Vietnam - The biggest affairs relating to coffee brands in 2011 (part 1)

VietNamNet Bridge – The Vietnamese coffee market in 2011 witnessed a series of big deals wrap up. However, analysts say it’s not easy to squeeze into the market.

The surprising affairs

Any information relating to the current most famous coffee brand--Highlands Coffee, always catches the special attention of the public.

After buying Pho 24 brand, the owner of the Highlands coffee chain unexpectedly sold 50 percent of Viet Thai Company in Vietnam, including Pho 24 and Highlands to Jollibee Foods for 25 million dollars.

However, the more surprising affair in 2011 was the one in which Vinacafe sold 50.11 percent of stakes to Masan Group. Meanwhile, two years ago, Masan tried to negotiate to buy Vincafe stakes, but it was refused.

Most recently, due to the big losses, the owner of Coffee Duc Lap Minh An and Coffee Duc Lap Dakmil brands has shown his intention to sell the brands to a Chinese company for 18 billion dong.

The sales of the coffee brands show that it’s not easy to squeeze into the coffee market because of the stiff competition, even though the market is believed to have great potentials.

Analysts believe that Vinacafe had to sell stakes to Masan because it had no other choice. Meanwhile, Deputy General Director of VInacafe Bien Hoa said coffee companies would still have to spend more money, efforts and time to raise the coffee consumption rate of Vietnamese people to the average rate of foreigners.

He went on to say that the stake transfer deals clearly aimed to improve the competitiveness of the sellers and create favorable conditions for the buyers to penetrate the Vietnamese market. In other words, the deals would bring benefits to both sides.

Vinacafe has admitted that the cooperation with Masan can help Vinacafe improve its marketing skills to make the products better and more widely popularized, thanks to the powerful financial capability and good marketing staff of Masan.

Finance experts believe that Masan still continues buying more Vinacafe’s shares, since it sees the high growth rate of the Vietnamese coffee market f 8-10 percent per annum, higher than the world’s average rate of 6-7 percent. Meanwhile, Vinacafe is really a good choice for investors, because the brand is still leading the soluble coffee market with stable business performance and large distribution network.

Analysts have said by buying Vinacafe’s stakes, Masan would not only have the right to join the management of Vinacafe, but it would also have a firm “springboard” to penetrate the lucrative coffee market in the quickest way.

Besides, the move would also help Masan’s plan to list its shares on the market.

Similarly, when buying Highlands Coffee – Pho 24, Jollibee took the first step in its plan to do business for a long term in Vietnam and seek promising profits on the Vietnamese potential coffee market.

Trung Nguyen, a well-known coffee brand in Vietnam, has also bought the Saigon coffee plant, explaining that the deal would help triple the soluble coffee capacity of Trung Nguyen.

However, consultants have warned that it’s not easy to jump into the coffee market. A lot of the conglomerates have failed to make investment in non-core investment fields.

Vinamilk, the most well-known dairy brand in Vietnam, for example, failed to squeeze into the coffee market, despite the great efforts. In late 2010, Vinamilk had to transfer the project on the Saigon Coffee Plant to Trung Nguyen.

They have warned that Masan should consider the case thoroughly, when it plans to distribute coffee products on the existing distribution network which has been specializing in selling soya sauce and instant noodles.

Doanh Nhan Saigon

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