Vietnam has a rich tradition of coffee drinking and coffee cultivation and in the past decades the country has grown into a global coffee exporting powerhouse and world’s largest producer of robusta coffee. However, much of Vietnam’s coffee exports are commodity coffee; robusta beans are often used as a base in coffee blends or coffee drinks like Japan’s ubiquitous canned coffees.
Commodity coffee prices are determined on international exchanges and there is little opportunity for growers to differentiate their crops or capture additional value for higher quality or better flavors. This leads to a potential opportunity to further develop the specialty coffee industry in Vietnam, especially coffee for the domestic market, where rising incomes and urban lifestyles are fueling a dynamic café culture.
This specialty coffee industry has been a target of Meros’ ongoing work in Vietnam. We are working with the Japan International Cooperation Agency (JICA) to understand opportunities and challenges for Japanese and other foreign investors into Vietnam’s agricultural value chains.
The team, led by Meros’ Chisa Ogura, together with experts in program evaluation, investment and private sector development recently visited La Viet, an example of a larger, fast growing specialty coffee business. It is located in the highlands of Dalat, the center of the coffee industry. The owner Tran Nhat Quang is enthusiastic and clearly committed to creating high-quality, specialty coffee in Vietnam. The company grows coffee in their own fields as well as collecting coffee from 120 farmers. 60% of their coffee is exported as green beans for roasting overseas. The other 40% is processed and roasted by La Viet themselves, mainly for the domestic market. This domestic market is expanding and La Viet now operate 5 retail coffee shops in Vietnam.
La Viet owner Tran Nhat Quang has also invented an original style of Vietnamese coffee maker. (There is now one in the Meros office in Tokyo – come try it in our office!)
Who will drive the emerging specialty coffee industry?
But can a small Vietnamese coffee producer get to the size of La Viet? Is it realistic for small producers to take the risk of leaving the reliable sales channel of commodity export beans to take on the domestic specialty coffee market? With the right investment, is there really opportunity here for Vietnamese growers? These are the questions we wrestle with.
Mr. Nguyen Van Son’s business Sonpacamara indicates that there are entrepreneurs who may be able to do it. Nguyen Van Son’s business is small – he harvests 4 hectares of his own coffee, plus 6 hectares from a partner. While he used to sell for export to Japanese roasting giant UCC, he now only deals with specialty coffee. He invested in his own roaster and now roasts 90% of his coffee for the domestic market. His coffees are characterized by a very clear and fruity taste.
Mr. Nguyen is not originally a coffee grower – left his career as a car dealer for coffee in 2005. Entrepreneurial spirit, charisma and passion for coffee drive his success, attracting volunteers and interns from around the world. Why coffee? “Oh, I didn’t choose coffee,” Nguyen says. “Coffee chose me!”