Based on 2019 revenues, Vietnam’s top three coffee chains are Highlands Coffee, The Coffee House and Starbucks, the global coffee chain. Highlands revenue was $94 million USD; while The Coffee House registered revenue of $37.2 million USD; and Starbucks had revenue of $33.6 million USD.
Starbucks saw its growth increase 32% year-on-year, but the international coffee chain placed third in revenues for the second year in a row after securing second place behind Highlands Coffee in 2017.Starbucks growth rate lagged far behind Phuc Long’s Coffee’s growth of 65% and also behind Highlands Coffee’s which saw a 35% growth rate.
Starbucks is the only international brand in Vietnam’s top five coffee chains, and has been in Vietnam for seven years, but it only has 60 outlets in four localities compared to Highlands, which has 336 outlets and The Coffee House which has 150+ outlets.
Critics say that the reasons that Starbucks will never receive the #1 rank is based upon four specific factors:
#1 – Starbucks has opened far fewer outlets in Vietnam than in other ASEAN countries – there are 320 outlets in Indonesia and 336 outlets in Thailand
#2 – Starbucks gross margin of 19% is far smaller than Highlands and The Coffee Houses margins of 60 ~ 70 percent and 35% for Phuc Long.
#3 – The most sold coffee in Vietnam is “Caphe Sua Da” which is made with Vietnamese sweet condensed milk and this item is not sold in Starbucks.
#4 – The average price for Vietnamese coffee is 30,000 ~ 50,000 VND while the average price for Starbucks coffee is 90,000 ~ 120,000 VND.
Whether Starbucks can adapt and change its model in Vietnam remains to be seen. Analysts of the coffee industry say that if the chain were to include Vietnamese coffee in its outlets that sales would increase, but in reality, that they don’t see product or pricing changes being made since the company’s business model is to keep its prices in Vietnam equivalent to its prices in the US.