Vietnam is starting to see a sprinkling of Western-style coffee chains, with the younger generation enjoying the new additions. ‘,’none’,’ Giorgio Vergano doesn’t want to sound like a coffee snob – that much is clear. Different cultures, he says, develop different ways of roasting, different brewing techniques, different recipes, different tastes – and that’s OK. As the point man for Punto Italia Espresso in Southeast Asia, it is Vergano’s mission to bring “a true taste of Italy” to a part of the world that seems to be migrating from traditional Vietnamese ‘ca phe’, to a Western espresso culture. Today in Vietnam, Punto Italia is served in numerous restaurants and hotels that cater to tourists, expats and wealthy Vietnamese. Some Vietnamese, once accustomed to their harsh, domestic Robusta roasts, are now developing an appreciation for the nuance of Arabica-based espresso, Vergano says. Inside Punto Italia’s showroom in Hanoi, he points to one expensive espresso machine that has been reserved for a wealthy Vietnamese customer. Vietnam’s coffee culture is going uptown. And in this nation of nearly 90 million people, coffee is also going downtown, cross town and cross-country as well. The upscaling is illustrated in the arrival and proliferation of franchise brands such as the Coffee Bean & Tea Leaf (CBTL) from California and Gloria Jean’s Coffees from Australia. CBTL, a Los Angeles-based company, already had a presence in Asia before the company’s General Manager Corinne Milagan, opened the first CBTL in Ho Chi Minh City (HCMC) in 2008. Milegan now oversees nine stores in prime locations in HCMC and Hanoi, including five that opened in 2011. CBTL offers competitive pricing and value for money, considering they use only specialty grade Arabica coffee beans from three distinct regions: Latin America, the Pacific, and East Africa, selecting only the top 1 per cent Arabica beans and finest hand plucked, whole leaf teas, all of which have been cultivated at high altitude – between 3500 and 6000 feet. CBTL’s reputation for quality lends a certain glow to the clientele, who Milagan says are roughly equally divided between foreigners and the increasingly trendy Vietnamese. Being seen at CBTL is considered a sign of status in cities where Bentleys and SUVs increasingly appear among the multitude of motorbikes. Australian-owned specialist global coffee company Gloria Jean’s Coffees has also emerged as a trendy coffee-drinking hot spot since the franchise first set up shop in the emerging market in late 2006. Nicolas Tan, Gloria Jean’s Coffees Market Development Manager, Asia, says the company saw its not-too-far neighbour as one of the 10 emerging markets worldwide, as included on the recently coined CIVETS list (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa). “With a growing middle class and the second youngest population in Asia, Vietnam was ready to host international brands, especially lifestyle brands such as Gloria Jean’s Coffees,” says Tan. “Our strategy [in 2006 was] to gain the first mover advantage in this potential market” Gloria Jean’s Coffees currently has six coffee houses in the country, with plans to open another 20 in the next five years. Interestingly, in addition to the logistical challenges that come with new operations, Tan points to the introduction of a foreign coffee culture as one of the biggest road blocks the company had to face. Different to other tea-drinking Asian nations, Vietnam already had coffee-drinking habits, and the introduction of Gloria Jean’s Coffees in Vietnam was less about introducing a new beverage and more about a new culture and taste profile. “Ninety-seven per cent of Vietnam’s coffee production is Robusta and, as such, the locals have been used to the strong profile of Robusta beans,” says Tan. “With Gloria Jean’s Coffees introducing espresso-based beverages using 100 per cent Grade A Arabica beans, this certainly creates a challenge.” To overcome these challenges, Tan says the company has largely targeted its marketing efforts on the younger middle class of Vietnam, “who are not loyal users of Robusta beans”, and thanks to overseas travels and mass communications channels are more open to new products and brands. With a per capita annual income of only US$1300, Vietnam is just barely middle income – but it is a strikingly young country. Vietnam’s post-war baby boomers and their children represent more than 60 per cent of the population, a demographic much younger than China’s or Japan’s. It is Vietnam’s young urban professionals – ‘vuppies’, you might say – who are spending much more of their disposable income on coffee than their parents did. The changing coffee culture hasn’t been limited to the introduction of espresso-serving chains. The broadening of Vietnam’s coffee culture has been exemplified by grocery shelves stocked with Trung Nguyen’s G7 instant coffee. Trung Nguyen boasts that G7, introduced in 2003, recently surpassed the ubiquitous Nescafé to become the nation’s most popular instant brew. G7 is gaining traction in China as well, home to 14 times Vietnam’s population. Coffee industry mavens in Vietnam, and elsewhere, envision instant coffee as a means to develop a devoted mass market that, over time, may move up to pricier coffee products. For Vietnam, coffee has largely been a feel-good story for the past two decades, after the nation’s Communist leaders shelved its failing central planned economy to gradually move to what it calls “market-oriented socialism”. With the help of World Bank loans, Vietnam has grown from a minor player, into the world’s second largest exporter after Brazil, and the top producer of Robusta in terms of volume. Coffee is one reason why, before a recent slowdown, Vietnam’s economy had been growing at a 7 per cent annual clip in recent years. Without coffee, it’s hard to imagine Vietnam edging into ‘middle income’ status in 2011, as judged by the World Bank. Among coffee industry leaders such as Trung Nguyen founder Dang Le Nguyen Vu, there is talk of a future when Vietnam will join Brazil as both a leading producer and consumer of coffee. In some respects, this new Western coffee shop trend may seem predictable and, frankly, a bit boring in a nation that has such a colourful, diverse ‘ca phe’ culture. Vietnam has been described as “the world’s best producer of bad coffee,” one industry analyst sneered to the Financial Times. But many people adore traditional Vietnamese coffee and its variations, from the famous – or infamous – “weasel coffee” to the eggy brew served at a shop near Hanoi’s Hoan Kiem Lake that is said to taste like roasted marshmallows. American military scholar Robert Kaplan, veering briefly from weighty geopolitical concerns in a recent article for The Atlantic, expressed his caffeinated enchantment with Hanoi: “This is pre-chain store capitalism, with cafés everywhere, each different in mood and design, offering some of the best coffee in the world, and no sign of Starbucks.” Not yet, anyway. The French first introduced coffee to Vietnam in the late 1800s. Ever since, Vietnam has been at the heart of Asia’s coffee culture coffee: one reason, Vergano says, that Punto Italia established a beachhead here three and a half years ago. While cuppers and connoisseurs may frown on the harsh, strong Robusta, those qualities inspired the Vietnamese to be unusually creative in making what is considered traditional Vietnamese coffee. While Italian tradition prohibits any additives such as soy or sugar in the roasting process, Vergano explains, Vietnam’s Robusta would not be drinkable without such additives that are considered trade secrets. The coffee is typically s
erved with sweet condensed milk to further mask the bitterness.
At the 2011 Coffee Festival in the Central Highlands city of Buon Ma Thuot, the hub of Vietnam’s coffee industry, a Western scholar addressing an assembly of industry professionals, drew laughter by calling attention to the fact that attendees had a choice of coffee or tea during breaks. But the either-or dichotomy may be a Western attitude that doesn’t necessarily translate in the yin and yang duality of Eastern sensibilities. At Trung Nguyen’s handsome flagship café near the Ho Chi Minh Mausoleum, customers are offered a small, free glass of mild iced tea with a menu that features food and a rich – and not cheap – variety of coffee drinks. To a Westerner, this comes as a surprise and charmingly Vietnamese: Why not sip tea while you order coffee? This doesn’t happen at CBTL or Highlands, where the style is decidedly more Western. Speaking of Western influences, when is Starbucks – already a striking presence in China – coming to Vietnam, anyway? The question is raised with some frequency in business circles of HCMC and Hanoi. One oft-told tale is that complications prompted Starbucks to back out of private negotiations to acquire Highlands, a chain that was founded in 1998 by a Vietnamese American from Seattle named David Thai. Highlands, with scores of locations in some of Vietnam’s priciest commercial real estate, is so derivative of Starbucks that there is speculation that the business model has always been to create a company that makes an ideal acquisition for Starbucks. Highlands has moved on to other deals, acquiring the restaurant chain Pho 24 and later selling a near 50 per cent stake of the company to the Philippines food giant Jollibee. What this means for Starbucks’ prospects in Vietnam is unclear.
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