Domestic coffee companies concede home market to foreign firms

15:36 | 03/03/2015 Trade

More and more foreign coffee companies are coming to Vietnam to make money from processing, while Vietnamese companies are content with modest profits from selling raw materials.

Domestic coffee companies concede home market to foreign firms

Massimo Zanetti Beverage, a large Italian-based international company, has opened a roasting plant in the southern province of Binh Duong, the first in Vietnam.

All the “big names” in the coffee industry attended the plant’s inauguration ceremony. The participants at the event drank wine the host had brought from Italy and talked about coffee.

The investment license shows that the company roasts coffee and makes 3-in-1 coffee, black coffee, milk coffee, compressed pellets, coffee packets and other products.

Massimo Zanetti chose Vietnam to set up its coffee plant, according to the group’s president, because the robusta bean, which is prevalent in Vietnam, is an indispensable ingredient in the group’s coffee formula.

Analysts believe more foreign companies will come to Vietnam to invest in coffee processing, a business which can bring high profits.

Do Ha Nam, CEO of Intimex, which exports 30% of Vietnam’s total coffee exports, also said that it would be much more profitable to invest in roasting and processing coffee than in trading coffee.

A report showed that existing roasters have a capacity of 70,000 tonnes a year.

However, Nam said Intimex, like many other Vietnamese companies, does not intend to follow that path.

“We do not think we should inject money into roasters in Vietnam, because this means that we would have to compete directly with the world’s largest groups which have 100 years of experience,” Nam said.

“We target our specific markets. We should try to avoid the giant foreign competitors,” he added.

Also according to Nam, a half of Vietnamese total coffee productivity has fallen into the hands of foreign invested enterprises. This shows the strong development and the high ability to swallow Vietnamese material areas by foreign invested enterprises.

The director of another company also said he tries to do what he can do well, which is the preliminary treatment of coffee beans for export. This allows him to save money and expand in the future.

“It may happen that existing roasters will meet difficulties in the future and their owners will have to sell the plants. If so, Vietnamese companies will be able to buy the roasters at reasonable prices,” the businessman said.

For the time being, big foreign firms have launched new products, and rookies in the coffee market have also marketed their products, such as Gold Roast, Ajinomoto and Big C instant coffee.

Source VOV News