Vietnam is ready to compete with Nestle SA and its Asian rivals after secretly supplying coffee drinkers with their daily fix in the last 10 years.
Instead of selling raw robusta beans to foreign firms to become instant coffee, the largest supplier in Vietnam is preparing to offer its own soluble powder early next year.
The change aims at gaining more income from Asia's growing rapid-brewed beverage market and buffering the effect of large swings on international commodity prices.
"We do not want to be left out from the instant coffee bandwagon," said Do Ha Nam, Intimex Group Chairman, who exports as much as 75 percent of Vietnam's robusta beans, the bitter-tasting kind popularly used for instant coffee production.
Nam said their robusta variety brings more benefit and less risk "because it means we don't have to rely on the price set by the London market."
Robusta futures traded in London were down 10 percent this year after slumping in three of the previous four years in Vietnam, the world's top producer and exporter.
The penetration into domestic instant coffee production is seen by the coffee industry in the country as a more lucrative growth venture compared to just continuing to plant more trees.
According to Euromonitor International, India will lead growth in the retail market for instant coffee in Asia, growing nearly 12 percent a year to top $850 million in 2024. In Indonesia, Malaysia, Philippines, Thailand and Vietnam, the market researchers are also predicting solid growth.
"Asia is the fastest-growing coffee-drinking region in the world, where many customers continue make a coffee-drinking habit," said Jose Sette, president of London's International Coffee Organization.
Thanks to its ease of preparation, instant coffee is a perfect way to introduce the drink to these customers, he said in an email. To penetrate the region, Vietnam should capitalize on its geographical location and low production costs, Sette said.
Ho Chi Minh City-based Intimex, which was a state-owned company before being sold to private investors in 2006, aims to beat Nestle in the next five years as Vietnam's largest pure instant coffee supplier by increasing annual capacity by five times to 20,000 tons.
Nestle, a Swiss-based manufacturer based in Vevey, will go up against both domestic and international firms by taking advantage of its size, technology and manufacturing expertise, more than 75 years of coffee making experience, and rising with Vietnamese coffee farmers, said Ganesan Ampalavanar, Nestle Vietnam's general manager.
