Starbucks, Naga, Philippines

Starbucks to open its 1st Vietnam cafe in Ho Chi Minh City in February

Starbucks CoffeeStarbucks Corp. says it will open its first Vietnam cafe early next month in Ho Chi Minh City as part of its strategy to expand across Asia. The Seattle-based chain will be entering a country of coffee lovers that already has an established market. At least two popular homegrown chains have dozens of locations across the country.  Vietnam is the world’s second-largest coffee producer behind Brazil and already provides high-quality beans for Starbucks stores in other countries. “We’ve been in the region going on 16 years, and given our success in Thailand, Singapore and Malaysia, as well as our overall financial performance, we see Vietnam as the next natural entry point,” said John Culver, president of the China and Asia Pacific region.

The Seattle coffee company will open the store in Ho Chi Minh City, along with partner Hong Kong Maxim’s Group. The move continues Starbucks’ expansion in the Asia-Pacific region, as the company now will have more than 3,300 stores over 12 countries, including about 700 in China alone.

Starbucks says Vietnam has a strong coffee-drinking culture, unlike India or China, which are more accustomed to tea, creating a $3 billion coffee market, with coffee consumption rising. “Vietnam is the second-largest coffee-producing country in the world–behind Brazil,” Mr. Culver said. “We’ve been sourcing coffee from there for several years.” Wall Street Journal Marketwatch … 

Compared with other Asian markets Starbucks has recently entered, the Seattle-based company faces a unique scenario in Vietnam, where French-inspired coffee culture reigns supreme, two homegrown chains have established presences and family-run sidewalk cafes are as ubiquitous as noodle shops. However, Starbucks’ upmarket brand will appeal to the growing Vietnamese middle class, said Anthony Emms, managing partner at Stanton Emms Strategy Consultants in Singapore, because “Starbucks is not really a coffee; it’s a food-service concept.”  Huffington Post

The proliferation of Starbucks poses new competition for home-grown cafes such as Trung Nguyen and Highlands Coffee, as well as foreign shops operating in Vietnam such as the US-based Coffee Bean & Tea Leaf and Australia’s Gloria Jean’s.

Coffee Concepts (Vietnam) Limited, a Hong Kong Maxim’s Group subsidiary,  will be the licensed for operating Starbucks stores in the country, “delivering the legendary Starbucks Experience to customers, and maximising the growth potential of the Starbucks brand in Vietnam. We will offer a community gathering place where people come together, connect with family and friends and celebrate the local Vietnamese coffee culture and heritage.”

“We are looking forward to leveraging our expertise and deep understanding of the Starbucks brand to welcome Vietnamese customers to our stores, earning their trust and respect with the unparalleled Starbucks Experience, known by customers around the globe,” Michael Wu, chairman and managing director of Hong Kong Maxim’s Group, said.

“Starbucks is deeply respectful of Vietnam’s long and distinctive local coffee culture. We know coffee is a national pride for many Vietnamese and as such, we look forward to contributing and growing Vietnam’s already vibrant coffee industry. As we continue to source more Vietnamese high-quality, arabica coffee we want to leverage our scale to bring the best of Vietnam’s coffee traditions to the rest of the world,” Culver added. Vietnam Investment Review

Why doesn’t Starbucks choose a Vietnamese partner? It’s understandable why the US Starbucks decided to set up its first shop in Vietnam in HCM City, a commercial hub. Meanwhile, it’s enigmatic why it did not choose a Vietnamese partner, but a Hong Kong one– Maxim’s Group. Established in 1956, the group now has 760 shops providing diversified services, which include Chinese, European, Asian chains and Japanese restaurant chains. It is estimated that Maxim Hong Kong serves 630,000 clients a day. This was also the group which brought Starbucks brand to Hong Kong and Macau. First setting its foot in Hong Kong in 2000, Starbucks has had 110 shops there after 10 years of development. Maxim’s Mooncakes has always been the Number One moon cake in Hong Kong brand since 1998. VietnamNet

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“The Starbucks Experience”  “From my 18-month exploration into the world of Starbucks, listening to what Starbucks leaders say and watching what they do, I have derived five key business principles that drive its phenomenal success. These principles are offered in the hope that you will apply them to your own situation to enrich your leadership influence in business and beyond. The Starbucks Experience reflects tenets that are simple, yet not simplistic. They are results-oriented and can be deceptively powerful when applied:

1. Make it your own
2. Everything matters
3. Surprise and delight
4. Embrace resistance
5. Leave your mark”