How Starbucks Failed to Conquer Vietnam’s Coffee-Loving Nation

Starbucks, the American coffee chain, has struggled to gain a significant foothold in Vietnam, a nation known for its love of coffee. Despite being in the country for ten years, Starbucks accounts for just 2% of Vietnam’s coffee market. The lack of success can be attributed to various factors, including consumer preference for local coffee flavors, the high prices on the menu, and the lack of diversity in Starbucks’ offerings.

Vietnamese people have a deep-rooted tradition of drinking coffee, with the country being the world’s second-largest exporter of coffee. The local coffee culture is vibrant, with numerous street vendors and coffee shops offering a wide range of flavors at affordable prices. In contrast, Starbucks’ menu is perceived as expensive and lacking variety. This, coupled with the strong preference for Robusta coffee over Arabica, which Starbucks uses exclusively, has contributed to the brand’s limited appeal in Vietnam.

The allure of Starbucks for some Vietnamese consumers lies more in its trendy image and aesthetically pleasing ambiance, rather than the coffee itself. Many young people see visiting Starbucks as an opportunity to take stylish photos and post them on social media platforms like Instagram. However, this demographic is not representative of the broader population, which views coffee as a daily necessity rather than a luxury.

Furthermore, the average monthly wage in Vietnam is relatively low, making Starbucks’ prices prohibitive for many people. A medium-sized drink at Starbucks costs around 90,000 Vietnamese Dong ($3.8), which is considered expensive in a country where the average monthly income is only about $345. Local coffee chains like Highlands have recognized the need to appeal to a wider customer base by offering more affordable options, while still maintaining quality.

Starbucks’ struggle to penetrate the Vietnamese market is not unique, as other international chains, such as The Coffee Bean & Tea Leaf and Mellower Coffee, have also faced challenges. The prevailing preference for traditional Vietnamese coffee flavors and the vibrant local coffee scene make it difficult for foreign brands to compete effectively.

Despite the limited success, Starbucks remains committed to its long-term investment in Vietnam. The brand continues to operate 92 stores in the country, although its expansion has been relatively slow compared to neighboring countries like Thailand and Indonesia. However, Starbucks’ presence in Vietnam is unlikely to pose a significant threat to the dominant local coffee culture and the abundance of affordable coffee options available.

In conclusion, Starbucks’ inability to crack Vietnam’s coffee-loving nation can be attributed to various factors, including consumer preference for local coffee flavors, the high prices on the menu, and the lack of diversity in offerings. The brand’s image as a luxury coffee experience is overshadowed by the vibrant and affordable local coffee scene. While Starbucks has found a niche among certain demographics, it remains a relatively niche player in a market dominated by traditional Vietnamese coffee.