Entering the US market with iced milk coffee Nuticafé, NutiFood is showing its obvious ambition to dominate the instant coffee market share not only in Vietnam but also over the world.
Nutrition Food Joint Stock Company (NutiFood) has recently launched a new product called Nuticafé Fresh Iced Milk Coffee, which is the debut product of its dairy business in the coffee industry.
To help readers get hold of this story, TheLEADER had a talk with Le Nguyen Hoa - NutiFood Vice Chairman.
What do you think about Vietnam's instant coffee market? How can NutiFood position Nuticafé iced milk coffee in this market?
Le Nguyen Hoa: Annual domestic coffee consumption is about $1 billion, 65 per cent of which is roasted ground coffee and the remaining is instant coffee. According to Vietnam Coffee-Cocoa Association, up to now, the country has 19 instant coffee plants with a total capacity of nearly 180,000 tons per year. By 2020, Vietnam aims to bring the proportion of processed coffee for domestic consumption and export to over 25 per cent, compared with only 10 per cent currently.
In developed countries, coffee is consumed as an industrialised beverage. Hence, NutiFood serves Nuticafé for people who want to drink brewed coffee but do not have enough time for manual preparation.
Nuticafé’s goal in the beginning period was its widespread appearance, from supermarkets to groceries, which helps consumers recognise and buy the product easily.
Why does not NutiFood choose to start by selling or exporting coffee, or opening a coffee shop chain?
Le Nguyen Hoa: There are three reasons why NutiFood chose instant coffee. Firstly, Vietnamese iced milk coffee, already well-known over the world, is suitable for both export markets and domestic consumption.
Secondly, NutiFood wants to diversify its customer groups by expanding to another segment.
Third, NutiFood wants the new product to have a value that has long been available: milk.
Many businesses have been trying to create instant coffee products with true Vietnamese flavour but no one has succeeded yet. What can help NutiFood break from this old track?
Le Nguyen Hoa: As a follower, NutiFood has the advantage in technology. The basic principle for NutiFood products is "the best taste", and this coffee product is the same.
After a long process of testing and improving the samples, by the end of August 2018, Nuticafé Iced Milk Coffee could officially be on sale and receive positive feedbacks.
With Nuticafé Iced Milk Coffee, NutiFood sells not only coffee but also the Vietnamese culture. Pioneers always have advantages and disadvantages. In this case, the advantage is the uniqueness while the disadvantage is to "educate" the customers. How did NutiFood prepare for this task?
Le Nguyen Hoa: Actually, NutiFood does not have to worry much about finding customers. Recent studies show that Nuticafé Iced Milk Coffee is the product that the market needs.
In a report by Nielsen in May 2018, 37 per cent of consumers said they had major health concerns. 80 per cent were keenly aware of the long-term effects of artificial ingredients. 76 per cent would like to know about the ingredients that made up the products they use daily, and they are ready to adjust their habits to protect their health.
NutiCafé is following the new consumption trend of the market, which craves for non-toxic products from trustworthy brands.
According to Euromonitor, the global instant coffee market is worth $28 billion. The US instant coffee market has been dominated by Nestle and Starbucks. So, why did NutiFood still choose to attack the US market first?
Le Nguyen Hoa: There are three reasons for NutiFood’s decision.
First, the United State of America is where cultures unite, as said in its name. Why cannot the famous Vietnamese beverage, iced milk coffee, do this? NutiCafé’s flavour is also a world different compared to one of Nestle and Starbuck.
Second, according to statistics in 2016, there were about 1.3 million Vietnamese in the US, accounting for half of the overseas Vietnamese. They can be both customers and brand ambassadors for NutiCafé.
Finally, as NutiFood already has Pedia Plus in the US market, NutiCafé should surely follow the steps.
Thank you very much!
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