international marketing exporting coffee of trung nguyên enterprise to the german market

Trung Nguyen's powdered coffee, instant coffee, Trung Nguyen not only dominates the domestic market but is also welcomed in many regional markets, and has initially built a Vietnamese co

BO TAI CHINH TRUONG DAI HOC TAI CHINH — MARKETING

KHOA MARKETING

TRƯỜNG ĐẠI HỌC TÀI CHÍNH - MARKETING

INTERNATIONAL MARKETING

Theme name:

EXPORTING COFFEE OF TRUNG NGUYEN ENTERPRISE TO

THE GERMAN MARKET

H6 Chi Minh, ngay 22 thang 8 nam 2021

CONG HOA XA HOI CHU NGHIA VIET NAM

Doc Lap — Tu Do — Hạnh Phúc

BIEN BAN HỌP ĐÁNH GIÁ MỨC ĐỘ HOÀN THÀNH CÔNG VIỆC

1 Thời gian: 12h ngày 22 tháng 08 năm 2021

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II Thanh vién co mat: Day da

IV Thanh vién vang mat/Ly do: Khéng cé thanh vién vang mat

V Chủ trì cuộc hợp: Trương Tôn Anh Thị

VỊ Thư ký cuộc họp: Vũ Ngọc Thái

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L EXCUTIVE SUMARY

About Trung Nguyen company

Born in mid-1996 - Trung Nguyen is a fledgling coffee brand in Vietnam, but has quickly built up a reputation and become the most familiar coffee brand for both domestic and foreign users

In just 10 years, from a small coffee company located in the middle of the coffee capital Buon Ma Thuot, Trung Nguyen has risen to become a powerful corporation with 6 member companies: Trung Nguyen Joint Stock Company, a joint stock company Trung Neuyen instant coffee, Trung Nguyen Coffee Co., Ltd., G7 Trading and Service Joint Stock Company and Vietnam Global Gateway (VGG) joint venture company with industries including: production, processing, trading tea and coffee, the per permissions and the analysis of Service, selling to resellers In the future, Trung Nguyen Group will develop with 10 member companies, dealing in a variety of industries

Pioneering in applying the franchise business model in Vietnam, now, Trung Nguyen has a network of nearly 1,000 coffee shops nationwide and 8 foreign coffee shops such as the

US, Japan, Singapore, and Thailand , China, Cambodia, Poland, Ukraine Trung Nguyen coffee products and G7 instant coffee have been exported to 43 countries around the world with key markets such as the US and China Besides, Trung Nguyen has also built a system

of more than 1000 convenience stores and G7Mart distribution centers nationwide

Vietnam is the second largest coffee exporter in the world Particularly for Robusta coffee, Vietnam has an export output of up to 11 million tons per year, leading the international market From 2020, although the global economy is affected by the COVID-19 pandemic, the demand for coffee consumption has not decreased but is on the rise

But there is a fact that Vietnam is exporting green coffee mainly This is a weakness that makes the commercial value of this item not high compared to the quantity Currently, the international market is especially fond of roasted and ground coffee, instant coffee - processed coffee lines Therefore, to meet this demand, our country's coffee enterprises need

to invest in processing to increase the value of coffee products

Trung Nguyen's powdered coffee, instant coffee, Trung Nguyen not only dominates the domestic market but is also welcomed in many regional markets, and has initially built a Vietnamese coffee brand In addition, with the active support of ministries and branches in

improving processing capacity, expanding markets, reorganizing exports, etc., with the initiative and efforts of enterprises Vietnam in promotion, marketing and brand positioning will help Vietnamese coffee products increasingly assert their position in the international market

According to preliminary statistics of the General Department of Customs, in the first nine months of 2019, the whole country exported nearly 1.3 million tons of coffee, earning nearly $2.2 billion, down 13% in volume, down 21% in terms of turnover

Import and export situation of Vietnam in December and 12 months of 2020 - ThongKeHaiQuan : Vietnam Customs (customs.gov.vn)

The average export price of Vietnamese coffee is $1,718/ton (equivalent to about VND 39.5 million/ton, down 9.6% in price over the same period in 2018 Notably, Vietnam's coffee exports are exported The most to the German market reached nearly 185,300 tons, equivalent

to more than 289 million USD, accounting for over 14.6% of the total volume and accounting for 13.3% of the total coffee export turnover of the country

Vietnamese coffee is suddenly the most consumed by Germans | Economics | PLO

=> Based on those advantages, we continue to export Trung Nguyen roasted coffee products to the German market to enhance the position of the coffee market in the German market, but along with that, it is a huge profit from the German market in particular and Europe in general

Il SITUATION ANALYSIS

1 Market size:

-The German coffee market reached a value of USD 7,744.96 million in 2019 and is expected

to grow significantly in 2025, reaching a CAGR of 3.09% during the forecast period (2020- 2025)

- In Europe, Germany is the largest country in terms of coffee consumption, with per capita consumption reaching about 6.5 kg Strong demand for freshly brewed coffee is driving sales

in market research Furthermore, consumer demand for specialty coffees is growing due to increasing awareness and knowledge of the product Another factor contributing to this trend

is the increase in the number of cafes, small residential brands, small roasters and bartenders Furthermore, consumers have initiated a new trend of home roasting

2 Growth:

¢ Coffee consumption in Germany remains stable

¢ The market for specialty coffees in Germany is growing and presents opportunities for suppliers of high-quality coffee The specialty coffee segment is a niche market but requires high quality — high value

® Germany, Italy and France are the largest coffee consumer markets in Europe

¢ The German market in particular accounts for about 20% of total European coffee consumption, followed by Italy (13%) Other major coffee consumer markets are France (13%), Spain (8%) and the UK (8%) (ICO, 2016) The ICO emphasizes that the EU is a single market and cannot pinpoint exactly where imported coffee is consumed

¢ Germany was the largest direct importer of green coffee from developing countries in

2016, accounting for 35% of total European green coffee imports (1.1 million tons)

® Germany has a large coffee roasting industry and most green coffee is shipped through the port of Hamburg, the largest coffee transit point in Europe The port of Bremn is also used as a coffee docking point in Germany The major German coffee roasters are Tchibo, Melitta, Jacobs and Dallmayr

3 Market trend

® Consumer trends towards home-brewed coffee, from whole roasted beans, often lead

to the preparation of fresh batches of coffee Furthermore, the trend of coffee consumption in the workplace is prominent in Germany

¢ According to Beverage Business World in 2019, Germany is the leader in office coffee consumption It was valued at EUR 725 million, with an average growth of 3%, in 2018 Key players love to serve freshly brewed coffee, made from whole roasted beans, especially in office spaces , mainly due to the growing demand for whole roasted coffee This greatly increases the sales of roasted coffee

Sales of Roasted Coffee by Segment Type (in %), Germany, 2018

Source : Deutscher Kaffeeverband, Mordor Intelligence wi

picture 2 1 Sale of Roasted coffee by Segment type

e Arabica Coffee is the Largest Segment in the German Coffee Market Germany is one

of the main importers of green coffee German consumers prefer light, high-quality roasted Arabica coffee Arabica beans stand out to German consumers, compared to robusta

4 SWOT:

- Strength:

+ Germans love to use roasted coffee

+ Trung Nguyen coffee brand is international

+ Technology, coffee flavor of Trung Nguyen is extremely special in the market

+ Germany is the coffee roasting center of Europe

+ The German market has to import coffee, especially in Brazil and Vietnam

+ The domestic coffee market in Germany has many loopholes

+ Expanding the market in Germany

- Threats:

+ Brazil is trying to export a large amount of coffee to the German market

+ Indonesia is targeting the coffee export market to Germany

+ There are many domestic and imported coffee brands in the German domestic market + Entering a new market, factors such as capital, knowledge, and interests are the things that determine quite a lot in the existence of a business

5 Competitor analysis

5.1 Direct competitor

Today's coffee production and export industry has a high level of competition, from foreign competitors to domestic competitors having the ability to penetrate the market that the company is aiming for Here are some comparisons of potential industry competitors:

Nestlé Vietnam, for many years in a row among the leading sustainable development enterprises, not only performs well

in business activities, creates jobs, contributes to the state budget but also actively contributes pole for initiatives and

entcoffeiniert

Garry

This is the best rated German coffee in 2020 because it retains the natural and sweet taste that anyone would love to feel It is presented in ground coffee form, so all you need is to grab some and use the best coffee grinders, your coffee will be ready Furthermore, it comes in a pack of six, with each weighing 1.1 pounds

The reason why like this coffee is because it contains 100% Arabica so can be considered good for your health Produced by a trusted brand in Germany, you want to experience any health complications when drinking coffee because the coffee is pure and carefully crafted to meet everyone's needs, with no hidden chemicals or ingredients with no value

Caffeine has been known to be a quality stimulant that, at the time, can affect you when taken in large quantities As a result, Dallmayr takes extra measures to ensure their coffee

is decaffeinated without losing the flavor and aroma of the original coffee Moreover, coffee is obtained from the Central Highlands Arabica tree It configures only the best farms in the world using proprietary farming methods, thus ensuring pure and natural coffee

From the best coffee reviews available online By far, decaffeinated Dallmayr ground coffee

is the best coffee without bitterness and irritants What's more, the coffee is produced in Germany according to Good Manufacturing Practices in the bodies that comply with the Industrial Park

the standards of the consumer However, to make this coffee you will need to add 2 tablespoons/60z of water to the automatic drip coffee maker, you should not reheat or boil your brewed coffee as it may affect the taste and flavour

The company strives to guarantee 100% customer satisfaction by only producing the best quality that meets the standards of the consumer However, to make this coffee you will need

to add 2 tablespoons/60z of water to the automatic drip coffee maker, you should not reheat

or boil your brewed coffee as it may affect the taste and flavour

Founded by Johann Jacobs in 1895, this brand has continuously provided German residents with high quality coffee roasted by professionals with experience hence still considered the best coffee brand in Germany As we believe the 3in1 Classic Instant Coffee Sticks, you'll enjoy serving your coffee

Producers to meet the expectations of coffee consumers Tchibo Gold Selection brews coffee to give you the best coffee with great aroma Moreover, the brand mainly uses the finest coffee grown from the best

agricultural lands, free of harmful ingredients In addition, before bringing these coffees to market, they are ground, freeze-dried, roasted to perfection, and then carefully blended to preserve the natural flavor and aroma of the beans

Coffee is imported directly from Germany and meets all safety standards for consumers They come in two pots for a total of 70z/200grams of coffee

Advantages: has a long-standing position in the hearts of domestic German customers, reasonable prices with a wide distribution network throughout Germany, easy to find In addition, the above brands also have ingredients as well as quality from nature Cons: Many foreign brands, so the high cost makes the price of the product high

5,2 Alternative products

In this era of technological development, high-end customers can replace skin care with modem, high-tech machinery products In the current era of technology development, customers in the high-end segment can buy themselves a coffee machine at home These alternative products have the advantage of bringing class, and convenience Besides, it also solves the problem of buying and buying products again and again

Coffee machines are sold widely throughout the market, everywhere selling home appliances, This alternative product has the advantage of reasonable price and because it is sold at electrical stores In addition, these substitutes are highly personalized and can be seasoned according to the user, regardless of the producer

5.3 New competitive force

Because Vietnam is a country with a large coffee production and good quality, there may be many potential businesses appearing in this industry

Large and small coffee chains across the country can actively source and produce their own products to launch into the market in order to supply themselves for use and compete with existing brands

Advantages: These potential competitors may have unique and strange moves in the coffee industry

Cons: The cost to invest in machinery is quite large, technology and finding a source of quality raw materials are still a problem and the time to test it out to the market is quite long

HL EXTERNAL ENVIRONMENT

1 Political

Since the EVFTA was officially ratified between Vietnam and Europe, product lines exported from Vietnam have enjoyed a huge reduction in import tax rates Including coffee products coming to the German market (considered the largest coffee consuming country in Europe) In addition, the German government also requires coffee products to ensure that there are no residues of pesticides

$1.57 billion, up more than 5% over the same period last year (http://connectviet.moit gov.vn/default.aspx?

page=news&do=detail&category_id=66&id=5559) Therefore, this is still considered a potential market to bring Vietnamese coffee products into

3 Social

Germany has a population of more than 83 million people, making it the most populous country in the European Union The German people have a diverse culture and in the cuisine, coffee is considered a drink that is loved by many people Coffee was introduced to Germany

in the 1670s and gradually became widespread According to data that Trung Nguyen Legend has studied, up to 86% of adults in Germany use coffee every day And on average | year, Germans drink up to 164 liters of coffee and this number is even greater than filtered water (https://trungnguyenlegend.com/ky-46-ca-phe-va-sach-cong-thuc-thinh) -yvuong-cua-people- duc/) The Germans have an extremely developed coffee roasting industry and most of

Germany's seaports are used as Europe's largest coffee transshipment points y p Pp g Pp (http://thitruongnongsan.gov.vn/vn/tID25800_Nhu-cau) -ca-phe-tai-thi-truong-chau-Au html)

4 Technology

Germany is famous for its highly advanced industry that helps them apply many technologies

to make the world's best coffee-making equipment With trinamiX Mobile Near-Infrared (NIR) Spectroscopy Solutions helps determine the caffeine content and moisture content of coffee beans, coffee roasters monitor and better control the process of purchasing and refining coffee beans (https: //www.basf.com/fi/en/media/news-releases/2020/09/p-20-

294 html)

5 Environment

Due to being a country with a relatively low average annual temperature of 8.4 degrees Celsius, it is difficult for Germany to cultivate and grow coffee on its own So both Germany and Europe have to import coffee from other countries And According to the EU report on the German environment in 2019, the effects of air pollution are increasing in Germany (https://ec.europa.eu/environment/eir/pdf/report_de_en.pdf) A large part comes from the German people's overuse of one-time cups These cups are made from paper, plastic and styrofoam and after use these cups will be thrown away, lying in landfills for many years releasing toxins for the environment Under the "green initiatives" program, the German government is trying to get rid of single-use cups and replace them with reusable cups And the Freiburg Cup system has been going very well

6 Legal

German Coffee Tax Law stipulates that the tax rate for coffee goods and products is 2.19 Euro/lkg The high tax rate makes the coffee market in Germany not so attractive (https://www.globalregulation.com/translation/germany/38759 1/index.btml#BJNR191900009 BJNE000501140) In addition, the German government has some amendments in the law to prevent environmental pollution Therefore, it is difficult for Vietnamese coffee products packaged with single-use plastic to enter this market (https://www.thebreaker.co.uk/the- german-plastic-pollution/)

IV.IN ENVIRONMENT

1 Threat from new competitors:

Coffee supplies from countries in Southeast Asia such as Indonesia and Thailand began to target the German target market, which is a foreign concern about the price, market share and output competition of Trung Nguyen coffee with countries in the region

2 Power of supplier:

Currently, the supplier does not have much impact on Trung Nguyen's coffee export output because the company already has the company's exclusive supply With a closed care and production process in Daklak

Trung Nguyen coffee masterpieces are created from the world's best ingredients, combined with the mysterious oriental know-how and the world's leading modern roasting technology, along with the love and passion of the coffee makers No | coffee expert Only Trung Nguyen energy coffee masterpiece converges 3 world famous coffee civilizations Ottoman, Roman, Zen

(Trung Nguyen Legend Energy Coffee - Trung Nguyen Legend (trungnguyenlegend.com))

3 Threats from substitute products and services:

In Germany, in addition to coffee, people also drink drinks that have the same effect as coffee: monter energy drink, red bull, ready-to-drink coffee With reasonable prices, product diversity and convenience in use are threats to Trung Nguyen's coffee roasting behavior

4 Power of customers:

* The main concern is the taste of German people, the taste of coffee is slightly bitter, they prioritize the taste of milk coffee over pure coffee

« Many similar products of competitors

* The second is the price, with the process of caring and producing the best coffee beans of Trung Nguyen coffee, the price is quite high compared to the market price in Germany, still calculating the price of customers

5 Fierce competition of competitors in the same industry:

Companies, such as Tchibo, exclusively use this high-quality coffee bean in their coffee blends, and the Company purchases Arabica coffee from experienced roasters and quality

staff major competitor in the roasting coffee market for Trung Nguyen coffee in the German market

Brazil is a major coffee export market in the world and a major competitor in the Vietnamese coffee export market in Germany

V TARGET MARKET DESCRITION

1 International market segment

Segment Variables Segment A Segment B Segment C

Region Hamburg, Berlin, Hamburg,

Berlin, Frankfurt Berlin, Frankfurt Bremen Frankfurt

Munich Geographical

Population millions millions millions Advantageou The many large The Biggest

s Factor Biggest Port | cities Port and many

and many large large cities cities

Population 2,812 - 2,900 - 4,650 - Density Average | 2,815 3,000 4,651

inhabitants/km | inhabitants/km | inhabitants/km2

Generation Generation Generation Generation

Income 1,500 - 3,000 - 3,500 -

5,000 5,500 6,000 Euro/ Euro/month Euro/month month Occupation Mainly Manager, Manager,

Personality Openness/ Openness/ Openness/

Extraversion Extraversion Extraversion Attitude Happiness / Happiness / Neutral

Frustration Confident

User status First-time Potential/ Regular

users/ Regular potential

User rate Light / Medium / Medium /

Medium Heavy Heavy

Loyalty Shifting Hard-core/ Hard-core/ status Loyals

Split Split Loyals Loyals

Favourite Arabica Arabica / Arabica /

With 3 Segments in Market Segment, Segment C will be the target market for Trung Nguyen Legend to target With areas in Segment C including Harmbug, where Germany's largest seaport is located, this is where the focus of coffee imports into Germany and Europe

is In addition to Harmbug port, with the remaining cities considered the coffee capital Therefore, these areas have the potential to bring many benefits to TNLegend's transportation and penetration into the German market And the target customers TNLegend can focus on are people between the ages of 23 and 55 who currently make up the maximum percentage of the population structure in Germany with 62% and this is also the main labor force with high frequency highest utilization rate of coffee products (https: //service.destatis de/bevoelkerungspyramide/index.html#!y=2020&1=en)

(https://www statista.com/statistics/553 15 1/coffee)