CHIẾN lược CHIẾM LĨNH THỊ PHẦN cà PHÊ của TRUNG NGUYÊNe

STRATEGY TO CONTROL COFFEE MARKET OF TRUNG NGUYEN I Introduction The world has proven that coffee has actually became an industry with total transaction value is $ 80 billion worldwide, ranking second after oil industry in terms of good value and go beyond the gold, silver and precious stones to become the invested good The industry has expanded and contains elements of finance, trade, investment, tourism, culture, knowledge economy, ecotourism, coffee travel In Vietnam, coffee is day by day becoming one of the most important economic sectors contributed $2 billion per year in GDP From coffee, many companies have developed and success including Trung Nguyen Trung Nguyen is a marvelous success of brand building in Vietnam in recent years Within less than 20 years, from a small warehouse in Buon Ma Thuot to process coffee, Trung Nguyen has developed and presented its good in all regions of the country Trung Nguyen has made a spectacular entry in the history of buiding brand in Vietnam Trung Nguyen Coffee Corporation (called as: Trung Nguyen Coffee) was established in 1996 as a new coffee brand in Vietnam and has quickly built up reputation and becomes one of the most familiar coffee brands for consumers in the domestic and international markets After more than ten years, Trung Nguyen Coffee has developed and emerged into a powerful group with six members working in major industries namely: coffee manufacturing and processing, trade tea; franchising and distribution services as well as retail Trung Nguyen currently contains nearly 2000 employees, factories and branches from the north to south of Vietnam together with one joint venture company placed in Singapore Furthermore, the company also indirectly creates jobs for more than 15,000 employees through 1000 system franchising coffee shops across the country Trung Nguyen so far has developed many products namely: creative coffee, weasel and legendee coffee, Passiona low-caffeine coffee, and G7 instant coffee Please see Trung Nguyen’s products in the Table as below: | Page Table Products of Trung Nguyen coffee Instant Coffee G7 Cappuccino Weasel Gourmet Blend Legendee Passiona A research showed that Trung Nguyen is the coffee brand obtaining the biggest consumer base in Vietnam market in the last years from 2009-2011 Nearly 10 million out of 17 million Vietnamese households purchased Trung Nguyen’s Diagram Market share of G7 coffee products for in-home consumption The researched also indicated that G7 (3in1) instant coffee has leaded the Vietnamese instant coffee market with 38% market-share in total in 2011 (see the diagram above) The competitive advantages of Trung Nguyen coffee: the company is facing competitive advantage enormously by being actively control input source, manufacturing system with factories in the north and south of Vietnam which help to save costs in term of prices and quality Declaration and positioning: During the earlier development process, Trung Nguyen Coffee is considered sugar water with flavored coffee After years of development, Trung Nguyen coffee has always insisted his reason by giving the message and positioning “it is true with Trung Nguyen" This statement is confirmed quality is the | Page leading factor that Trung Nguyen has always pursued by the coffee products have high quality , position in the market for coffee in Vietnam and around the world What has been achieved always require Trung Nguyen to constantly move forward To maintain the advantage as well as leading coffee brand in Vietnam, Trung Nguyen has always been awarded of strategic importance for the company This will be driven growth path in the future To get a proper comprehensive strategy, the company has a detailed analysis of these factors Detailed content analysis will be presented in the following section II Impacted Factors Live cycle: Vietnam coffee industry began to form and develop from the late 19th century by the French who make the foundation However, over the centuries, coffee and coffee industry Vietnam has not really developed until after 1990 -2000 years after Vietnam participation and integration into the world economy Therefore, the coffee industry is assessed as beginning development stages Trung Nguyen Company provides this assessment based on evaluating specific data as follows: According to statistics, coffee exports in 2012 reached 1,732,156 tons, valued at $ 3,672,823,086, an increase of 37.8% in volume and 33.4% in value compared with the same period last year In 2012, Vietnam ranks the top coffee exporters to the U.S market, with 203,516 tones, achieving value at $ 459,616,328, an increase of 46.8% in volume and 34.7% in value compared with the same period on a year before, accounting for 12.5% of total export value The other bigger import markets of Vietnam coffee include Germany and Spain respectively, worth $ 427,178,275 and $ 216,281,513, an increase of 28.2% and 59.3% The average export price in 2012 is $ 2,120 / ton, down from an average price of exports in 2011 reached $ 2,191 / ton Currently the supply of raw materials in Vietnam has a stable stage and continues to rise This proves that the coffee industry is growing fast (see diagram) According to the data shown we can see, café area and yields are increasing steadily in the years from | Page 2004 to 2014 If the new 2004 when the country began to increase acreage, production at 700 thousand tons, about 1200 thousand tons in 2010 to 2013, the number was close to 1,800 thousand tons (more than times) Period 2006 - 2010 production increased but not significantly from 2010-2013 to increase the yield (see table below) This suggests that the café area and yields are still rising Table – Quantity of Vietnam coffee in phase 2005 – 2010, source: BCT However, the actual exports of coffee in the recent time not increase or increase but no stability The numbers of small coffee exporters in Vietnam are very crowded with over 100 businesses but they have strong competition resulting in reducing price This situation form Trung Nguyen Coffee the ideas of thinking about the unification | Page Vietnam exports so that the export value will be higher both in quality and quantity From the thoughts that inspired Trung Nguyen to build a proper strategy to shape coffee exports Vietnam Besides export markets, coffee consumption in the domestic market also showed some very encouraging data Speed domestic coffee consumption is relatively high growth and stability, crop forecasts in 2010/2011 production of domestic coffee consumption will reach 12.1 % growth over the same period last year Instant coffee market goes up According to the British Coffee Association, in 2000, the share of instant coffee consumption only accounts for 13 % of total coffee consumption and only 10 years later, this figure exceeded 40 %, the current instant coffee continues to accelerate strongly and threatened proportion of the product consumed traditional roasting coffee Two nations with the highest rate of consumption of instant coffee are England with 81 % and Japan with 63 %, while in the traditional U.S market, sales of instant coffee accounts for only % According to data from the International Coffee Organization (ICO), instant coffee consumption in Vietnam grew 31 % in 2010, reaching 1,583 million packs of instant coffee which accounts for 38.5 % of total consumption, roasted coffee grind up about 61.5 % Growth of instant coffee production increased by only about 4.5 % but the growth of instant coffee consumption in Vietnam has reached double digits Diagram – Total instant coffee of Viet Nam (Ton) | Page Source: MARD These data were analyzed in very detail and thereby shape the strategic of Trung Nguyen coffee for the domestic market as well as exports This strategic orientation of Trung Nguyen Group will become Vietnam's leading coffee and coffee contributes to the development of Vietnam towards sustainability Competitors Up to the current period, the instant coffee market Vietnam is ongoing "nettle race" between three typical companies including VinaCafe (Bien Hoa Coffee - VinaCafe JSC); Nescafe (Nestle - Switzerland) and G7 (Trung Nguyen Company) So far, Trung Nguyen is still the market leader in Vietnam instant coffee but to maintain and strengthen the position may also exporting instant coffee to other countries that are extremely important targets After the target formed, Trung Nguyen has formed strategies developing instant coffee containing spirit and style of Vietnamese people and will offer to the world To implement this strategy, Trung Nguyen has focused on the study of national taste This study divided into 03 main markets: the taste of Asia – expect to export to Asian countries; Taste and Europe; taste of America (North America) for soluble coffee exports to two continents Trung Nguyen also actively building a network of international distributors - has branches in Singapore and manufacturing supply chain When completed, this system will help companies to secure supplies as well as distribution system completed For roasting coffee export industry, Trung Nguyen is currently competing in the major competitors including Vietnam Coffee Corporation and over 100 small businesses as analyzed and company also has a strategy ( see part ) Customers In term of export market, Vietnam's coffee exports mainly to the European region, official statistics in 2013 coffee exports to the region reached 568.0 thousand tons with a turnover of 1.2 billion (down 13.7% in volume, turnover decreased by 15.6% compared with 2012) There are 13 markets in the European coffee imported Vietnam coffee and there were 11 import market has fallen comparing to previous years, only | Page markets have increased in 2013 including British market (increased by 13.1% in volume, 6.9% increase in turnover) and Russia (increased by 11.2% in volume, an increase of 13.0% in turnover) Asia is the second largest region importing Vietnam coffee in 2013, reaching 269.0 thousand tons with a turnover of 598.9 million, down 21.8 % in volume and 20.6 % of the metal value compared with 2012 Trung Nguyen has 11 regional markets of Asia import coffee from Vietnam, in which Japan and China are the two leading importers, specifically exports to Japan reached 78.1 thousand tons turnover of U.S $ 167.6 million, to China reached 37.1 thousand tons with a turnover of 96.2 million Notably, exports to India and Israel show signs of growth compared to 2012, exports to India increased by 3.8 % and 4.8 % of turnover, to Israel with 11.0 % growth increasing and 16.8 % of turnover Besides, the company also targets the African market This is a new market and potential For the turnover, the market has accounted for over 10 % of export revenues of Trung Nguyen It is founded that the maintenance and development of traditional markets and new markets is vital for development of Trung Nguyen coffee Trung Nguyen's strategy is to focus research, search and maximize the market Products for replacement The current market appears many drinks that can replace coffee for example:  First, the bottled product made from chocolate contains a large amount of increased tone, stimulates the brain produces endorphins - an endogenous hormone ( often called the " hormone of happiness " ) makes people manic happy, fun and increase energy reserves and can affect drinking coffee  Second, red apples contain vitamins and fiber, are suitable to eat morning, on an empty stomach In the list of “substitute coffee " also have oatmeal , cereal , fish, chicken, green tea So outside café , customers can choose the drinks to gain weight fair in each breakfast | Page Besides, there are also a lot of other bottle drinks can replace coffee However, if you look at the fact that most customers use coffee as a habit to replace the crops that will not affect the consumption of coffee However, these analyzes also put Trung Nguyen on new opportunities Strategic diversification from coffee products was formed Trung Nguyen is studying the market and will provide bottled coffee products are very handy and compete directly with existing drinks Supply resources: Supply is the coffee growing areas are mainly distributed in the Central Highlands and some other localities like Quang Tri, Binh Phuoc or Dien Bien province Currently the Central Highlands is the largest coffee plantation where are the majority of the country's area Other provinces also started planting coffee like Quang Tri as 1% of the total area The new province in the north also started planting coffee but untapped Therefore these areas are not located in the local map of Vietnam coffee plantation Details of the coffee growing regions are shown in Figure below Competitors: Beside the domestic competitors, currently, there are some foreign investors who have been or prepared to invest in Vietnam Therefore, they will become competitors of Trung Nguyen | Page II PEST Analysis Economic Environment According to economists, the economic environment is the entire economic factors such as employment, income, inflation; interest rates, productivity, and wealth affect the buying behavior of consumers and the organization Overall, Vietnam’s economy in 2013 is growing stable Production growth and the positive changes going on in the last year, however, economic growth is still low Stable macroeconomic Environment stability: The inflation index is remained stable The consumer price index (CPI) is slowed down in November, at 0.34 % compared to October, up 5.5 % compared with 12/ 2012 increased 5.78 % compared to the same period in 2012 Thus, inflation in 11/ 2013 is slow at the second lowest since 2003 back here (after 2009) Interest rates have fallen steadily, stabilizing the exchange rate, balance of payments improved Ceiling deposit interest rate has been lowered from 14 % to 12 % interest rate credit fell from a year earlier, this trend is being pushed imaginative direction and flexibility of market fluctuations and take know of inflation This is an opportunity for companies to access concessional loans of banks, maintain and expand production The infrastructure of the economy as well as factors is affecting the purchasing power of the market If poor infrastructure increases the costs of production and consumption of products, product price increases, which will reduce the products competitiveness in the market Once the service distribution and promotion has been slow due to the impact on markets of infrastructure will make the product difficult to access or slow access to the company's products Sector Environment Due to the slowing economy in most developing countries, so the situation is declining export coffee Coffee exports of Vietnam in 2013 reached 1.3 million tons with an export turnover reached $ 2.7 billion, down 24.8 % in volume and 25.9 % in value If compared with the previous year, 2013 was the year that coffee industry has been a significant decline in export volume and export value | Page Review within five years, exports of Vietnam's coffee growing growth in the first years (from 2009 to 2012) with an average growth rate of 17.7 % / year This suggests that the main market imported goods is increasingly popular coffee Vietnam and the number of export markets in coffee growing expanded (2008, coffee exports to Vietnam 74 market, by the end of 2013 had reached 86 markets) However, the world economic situation difficult , consumer demand for this item in the import market is significantly reduced due to the economic downturn , natural disasters diseases ( like rain ice , water shortage , rust ) that seriously affects the productivity and quality of coffee products leading to the country's coffee exports in 2013 we both volume decline , both in terms of metal value Political Environment Currently, Vietnam's political stability is considered This is a very basic element to attract foreign investment and is highly appreciated Survey locations with the most attractive investment investors Japan by the Trade Promotion Organization of Japan (JETRO) done this clearly acknowledged And the factors attractiveness of this business is due to political stability Policy innovation, opening with political stability, a safe living environment, security is the underlying cause that amount of capital foreign direct investment into Vietnam In November 2013, this capital gain of $ 10 billion, an increase of 9.9 % compared to the same period last year Export turnover increased by 24.5 % in 11 months, a growth rate much higher growth rate under high goals and many times the GDP growth rate Unstable political situation in Vietnam has decisive significance in the economic development, employment income for workers, increasing consumer demand of society This also impact on the creation and implementation of the strategies the Vietnamese enterprises Social Environment Vietnam's social strides bass levels on human index In addition, information systems and communications to people are very good Therefore Trung Nguyen needs more conditions to reach customers Technology Environment 10 | Page These factors create opportunities and challenges coexist forcing businesses to learn skills to make marketing strategies As one of the inputs of the production process, so this is an important factor to decide the production of effective corporate structure or not So that also affect the marketing activities of the Central Highlands are using technological factors to promote the sale of products on the market Trung Nguyen has applied the new achievements of the equipment and machinery to produce the product has quality efficiency of both facilities On the other hand the impact of science and technology to the advertisements and stitched level communication about the product Science has developed to meet the demand for consumer products in both quality and quantity Science and technology also creates new manufacturing resources effectively to help businesses reduce production time and improve production efficiency So the challenge is constantly changing production technology With regard to the conduct of scientific research and the application of scientific and technological progress , which is the basis to find useful ways of processing milk suit different consumer tastes This is also one of the challenges learn to market faster through the channel advice on science and technology policy III Strategy and Implementation Plan Overall, Trung Nguyen is trying to diversify its products to meet the needs of enjoying coffee of all kinds of customers with emphasis on instant coffee and coffee export Instant coffee: Trung Nguyen will have many products and different prices to meet the tastes of all classes Instant coffee will be distributed at the department stores, supermarkets Trung Nguyen will also link with one large distribution company to distribute products efficiently Instant coffee products will be distributed in the city before they are available in countryside Real research shows that consumers enjoyed kind of Cappuccino instant coffee of Trung Nguyen According to the survey of over 1000 customers, it shows very positive reaction results This kind of coffee had attractive, very gently scent, in a line with the people and is mainstream product Hence, Trung Nguyen hope in the long and medium term, instant coffee of Trung Nguyen will account for 35% instant coffee market share Instant coffee of Trung 11 | Page Nguyen desires to achieve the purpose that is to become the favorite products in this market Coffee shops: This product confirms Trung Nguyen coffee brand, and thus it only focuses on customers with average income or more Trung Nguyen coffee shops will have different prices with product lines such as:  Common products: including products as vitality coffee, aspirations coffee, conquest coffee  Medium products: including products as Passion coffee filter coffee, roasted coffee seeds…  Advanced products: including products as Diamond Collection café, Legendee café, Classic Blend café … Trung Nguyen coffee shops have youthful, luxury, warm style to serve the young that like coffee, middle and upper class Trung Nguyen not only shows customers how to enjoy coffee but also gives information about coffee types, effects and practice to make the most delicious coffee Contents are as follows:  Trung Nguyen will introduce the healthy benefits of drinking coffee: Coffee seeds contain antioxidant minerals; using coffee in the morning is effective in increasing the metabolism, helps burn calories; coffee is also good for cardiovascular system…  Making the coffee at Trung Nguyen café shop raises the curiosity, inspiration and creates its own culture of coffee Those actions will act on specific strategies of Trung Nguyen coffee is a supplier of high-quality coffees Café will not only products alone but also has its own value Analysis shows that the company's strategy has always been concretized through vision and mission So, I would like to conclude by the company's strategic vision statement and mission of the company: Vision: To become a conglomerate promoted the rise of Vietnam’s economy, maintaining the autonomy of national economic and inspire, demonstrate a desire to explore the Great and conquer Vietnam 12 | Page Mission: Build leading brands by bringing coffee to enjoy creative inspiration and pride in bold style Trung Nguyen Vietnamese culture 13 | Page REFERENCE Strategy and development program, Chapter 12, Marketing Management, Philip kotler, Custom Edition for University of Phoenix, Upper Saddle River, New Jersey 07458 Main impact of coffee, March 2013, http://www.vietrade.gov.vn/kien-thuc-kinhdoanh/109-chin-lc-tham-nhp-th-trng.html Export status of Vietnam coffee in 2013, 07/03/2014 http://www.moit.gov.vn/vn/tin-tuc/2862/tinh-hinh-xuat-khau-ca-phe-cua-vietnam-trong-nam-2013.aspx Trung Nguyen and distribution system in Vietnam, 09 February 2006 http://vietbao.vn/Kinh-te/Trung-Nguyen-voi-du-an-mang-phan-phoi-lon-nhatVN/65043679/87/ Overview of Vietnam coffee, 22.3.13 http://www.marketingnongnghiep.com/2013/03/tong-quan-nganh-ca-phe-vietnam.html 14 | Page ... of export revenues of Trung Nguyen It is founded that the maintenance and development of traditional markets and new markets is vital for development of Trung Nguyen coffee Trung Nguyen's strategy... mainstream product Hence, Trung Nguyen hope in the long and medium term, instant coffee of Trung Nguyen will account for 35% instant coffee market share Instant coffee of Trung 11 | Page Nguyen... by giving the message and positioning “it is true with Trung Nguyen" This statement is confirmed quality is the | Page leading factor that Trung Nguyen has always pursued by the coffee products