Why Starbucks Will Be Successful in Vietnam

The first Starbucks soon to open in Vietnam got worldwide attention this week, including a report from CNN that called Vietnam “a nation that serves up some of the globe’s best coffee.”  Actually, Vietnam coffee isn’t very good, and neither is Starbucks — which should help consummate the marriage.

True coffee lovers tend to view the success of Starbucks as having less to do with coffee than its marketing, ambiance, and recipes for putting things in coffee that make it taste good.  Before the arrival of Starbucks, that happens to be the formula in Vietnam, where the coffee itself is so strong and bitter that consumers typically add it like syrup to a glass of condensed milk and ice.

Wall Street meets Vietnam: A bull in elephant country

Wall Street meets Vietnam: A bull in elephant country

It would be impossible for a company as large as Starbucks to provide highest quality coffee because Starbucks — like McDonald’s with french fries — is compelled to make its coffee taste the same whether you order it in Moscow or in San Francisco.  There aren’t enough good Arabica coffee beans in the world to do that, so Starbucks over-roasts mediocre beans to make its coffee  taste the same everywhere.  Like the old Holiday Inns, the best surprise is no surprise; Starbucks customers can count on their next cup of Starbucks to taste the same as the last one.

Consistency will be a big deal in Vietnam, where you never know what else they’re going to put in your coffee — fish sauce? roasted corn? chicken fat?

Vietnamese coffee farmers at home in Dak Lak Province

Vietnamese coffee farmers at home in Dak Lak Province, Vietnam

In addition, Starbucks will have at least four other advantages in Vietnam.   In the first place, Vietnamese consumers love American products — for good reason:  Americans have earned a reputation for quality, and Starbucks is a top brand.

Second, there has been an explosive growth of coffee shops catering to Vietnam’s ambitious and energetic youth.  Third, even though it is culturally still a tea-drinking country like China, Vietnam now is one of the world’s biggest growers and exporters of coffee.

And finally, despite its colossal coffee crop, Vietnam reports very little per capita coffee consumption compared to Europe and the Americas.  There’s a lot of room to grow in a country of nearly 100 million potential Starbucks customers.

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