Vietnam is the largest Robusta coffee exporter in the world but mainly in raw form, which does not bring high added value. Reading Time: 5 minutes Mention Vietnam to anyone, and the conversation might conjure up a few things – the beautiful scenery, the tragic war, the chaotic, thrilling big cities. It should not be treated as authoritative or accurate when considering investments or other financial products. Presently, Vietnam forms strong production capacity of coffee bean rough processing and deep processing. Free resources to assist you with your university studies! Even though price of coffee is change due to price change, coffee it self will not decrease the quantity of coffee supply. Export structure of coffee beans by country and territory, 2017/2018e Export structure of roasted ground coffee by … Combining primary and secondary techniques, researchers use data sources of different levels starting from international expert view on the market to the data of local authorities and associations. But the world's second largest exporter today is Vietnam. Chapter One: Coffee Chain Definition. This would not be good news for farmers but that is great news for other exporting countries in which have Viet Nam. For the Arabica coffee, it increases more than two times than the first days in October, 2013. Coffee or ca phe in Vietnamese was introduced by the French colonists and has quickly grown into a local habit and major export. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. Discover the latest market trends and uncover sources of future market growth for the Coffee industry in Vietnam with research from Euromonitor's team of in-country analysts. Beside the growth of production, Vietnamâs coffee culture is also well known with the unique brewing style. The global coffee market is projected to grow at a CAGR of 4.22% during the forecast period (2020-2025). If you need assistance with writing your essay, our professional essay writing service is here to help! Meanwhile, demand for Arabica products rose only 1.9% in 2012, after rising 4.1% in 2011 and 5.4% in 2010. More important, coffee is the daily need of Vietnamese people, because they need coffee to make them stay awake and gain energy to focus on work. Think of coffee and you will probably think of Brazil, Colombia, or maybe Ethiopia. In the report our group learn about four facts: First, the Vietnamese coffee market structure is Oligopoly, which has a few firms can enter and produce similar product. Fig.1: Short run of coffeeâs price elasticity of supply. Because the changes in the supply curve above, the new equilibrium point will move to the new point which is from E1 to E2. ... Vinacafe Bien Hoa, also a famous brand in the instant coffee market, which now holds 40 percent of the instant-coffee market share, has been quiet for a long time after the failure of its “real coffee” marketing campaign. Study for free with our range of university lectures! In addition, it constitutes more than 96% of Vietnam’s coffee crops. Reference this, Group members: Huynh Anh Tin, Pham Le Bao Tran, Pham Le Thien Huong. The economy of Vietnam is a socialist-oriented market economy, which is the 36th-largest in the world as measured by nominal gross domestic product (GDP) and 23rd-largest in the world as measured by purchasing power parity (PPP). But as someone who has spent much time traveling through Vietnam, there’s one thing for me that stands out as synonymous with the country, and that’s the burgeoning coffee culture that has taken hold. Vietnam has many coffee distributors, so there will be many different prices of coffee. Disclaimer: This work has been submitted by a university student. *You can also browse our support articles here >, http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-revision-on-price-elasticity-of-supply. It proved that the demand of coffee in Viet Nam is very high and it also attracted some of big coffee distributor come to Viet Nam such as Starbucks and Coffee Bean and Tea Leaf. Coffee Culture is increasing can also make consumers demand more coffee than before. 17th Oct 2017 Vietnam - Coffee sector report (Vietnamese) Abstract. Maja, W.,2013, âVietnam Coffee Production is Blooming, as is the Coffee Cultureâ, Tea & Coffee Trade Journal, p.p:32-33. Vietnam coffee market 3.1 Types of coffee produced in Vietnam Second, The elasticity of demand and supply are considered inelastic, because of price cannot change the supply and demand of coffee of Vietnamese people. It also relates to the forecasting and navigation, which offer a number of solutions for the period until 2020. Until 2024, the coffee market in Vietnam is forecast to reach 1.21 billion USD (in retail prices), thus increasing at a CAGR of 9.86% per annum for the period 2019-2024. Sloman, J., Garrett, D.,2013, âEssential of Economicsâ, Pearson, p.p: 94. The designed rough processing capacity is 1.5 million tons/year, coffee bean baking and coffee powder processing capacity is 52,000 tons/year and instant coffee production capacity is … And when reporter asked about why donât you sale the real coffee then the owner of factory just give only one reason that about the price, the real coffe was cost over 200.000 VNÃÂ but fake coffee only cost over 100.000 to 120.000 to produce and sales. Here are the 7 reasonsâ, Authority Nutrition. The preparation process, as well as the blend of beans, helps give Vietnamese coffee its particular style. Base on the Hallam research, Vietnam coffee production is a strong producer, which can expand from 60 578 hectares to 463 450 hectares and coffee bean output increased from 96 000 tones to 800 000 tones, making Viet Nam the largest Robusta producer and second largest coffee producer in the world. Accessed: March 31,2014, from: http://www.ipsosconsulting.com/pdf/Ipsos-Research-Note-Vietnam-Coffee.pdf`. The report will help you to find prospective partners and suppliers. Gunnars, K., Feb 20,2013,âWhy Is Coffee Good For You? Summary the event: in a role of apprentice, somehow the reporter was got into a factory which is producing fake coffee in Hoc Mon . And it takes a lot of time to find other substitute or to stop drinking coffee. Because coffee is consisted of caffeine, so some of customers cannot quit coffee. Economics We've received widespread press coverage since 2003, Your UKEssays purchase is secure and we're rated 4.4/5 on reviews.co.uk. And young people also drink coffee to prove that they are already grow up. | http://www.thesaigontimes.vn/Home/nongsan/tintucthitruong/112433/Gia-ca-phe-tang-Cau-hoi-nup-sau-tin-thoi-tiet.html. Coffee only grows in high land area of Vietnam, so the investors have to buy large land and burn forest. Reduced labor input through makes the coffee are less care, which lowered the quality of coffee and also create a pressure on price. The coffee type mainly grown in Vietnam is Robusta, a relatively low quality coffee in comparison to Arabia. base on the survey of director of Thu Ha company, Thu Ha company produced 100 ton per year but only 30% of product was exported and the rest was consumed in domestic. Hallam, D., âFalling Commodity Price And Industry Responses: Some Lessons From The International Coffee Crisisâ, Food and Agriculture Organization of the United Nation. Post sees mild growth in the domestic coffee market because the Vietnamese coffee market needs more value-added coffee products to expand. The production of coffee is expensive, it include land, machine, labor, and material. ; A coffee 'boom' in consuming countries with rising sales and profits for coffee retailers and roasters (Sloman, Garrett, 2013) When people have to make choice they have to lose the other alternative that involves. Detailed analysis provided in the report will assist and strengthen your companyâs decision-making processes. Competition In Vietnam's Coffee Market is Hotter Than Ever. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. The gap from P1 to P2 will much bigger than other situations. More over, we can also learn what is the position of the product in the world market. Total robusta consumption in the United States increased by 7% in 2012, after rising 3.9% in 2011 and 3.6% in 2010 (according to StudyLogic). The top services exported by Vietnam in 2019 were Travel ($11.8B), Air transport ($2.36B), Sea transport ($831M), Miscellaneous business, professional, and technical services ($646M), and Financial services ($210M). A coffee crisis in producing countries with a trend towards lower prices, declining incomes and profits affecting millions of people in the world's poorest countries. 70 pages This is … The labor forces are the farmers, who have years of experience on growing coffee, are paid to grow the coffee to export over sea. Opportunity cost occurs in simple purchase to complex purchase. According to a report of Vietnam Trade Promotion Department, “Vietnamese coffee has relatively low quality due to bad processing and drying equipment and obsolete harvesting technology”. Coffee was introduced to Vietnam in the 1800’s, and throughout the French Colonial period, Arabica was actually grown on many French-owned plantations. This makes it an essential source for commercial quality coffee giants such as Nestlé (Nescafé), which own several factories in Vietnam. http://www2.hcmuaf.edu.vn/contents.php?ids=8334&ur=hoainam. Vietnam coffee market structure is oligopoly, because there are a few firms that have the ability to enter this industry, and with many similar product taste (Sloman, Garratt, 2013). Coffee is a brewed drink prepared from roasted coffee beans (which are the seeds of berries from the Coffea plant). Money: The first alternative that people have to pay in order to get their coffee. Coffee price will also change because of the world market price change everyday. Search this site: Humanities. Supply responses to falling prices have also been slowed in some cases by national efforts to assist producers, for example through price supports and debt relief. It means that this market can consume 10% of the amount harvested each year which is 700,000 -800,000 tons. In this case, with the impact of the drought, it makes the selling price increase from P1 to P2 because the productivity is less than before. According to this event, the reason for increasing selling price for coffee also concern about the speculation of firms and other organizations. The report will help the management of your business environment. The weather can easily affect the productivity of coffee. Most of Vietnam coffees are export to countries such as: England, United States, Japan, Korean, Hong Kong, Italy, etc. In order to make the Vietnamâs coffee become acknowledge for both quantity and quality, finding solution and make changes in production are required to boost the production. Purchasing coffee also occur opportunity cost, the consumer may decide the good that they want, so they can satisfied their simple needs. This result the increase of income of employment and decline the hunger rate. Meanwhile, according to the World Coffee Association, Vietnam’s domestic consumption is now nearly 3.6% which is the lowest in the group of coffee producers. Robusta coffee is more bitter and less aromatic than Arabica coffee and is used very often for instant coffees and low-quality blends. However, Drinking coffe is a Vietnameseâs culture for years so even if price change the customers are still buying the coffee. Coffee makes people focus, smarter, gain energy, release stress (Gunnars, 2013) . Last, analyzing the demand and supply of Vietnamese coffee. Vietnam has experienced three sets of direct impacts as a result of the coffee crisis: Some regional economic shocks, socio-economic impacts in the primary coffee-producing regions that have resulted in the partial dismantling of … All work is written to order. Vietnam’s market may consume 70,000 tons per year. Accessed: April 1, 2014, from: http://www.tutor2u.net/blog/index.php/economics/comments/unit-1-micro-revision-on-price-elasticity-of-supply. After analyzing the impact of the event to the supply curve, coffee can easily be affected by the outside factors such as: environment, weather and people. The coffees mentioned in the thesis research are green coffee, roasted coffee (The popularity of coffee More over, there are also some brands of coffee product such as: Trung Nguyen, Y 5, Vina, etc. Rise of other culture coffee makes consumer curious and want to taste the different coffee style. Soluble coffee is enjoying light growth because of the increasing number of western expatriates living in the big cities in Vietnam. However, price of Robusta coffee has fallen because of the Arabica coffee had also fallen. Of course, the supply curve will move to the left, from S1 to S2 in the curve. In order to get a cup of coffee, customers have to sacrifice some of the alternatives to get the coffee they demand. The report includes detailed analyses of coffee market in Vietnam, information on major producers, distributing companies, and buyers. VAT Registration No: 842417633. Looking for a flexible role? Coffee market is analyzed in depth by concentrating on domestic production and consumption. Opportunity cost is the alternatives consumers or producers have to give up when deciding purchasing or producing. The report aim to learn and understand the characteristic of the strongest product of Vietnam, which is coffee. Third, the opportunity costs in order to buy a cup of coffee. The eighth chapter will be dedicated to build-ing the cost structure and price model of importing coffee beans from Vietnam to Nor-dic market, specifically Sweden, Finland, and Denmark. But Vietnam's coffee is of high quality and planted on mountainous areas because of "a large range of temperature between day and night and basaltic soil" (Sinh, Sutcliffe, and Van, 1999, p.68). Sloman, J., Garrett, D.,2013, âEssential of Economicsâ , Pearson, p.p: 7. After drew Demand curve, we can see how the scandal of produce coffee from soya bean mixed with arsenical affected to the demand of coffee. Supply responses to price incentives are not balanced: periods of rising prices stimulate new plantings and other fixed asset investments, which does not change when price fall, it can not be replaced when it reach to the end of production. It makes the supplier decrease the cost to attract the consumers, at the curve you can see that P1 move to P2 and it makes a new equilibrium from E1 to E2, and besides that the quantity of coffee also move backward from Q1 to Q2, http://www.thanhnien.com.vn/pages/20120718/hai-hung-ca-phe-deu-ky-2-dau-nanh-+-15-hoa-chat-=-ca-phe-18-7-2012.aspx. The United States continues to be a major export market for Vietnam's coffee bean exporters. Due to coffee planting become popular in Vietnam, Vietnam coffee production surpass Colombia to become the second largest coffee producers. The event mention about the increase in price of coffee not only in Viet Nam and in the world because that is affected by the drought in Brazil. In some cases, the price of coffee will increase slightly because the demand for coffee is elastic but in this case, many factors combine together from the impact from the weather and the speculation of people, which lead to the big increase for selling price of coffee. Do you have a 2:1 degree or higher? 2.2 Vietnam Coffee Chain Market Overview | In 2019, Vietnam exported $16.6B worth of services. The Coffee Paradox. ( Hallam. Vietnam's coffee industry is expected to grow strongly in the coming years as the population continues to expand at a rate of about one million people a year and the country and the tastes of its people become more sophisticated. The convenient forms of coffee, like coffee pods and capsules and RTD coffee are becoming popular among masses (especially in North America and Western Europe) to prepare good coffee in the comfort of home, in less time. Accessed: April 2, 2014, from: http://authoritynutrition.com/why-is-coffee-good-for-you/. By Product Type. 4 Export of Coffee Beans in Vietnam 5 Market Competition in Coffee Industry in Vietnam 6 Analysis on Major Domestic Coffee Brands in Vietnam 7 Prospect of Vietnamese Coffee … This will be achieved through the reportâs unique analysis by providing detailed information about the internal and external factors that affect the market. Vietnam PESTEL gives an overview of diverse macro-environmental factors (political, economic, sociocultural, technological, environmental and legal) and analyzes what influence they exert on a business. Vietnam coffee is still very potential if coffee quality is improved. Vietnam coffee market structure: Vietnam coffee market structure is oligopoly, because there are a few firms that have the ability to enter this industry, and with many similar product taste (Sloman, Garratt, 2013). Chapter Two: Vietnam Coffee Chain Market Major Player Share and Market Overview 2.1 Vietnam Major Player Coffee Chain Business Revenue. The scope of the Vietnam coffee market is segmented by product type (Whole Bean, Ground Coffee and Instant Coffee) and by Distribution Channels, On-trade and Off-trade (Supermarket/Hypermarket, Speciality stores, Online retailing and Others). We're here to answer any questions you have about our services. Registered Data Controller No: Z1821391. When consumers decide to get a cup of coffee, they have to know the price of coffee that they will buy. In the report, we learn about the market structure, the demand, the supply of coffee, the elasticity of demand and elasticity of supply. Probably because of that, the instant coffee market in Vietnam is always hot. However, the consumers give up the alternative of saving money, spending on other substitute, or even invest on a business. January 2020 The growth of Vietnam coffee productivity has entered the world market and became the second largest coffee producer, after Brazil. After drawing the curve of supply, we can see how the drought in Brazil affect the supply for coffee. Architecture and Environmental Design; Art History Section 11: 500 USD——Conclusion. With regard to market fundamentals, total coffee production increased from 133.99 million bags in 2010/11 to approximately 151.6 million bags in 2016/17. When the selling price increase, that is also a main reason why the number of people wants to buy less than before, Q1 will move backward to Q2 as well. Vietnam is currently importing a small amount of fresh coffee beans and roasted coffee beans, brewed coffee from China, Laos, Indonesia, Brazil, America … In Q1/2019, it was estimated that the coffee exports declined by 13.3% in volume and 21.9% in value compared to the same period last year . Vietnam: Revenue in the Coffee segment is projected to reach US$4,845m in 2020. Coffee drinking in western cafes has becomes the vogue across Vietnam. The plantations are mainly located in the Central Highlands regions of Vietnam, such as Gia Lai, Lam Dong, Buon Me Thuot, Dak Lak, and Kontum. Against this background, the coffee price elasticity of supply is very low, which is only 0.13 in short run and 0.24 in the long run . This is not an example of the work produced by our Essay Writing Service. Abbreviations Executive Summary 1. Business environment 1.1 Macroeconomic situation 1.2 Legal framework 2. Readers will gain an unrivalled in-depth knowledge about the market. The production of coffee is expensive, it include land, machine, labor, and material. Tran, T., July, 2013 âVietnam Coffeeâs Industryâ, Ipos. Accessed: March 31, 2013, from: http://www.fao.org/docrep/006/y5117e/y5117e03.htm#TopOfPage. The market is expected to grow annually by 10.4% (CAGR 2020-2025). In the short-term adjustments can be made to reduce inputs including labor, but creating unemployment and stimulating migration. 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