Think of coffee and you will probably think of Brazil, Colombia, or

maybe Ethiopia. But the world's second largest exporter today is Vietnam.
How did its market share jump from 0.1% to 20% in just 30 years, and how
has this rapid change affected the country?
When the Vietnam war ended in 1975 the country was on its knees, and
economic policies copied from the Soviet union did nothing to help.
Collectivising agriculture proved to be a disaster, so in 1986 the Communist
Party carried out a U-turn - placing a big bet, at the same time, on coffee.
Coffee production then grew by 20%-30% every year in the 1990s. The
industry now employs about 2.6 million people, with beans grown on half a
million smallholdings of two to three acres each.
This has helped transform the Vietnamese economy. In 1994 some 60% of
Vietnamese lived under the poverty line, now less than 10% do.
1. Overview information of coffee industry
Vietnam locates in the tropical belt of Northern Hemisphere, where the
climate is suitable for developing coffee trees, and brings Vietnamese
coffee a very special flavour. Especially in the south, near the equator, hot and
wet tropical climate is suitable for Robusta coffee tree, gathering in Tay
Nguyen area of which Dac Lac accounts for over 50% of national
output. The north with cold winter is suitable for coffee Arabica. Coffee
C.Canephora Robusta of Vietnam, which is famous on the world,is a product
originating from Robusta species having been selected for decades. Since
they are produced concentratedly in good soil with suitable climate high
intensive cultivation, especially most of them are planted at altitude of
400 m and over, big amplitude of temperature between day and night, so they
not only have high productivity but also good taste fancied by many countries
on the world. Vietnamese coffee has been developing fast. The whole nation
had 13.000 ha of coffee with the output of over 6.000 tons in 1975, and
now approximatedly 500.000 ha with the output of over 700.000 tons. Among
Vietnamese agricultural product commodities, coffee plays a quite important
role, every year coffee brings export turn-over of over 500 million US dollars,
ranking the second after rice.
2. Domestic and foreign famous coffee brands
Vietnamese coffee are widely known by domestic and foreign
consumers thanks to best brands including Vinacafe, Trung Nguyen, Thu Ha,
Bao Loc, Buon Ma Thuot, etc. Thu Ha Coffee is the brand proceeded by
former Dinh Dien brand which existed before 1975. Other best known brands
are also finding ways to improve its coffee quality by applying new advanced
technologies.These brands owners have marketed instant coffee made by
Moka and Robusta or coffee products with flower favors, etc.
3. Export situation
3.1. Yield and turnover of export
Viet Nam was expected to ship around 15 million tons of coffee abroad and
earn US$ 3 billion in export revenue this year, according to the Viet Nam
Coffee And Cocoa Association (Vicofa).
In the first quarter of 2014, nearly 550,000 tons of coffee was exported.So
far, Vietnamese coffee was available in over 80 countries and territories of
which Germany held the largest market share with around 14%; followed by
the US with 11%.According to Vicofa, coffee output was forecast to be
reduced this year due to severe droughts while coffee demand was projected
to surge and coffee prices are rising.Viet Nam is the world's largest producer
of robusta coffee beans.
Viet Nam is the second largest coffee bean exporter but the No 1 exporter of
robusta coffee. According to the National Customs Bureau, in February 2014,
over 184,000 tonnes of coffee beans were exported from Viet Nam, a year-on-
year increase of 83.4 per cent. In the first five months of 2013-2014, Viet Nam
shipped 604,200 tonnes of coffee beans, down by 15 per cent compared with
the previous coffee crop.
Vietnam earned US$1.96 billion from coffee exports in the first five months
of 2014, up 29% over the same period of 2013, the Ministry of Agriculture
and Rural Development reported.
Between January and May, Vietnams coffee shipments were estimated at
966,000 tonnes, a rise of 36.7% compared with the quantity exported during
the first five months of 2013.
In May alone, Vietnam shipped 154,000 tonnes of coffee beans, bringing
revenue of US$336 million. In recent years, the Vietnamese coffee industry
has developed vigorously. In 2009, Vietnam exported 1.2 million tons earning
revenue of 1.7 billion US$. Vietnam's crop of 2008-2009 produced exports of
16 million 60-kilogram bags and 977 metric tons of green coffee beans
reaping 1.5 billion US$ in revenue.Vietnam is exporting coffee beans to 90
countries, with 16 of them accounting for 79 percent of total Vietnamese
coffee bean exports.
3.2. Global Trade
Coffee is the worlds most widely traded tropical agricultural commodity.
From 2006 to 2010, world coffee consumption increased by 9% from
approximately 5.7 million tonnes to 6.2 million tonnes. World coffee exports
grew by 11% during this period. The USA and Germany were the largest
importers of green coffee beans, together consuming approximately 38% of
global coffee imports. Italy, Japan and Belgium were the other large importers.
The two largest producers of coffee Brazil and Vietnam are also the largest
sellers of coffee. Exports from these two countries alone make up
approximately 46% of total exports. Indonesia, Colombia and Germany were
the other large importers. In 2010, Papua New Guinea exported 58,810 tonnes.
Brazil and Viet Nam are expected to maintain high volumes of coffee exports
in March 2014 as coffee prices remain high in the world market
Germany and the US were the two largest consumers of Vietnamese coffee,
accounting for 14.08% and 9.62% of Vietnams total coffee exports during the
five-month period.The average export price during the period was US$2,001
per tonne. The agriculture ministry has forecast that Vietnams coffee yield
will reach 1.75 million tonnes in the 2014-2015 crop.
Coffee is one of Vietnam's most important agricultural exports. Vietnam is
highly competitive as a coffee producer because of ideal climate and
environmental conditions, low production costs, and yields among the highest
in the world.
Vietnamese coffee has been developing fast. To illustrate: In 1975 the
country had 13,000 ha of coffee producing 6,000 tons. Now 500,000 ha is in
coffee, with output exceeding 1,000,000 tons.

Subsequent to 2000 Vietnam became the second largest coffee exporter in the
world, following only Brazil. Vietnam exports 700 to 900 thousand tons
annually, 14% of world market share.

Two big markets in Asia - Japan and Korea - are also important customers of
Vietnam. The permanent markets among Southeast Asian nations are the
Philippines, Malaysia, and recently, Indonesia.
Germany is Vietnam's biggest customer. In 2009, Germany imported 136,248
tons worth 202 million US$. For the first seven months of 2010, this Teutonic
nation imported 88,447 tons of coffee valued at 125 million US$.
The United States is the second largest buyer of Vietnam's green coffee (after
Germany), and accounted for 16 percent of Vietnam's total green coffee
exports. Vietnam also exported a small amount of both ground roast and 3-in-
1 coffee mixes to the United States, value exceeding $193 million.
Vietnam's sales aren't limited to major markets in Europe and the US. It has a
diverse and sustainable market, exporting to Latin America, the Mid-East,
Africa, and ASEAN countries.
Within 2005-2006 period, Vietnam exported Kernel coffee into 71 countries
in the regions. Export market has been expanded not only in Europe and
America, but also Middle East, Africa, some countries in ASEAN Association
and Middle America. Top ten countries import Vietnam coffee are German,
USA, Spain, Italy, Belgium, Poland, France, Korea, Britain, and Japan, which
import 3/4 exported coffee amount of Vietnam.
4. Export opportunity and strength
Supply source of coffee is big and regularly distributed within the year.
Vietnam is now ranking second among the coffee producing countries. The
supply to the market is considerable. Vietnam can distribute about 600,000
700,000 tons of coffee each year.
Natural condition: Vietnam has many advantages; the soil and climate are
suitable for the growth of coffee. Thanks to natural condition, Dak Lak has
developed coffee with remarkable rate. Before 1975, Dak Lak had about
12000 hectares of coffee however this area has increased to 174000
hectares in the whole province in earlier 2007. At the present, area for
coffee growing is 500,000 hectares all over the country.
Abundant workforces: Agricultural workforce in Vietnam is crowding,
and Vietnam farmers are industrious and experienced in coffee cultivation and
accessible to advanced production and processing technology in the world.
International cooperation opportunities: Some coffee exporters such as
Indonesia and Malaysia have offered to cooperate with Vietnam to
bring benefit to coffee producers and export enterprises.
Coffee Cultural Week in 2007 is an activity following Coffee Festival held in
Buon Me Thuot in 2005 and an intermediate step to prepare for Coffee
Year with Coffee Festival hold in Buon Ma Thuot by 2008. The Coffee
Cultrual Week is organized with compact images representing information on
Vietnam coffee sector. There will be more than 30 inland famous coffee brand
names and several outland enterprises at the fair. This will create
opportunity to promote Vietnam coffe enterprises to foreign countries and to
facilitate the cooperation between Vietnam and developed countries to boost
the stable development of coffee sector.

5. Orientation and policies for developing coffee export of Viet Nam
Vietnam has adjusted its orientation and strategy in following contents:
Moving structure of trees, identifying strategic target for the branch.
Reducing production price and enhancing business effect.
Manufacturing and providing many kinds of goods for market except
multiplication coffee in order to meet requirements of consumers.
Manufacturing goods with high quality such as organic coffee, special coffee
etc.
Innovating purchase relationship, expanding market for Vietnam coffee trees,
interest towards local market.
Reducing coffee area, only retaining suitable areas based on research
inspection process and planning for coffee trees.
Having plans and directions of changing structure of tree growth for
unsuitable coffee areas to suitable other trees, which brings
economic and environement effetiveness.
Constructing mechanism of suitable coffee gender; apart from typical coffee,
it also needs to develop other coffees such as tea cioffee, jackfruit
coffee etc
Strengthening construction of infrastructure, innovation of
technological equipments, establishing price policies in product purchase
with the principle of high quality, high price bargain, low price bargain
for low quality, evenly without purchase.
Constructing organization system to guarantee for brand name to appear in
local and foreign market.
Expanding inds of coffees not only multiplication coffee but also
improvement of soluble coffee etc.
Strengthening, synchronously dealing with plan of implementation,
particularly in organization in order to create firm coffee production.
Expanding market for Vietnam coffee trees in foreign countries,
promoting coffee consumption at local market.
Development of Arabica coffee trees at places which have enough self-
intensive farming conditions, area reaches about 1.000 ha; output from
3.000 - 4.000 tons goods and private brand name. Constructing soluble
coffee processing plant with capacity of 500 tons/year to provide for local
market and export.

Conclusion
Achieving sustainable growth across the coffee industry requires timely
and effective action from the government, related institutions and all
stakeholders in the value chain. This means there will need to be better
integration and long-term sustainable relationships not only between farmers
and exporters, but also between value chain actors and business support
organisations. This can only be achieved by improving the capacity and
capabilities of coffee farmers, either through organising farmers horizontally
or by increasing the formal relationships between farmers and processors,
which should encourage more processors to invest in coffee farms.
While the role of government policies is to confront challenging issues
and provide overall leadership for the sector, higher competition in the global
coffee market means Hanoi will need to renew its focus on forging stronger
links between actors in the value chain and promoting the further investment
needed to leverage the production of sustainably produced coffee in order to
secure a sound future for the industry.Demand for coffee is expected to grow
driven by consumption of growing middle classes in developing countries as
well as growing niche markets such as certified organic and certified Fair
Trade coffee. Traditionally certified coffee was promoted in specialized,
small-scale trade channels. However, demand for certified coffee products is
becoming more mainstream as it attracted the attention of large roasters and
retailers.