Trung Nguyen Coffee & market entry strategy USA

A Introduction
1 Company
- Trung Nguyen is a Vietnamese business group involved in the production, processing and distribution of
coffee, was founded by chairman Dang Le Nguyen Vu on 16/06/1996 at Buon Ma Thuot city.
- In 2010, Trung Nguyen Coffee products were exported to over 60 countries around the world, especially
the U.S, Canada, Russia, England, Germany, Japan, China, ASEAN, etc.
- In 2012, Trung Nguyen Coffee was the favourite coffee brand in Vit Nam. There are 11/17 million
households in Vietnam use Trung Nguyen products.
- Today, Trung Nguyen still maintain its position is the largest and domestic coffee brand within Vietnam.
2 Products
- Fresh coffee
- G7 instant coffee: G7 3in1, G7 2in1, G7 Strong X2, Pure Black, Cappuccino, Passiona, White Coffee.
- Roasted and ground coffee: Filter Coffee (1,2,3,4,5)
- Creative Coffee (1,2,3,4,5,8),
- Espresso, Blend (I, S, N, Premium Blend, Gourmet Blend, House Blend).
- Bean coffee
Trung Nguyen Coffee products use a variety of different coffee beans, including Robusta, Arabica, and
Excelsa.
3 Extend and research
- On 16/06/1996, chairman Dang Le Nguyen Vu established Trung Nguyen Coffee with the desire to
build a famous brand of coffee, put coffee flavors spread out all over the world. His capital was just
an old bike, but he was constantly trying to improve the quality of Trung Nguyen Coffee and gained a
very memorable achievement by beating international competitors in the domestic market in the
event voted blind product test on 23/11/2003, with product G7 coffee.
- Since then, Trung Nguyen hasn't hide ambition to expand overseas business markets by establishing
sales offices in Singapore as a stepping stone to penetrate the ASEAN market in 2008 and to
conquest of the world market. In 2010, Trung Nguyen Coffee exported products to over 60 countries
around the world. Among the countries importing Trung Nguyen product, the US market is coffee
consumption the world's largest, but American can not grow coffee, thus all in the US are imported
goods. That is an extremely favorable conditions for Trung Nguyen Coffee enter US market.
(research)
- With the target set is to conquer the US market one of the largest market and the world's most
demanding, Trung Nguyen used research directly market to learn about culture, consumer habits and
tastes of the American coffee. American coffee culture is take-away coffee. Consumers in USA favour
coffee Catimor belonging family coffee Arabica. 30% consumption of coffee in USA is Robusta from
Vietnam and Indonesia.
- Because the US market is very potential, there are many competitors with Trung Nguyen Coffee;
among them, Starbucks is the main competitor of Trung Nguyen Coffee in USA. Chairman Dang Le
Nguyen Vu has delved competitors to take Trung Nguyen advantage. Accord himself, dark roasted coffee

of Trung Nguyen cannot own bold coffee flavor like product G7 coffee of Trung Nguyen. This marked
difference can creat unique characteristic for Trung Nguyen coffee.
- The US market is extremely difficult with the strict regulations on tariffs, rules .... has caused many
obstacles, but Trung Nguyen was the first coffee company in Vietnam has used franchise in US market
and achieved some limited success.
4 Objective
-

In Vietnam, Trung Nguyen have three main objectives: prosperity, sustainability, and national
character
In US, bring Trung Nguyen coffee to the US market and compete with domestic coffee product
The company projects the coffee industry could provide 5 6 million jobs and grow to a
US$20 billion annual business over the next 15 years.

B Market analysis
1 SWOT to American
a) Strength
- Brand G7 coffee is very popular, be favoured by international politican.
- Trung Nguyen coffee pack (R&G) and G7 (instant) can be popularity because American coffee culture is
take-away coffee. Vietnamese and Asian people in American also favour Trung Nguyen because of
courtesy coffee culture. Thus, Trung Nguyen coffee products are easy to find in American supermarkets.
- Thanks to efforts of the distributors, Trung Nguyen received considerable support from partners.
Vietnamese coffee brand is exported indirectly via intermediary exporters. In the UK, the company
Dragon coffee, a web marketing company based in Cardiff England has undertaken significant
distribution.
- Trung Nguyen has affiliated with Dragon travel business, specializing in tourism and travel to Vietnam,
Laos, Cambodia, China... conducive to the promotion and advertisement for company.
- In Canada, H & O coffee company, the company specializes in sales of coffee products of Vietnam has
supported Trung Nguyen, helps customers in many parts of the world can order Trung Nguyen products
in their company website.
=> Trung Nguyen can reach potential consumers if it exports more coffee to US market.
b) Weakness
- The data shows that consumption of Trung Nguyen Coffee is very modest compared to the potential of
market. Trung Nguyen Coffee is mainly exported to the US in the form of raw materials deep. All
Vietnamese coffee brand in the United States accounted for about 10% to 15% in volume and 6% in
value. In particular, Trung Nguyen does not have a large market share to the annual export volume is
quite modest.
- In the US, Trung Nguyen not only fierce competition with Vietnamese coffee brand but also "deal" with
a lot of Americas coffee brand, when 70% consumption of Arabica coffee in USA is from Colombia,
Brazil, Mexico.
=> Trung Nguyen can overcome disadvantage if it exports more coffee to US market.
c) Opportunity

- The US market is coffee consumption the world's largest, but American can not grow coffee, thus all in
the US are imported goods. That is an extremely favorable conditions for Trung Nguyen Coffee enter US
market.
- The integration of the market economy, combined with the promotion of trade items between products,
along with the strategic development of the service sector, including the coffee space will provide an
opportunity for Trung Nguyen has opportunities to enrich and strengthen macro stature of the company,
confirmed its real value in the international arena.
- Vietnamese community in USA favours Trung Nguyen Coffee and starts coffee meeting trend.
=> Opportunity for Trung Nguyen to entry the US market is always available.
d) Threaten
- United States has the complex legal system complex and technical barriers to commerce.
- The biggest obstacles is that direct confrontation with giant Starbucks, when franchise let Trung Nguyen
take difficulty to ensure the management stores as good as Starbucks.
=> Trung Nguyen can promote business if it finds way to serve American consumer more convenient.
2 PESTLE principle in market analysis
- Political: United States do not levy import duties on green coffee but processed coffee (roasted, soluble
importing from Vietnam.
- Economic: United States is the most powerful economy in the world and continues to growth in recent
years. United States is a huge market with large demand for coffee.
- Social- culture: Culture and object style coffee consumption will be focused on the trend of the younger
generation. They enjoy green beverages and follow take-away coffee drinking culture.
- Technological: The trend of technology transfer in U.S.A takes place very fast and strong, requires
Trung Nguyen approach with new production technology: increasing quantity and quality of products,
decreasing the production expense
- Legal: American apply quotas to control the volume of coffee imports in a given time and antidumping
law for all exporters, including Trung Nguyen Coffee. Trung Nguyen must ensure that it does not violate
any laws and regulations.
- Environmental: Vietnam Coffee plays a large role in the US market and does not have to compete with
all the other countries that mainly compete with countries such as Indonesia, Brazil and some African
countries.
3 Industry Analysis
- Imported coffee demand in the USA is quite stable, about 1 million ton/year because coffee is drinks
indispensable in daily life of American. (km bng most popular drink..)
- Percentage of tax applied to imported coffee from Vietnam is quite low, about 0-8%.
- However, US market set the complex legal system and commerce barriers, require imported coffee is
clearly about origin, trustable quality
- 70% of consumption is Arabica coffee is imported from Colombia, Brazil, Mexico, other 30% is
Robusta importing from Vietnam and Indonesia. There is a good sign that Vietnam passes both Indonesia
and Mexico and becomes third coffee exporting countries. (3 bng cc nc sn xut cf ln, loi cf sn
xut cc nc, tng sn lng Arabica & Robusta ton TG)

Customer
- Customers drink coffee culture is take-away. Coffee drinkers in the United States can be found just
about anywhere you go. They also like to buy coffee for meeting with friends.
- Customers like special hot and cold coffee drinks like Frappucinos and White Chocolate Mocha. They
prefer coffeehouse chains of popular brand such as Starbucks and Dunkin' Donuts. In fact, many people
criticize the aggressive expansion of Starbucks and its impersonal coffee shops, but these coffeehouse
chains have a strong and loyal following.
- It seems that American favor Arabica coffee. (bng lng tiu th cf Arabica & Robusta ca M)
The two most important kinds of coffee plants are the Arabica and Robusta. Robusta has a more caffeine
than arabica, it is usually mixed with other coffee beans or used for instant coffee. Robusta is less costly
and preserves in U.S. environment better than Arabica coffee bean.
=> Vietnam accounts for nearly 30% of the global coffee trade value but turnover accounts is just over
10% of the total trade value of 35 billion US dollars of the world.
4 Competitors:
*Starbuck:
Starbucks is the worlds largest coffeehouse chain, operating over 20,000 locations worldwide. Since the
chains foundation in Seattle in 1971, Starbucks has been serving up hot and cold beverages (primarily
coffee) as well as snacks.
Strenght
-Quality, profitability and ethicality: Their products are of excellent quality, seemingly environmentally
friendly, and relatively consistent between locations. As a result, they can afford to charge customers high
prices, which most people are willing to pay. Not only does this mean large profits, but also has them
globally recognised as one of the best coffee shop chains.
-Efficiency and reinvestment strategy: Most of the profits that this company makes go straight back into
expanding the business.
Weaknesses
-High price point: The hefty price tags on some of their products deter plenty of customers who might
otherwise make Starbucks a part of their daily lives.
-A lack of overly unique products: Even Starbucks has been known with plenty of famous product, but
they dont exactly have the most unique markets
Opportunities
-Global expansion: Even those most of SB company located in US, there are plenty of regions where
profitably branching out is a possibility, including India, Central Europe, and some regions in Africa.
-Introducing new products and co-branding: Selling their own branded products in stores other than their
own would be a great way to maximise the value of their big reputation. They also have the opportunity
to team up with other companies and co-brand.
Threats
-Fierce competition from cheaper alternatives:

C Develop strategies

- Trung Nguyen G7 instant coffee is selected for export development. We will export green coffee to US
and produce G7 instant coffee by applying technology blending instant coffee and canned it for sales.
- Trung Nguyen has to export more coffee to US market. We have export not only green coffee but also
processed coffee, especially Arabica coffee.
- Trung Nguyen should try to buy coffee processing plants. Both Trung Nguyen plants and franchised
stores must be located in California because there are many Vietnamese communities live here.
- Use local marketing e-commerce: Register with local business directories, participate in local
community blogs, invite people to contact to Trung Nguyen social network account and put a link back to
Trung Nguyen website.
- Expanding product distribution channels:
- Proposal offered coffee for some fast food startup firms, set up systems of coffee vending machine
- Try to follow take-away coffee drinking culture and continue growth coffee meeting trend.
- The product's export sale price will be adjusted base on price of Starbucks coffee, usually be lesser than.
- Launched promotion events, improve customers service

Solution to complete Trung Nguyens supply chain

synchronized chain of stores in its franchise stores.
link with the distributors to bring products directly to consumers
limiting the intermediary costs
transport organizations and rational distribution of goods to ensure the quality of the product is not
changes in the process of transport and distribution.
savings, reduce unnecessary costs. Saving and cost reduction must be understood here is the maximum
streamline the quality is not affected, consumers still enjoy good product that they expect, maintain
customer trust for product.
be cautious in expanding the scope of production, employment. Good relationships with partners,
customers previously to benefit many times more difficult as time passes. Besides, promoting existing
strengths is the quality of products, bringing real benefits to consumers, harmony of interests between
shareholders, employees, consumers.