VietNamNet Bridge – It’s not very likely that Vietnamese coffee growers would benefit with the appearance of Starbucks in Vietnam, because the US chain may not use Vietnam’s coffee.

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The information that Starbucks has landed in Vietnam has made coffee growers happy, because they think Starbucks would help increase the local coffee consumption. However, they have been warned that they may not be able to sell coffee to Starbucks, because the US chain may use coffee from Yunnan, China.

Vietnam’s coffee industry shaken violently by FIEs

Vietnam has been well known in the world as the biggest robusta coffee producer and exporter. However, Vietnamese coffee companies and farmers have been facing a lot of difficulties.

Exploiting the loopholes of the laws, foreign invested enterprises (FIEs) have been mushrooming and increasing their influences on the domestic coffee industry by getting involved more deeply into the coffee material development and collection.

The FIEs, though having not invested in developing the material areas, have been scrambling with domestic enterprises for collecting coffee directly from farmers. Since they accept to pay higher prices than domestic ones, they collect the majority of the coffee output, leaving Vietnamese enterprises in the thirst for materials.

In 1996, Dak Lak, the “coffee metropolis” of Vietnam, witnessed the appearance of a foreign invested enterprise – Dakman. Since then, nearly more FIEs have been established in the land.

In 2011, FIEs collected 50 percent of the coffee output in Dak Lak, while the figure has risen to 60 percent. While FIEs have been developing strongly, domestic ones have disappeared from the market. Vietnam now has only 20 coffee enterprises with stable business, while it once had 153 enterprises in the golden age.

Vietnamese coffee growers, who now feel happy because they can sell coffee at high prices to FIEs, have been warned that the FIEs, once dominating the market, would force the coffee prices down so as to make higher profits. A FIEs reportedly stated that the Vietnam’s coffee price would be slashed to $1,500 per ton.

Coffee from Chinese Yunnan

Yunnan, a Chinese province in the border area with Vietnam, has been known as the big coffee production center of China. This is the place which makes out 98 percent of “made in China” coffee products.

The province, which has decided to develop coffee industry as the key industry, hopes to increase the output by four times by 2020 to 200,000 tons a year. In 2011, it exported 50,000 tons.

The noteworthy thing is that the strong development of the Yunnan’s coffee industry has been backed by the US Starbucks, who always tries to control the whole coffee chain value, from the material development to roasting, processing and serving at shops.

In February 2012, Starbucks signed an agreement on setting up a joint venture with Chinese Ai Ni Group which would collect and process coffee in Yunnan. From there, Yunnan coffee would be brought to many markets in the world.

In early 2009, Starbucks marketed “South of the Cloud Blend” coffee made of Arabica from Yunnan

So, who would benefit from the presence of Starbucks in Vietnam? The farmers in Chinese Yunnan or Vietnamese Central Highlands? Will Starbucks help increase the consumption of Vietnam’s coffee, or Vietnamese would drink “made-in-China” coffee in their land, the coffee growing area?

Vietnam has 540,000 farmer households and 1.6 million workers, especially in the Central Highlands, have been earning their living in the coffee industry. How will they be, if they have to give up their farming and drink the coffee from China?

GDVN