Trung Nguyen, one of Vietnam’s largest coffee chains, will bring its bittersweet brew to the Emirates, the latest international brand drawn to the burgeoning UAE retail market.
Under a franchise agreement, Dubai-based Global Hotels Management (GHM) will invest Dh10 million in the first year, opening two Trung Nguyen coffee shops in Dubai by the third quarter. GMH is also in talks with airlines, hotels and supermarkets to distribute the coffee with the option to expand the brand to Pakistan, Saudi Arabia, Kuwait and Bahrain.
The UAE retail coffee market is dominated by European companies such as Nestlé and Germany’s Tchibo, followed by Lebanon’s Maatouk Maison Du Café and Société Ets Michel Najjar.
“International companies play a major role in the coffee category as they entered the UAE first, establishing their brands and developing good distribution networks,” according to Euromonitor International. “Consumer brand loyalty has thus become a major barrier to entry for potential new players.”
While the market is competitive for the smaller or newer players, it is a growing annually at 8 per cent in terms of retail sales, the research company said, and it is forecast to reach US$151m in 2018 from $111.2m this year.
In the next five years, GMH expects to open 100 coffee shops in the region, according to Nguyen Nguyen, the general manager of Ho Chi Minh City-based Trung Nguyen.
“Dubai and the Middle East is familiar with the western coffee but if we develop a new style from Asia, if we can make people aware of that, the market can be developed,” he said at the International Coffee and Tea Festival in Dubai last week. “Vietnamese coffee is strong and suitable for the tastes here.”
Vietnam is the world’s second largest exporter of the commodity and Trung Nguyen also imports Arabica beans from Brazil, Kenya, Colombia and other Latin American countries. “It will be 25 per cent cheaper than leading brands,” said Masood Hashim, the chief executive of GHM, referring to the instant coffee sachets that will hit the supermarket shelves in January.
“When it comes to locally roasted coffee, the UAE is still a niche market, but people are increasingly aware about where their coffee is coming from,” said Orit Mohammed, the founder and operations manager of Boon Coffee, which sells Ethiopian ground beans after roasting them in Dubai and opened a cafe in April.
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