The Vietnam Coffee Industry

Take a break from your busy day, grab a cup of joe, and learn more about the coffee culture in Vietnam.
The coffee industry In Vietnam by Standard Insights

Vietnam’s Coffee Industry is Booming – Here’s Why

For the Vietnamese, their coffee culture is much more than a quick boost of energy to get through a hard day at work or school. For them, it is an integral part of their daily life. Numerous coffee shops can be found lining up on the streets of Saigon and Hanoi, as well as on many small-town roads. And no matter the time of day, they are always a great place to unwind or socialize.

It’s remarkable to think that at the start of the 20th century, coffee was almost nonexistent in Vietnam. However, by the time we reached the new millennium, Vietnam had emerged as the world’s second-largest coffee exporter.

History of Coffee in Vietnam

The introduction of coffee to Vietnam dates back to 1857 when a French Catholic priest brought an Arabica tree to Northern Vietnam to start a small business. During the French colonial period, coffee farms were established, marking significant milestones in coffee production. Although the initial attempts were successful, it wasn’t until the early 1900s that the Robusta bean reached the nation’s central highlands.

This region, with its optimal climate and soil conditions, proved ideal for coffee cultivation. Over time, coffee plantations expanded in the Dak Lak province, located in Vietnam’s Central Highlands, and surrounding areas, allowing the coffee industry to flourish. However, the ‘Doi Moi’ economic changes of 1987 marked a turning point for the coffee industry in Vietnam, which forced the country to enter the global market, significantly boosting coffee exports.

Shortly after, Vietnam surpassed Colombia to become the world’s second-largest coffee exporter. Today, the country exports more than 1,650,000 metric tons of coffee annually, accounting for 20% of the world’s total production (and 40% of the world’s Robusta beans).

Vietnam Coffee Export Performance (2019-2024)

YearImport Volume (million bags)Export Volume (million bags)Average Export Price (USD/ton)Export Value (USD billion)
2019/200.5527.741,751.22.74
2020/210.6026.401,8002.38
2021/220.6525.002,3002.75
2022/230.8025.952,8344.24
2023/240.55 (forecast)26.85 (forecast)3,947>5.40

Furthermore, excluding the millions of coffee workers globally, an estimated 3 million people in Vietnam depend on the agricultural coffee industry.

Vietnamese Coffee Market: Size, Growth & Trends

Vietnam Coffee: Market Size, Growth & Trends

Coffee has evolved into a multi-billion dollar industry in Vietnam, with significant growth trajectory.

According to Statista, the Vietnamese coffee segment is projected to generate approximately $5.90 billion in 2022, with the market expected to grow by 5.99% annually between 2022 and 2025 (CAGR).

The industry faces both challenges and opportunities. Fluctuating coffee prices have prompted producers to improve production techniques and adopt new farming methods, the domestic market shows promising growth. By 2025, projections indicate that 78% of spending and 21% of volume consumption in the coffee segment will be attributed to out-of-home experiences such as cafes, bars, and restaurants. This shift is evidenced by the remarkable expansion of coffee shops, which have doubled from 816 in 2019 to 1,657 in 2023.

This growth reflects an evolving coffee culture in Vietnam, characterized by:

  • Increasing demand for premium coffee experiences
  • Growing appreciation for unique flavors and high-quality offerings
  • Expansion of specialty coffee shops
  • Rising consumer willingness to spend on coffee experiences

How the Coffee Industry Has Developed in Vietnam

The Rise of Vietnamese Coffee Culture

Our Consumer Report Vietnam 2022, which surveyed over 1,000 Vietnamese respondents about their consumption habits and brand perceptions, revealed compelling insights about beverage preferences in the country.

Most purchased beverage in Vietnam (overall).

Coffee leads as the most purchased beverage (39.6%), followed by soft drinks (35.6%) and bubble tea (30.7%). This preference shows a strong coffee culture embedded in Vietnamese society.

Most purchased beverage in Vietnam (male vs. female).

The gender analysis reveals interesting patterns, with male respondents strongly preferring coffee (51%) while female respondents show a higher preference for soft drinks (44.3%). These differences highlight the varied demographic appeal of different beverages.

The Growth of the Middle Class

The proliferation of coffee shops in Ho Chi Minh City and Hanoi reflects a young population increasingly willing to invest in quality coffee experiences, coupled with the growing influence of Western coffee culture through increased international exposure. This cultural shift coincides with Vietnam’s expanding middle class, who have greater disposable income for premium coffee experiences. As a result, the market has evolved to include more specialty coffee shops, a growing selection of packaged and instant coffee products, and diverse offerings catering to different consumer segments.

Labor Market Advantage

Vietnam’s competitive advantage in coffee production is largely attributed to its labor market conditions. With an abundant workforce and lower wage structure compared to other major coffee-producing nations like Brazil and Colombia, the country maintains cost-effective production that enables competitive pricing while supporting efficient small-scale farming operations.

Coffee Production in Vietnam

Vietnam is the second-largest coffee producer in the world, contributing around 15-20% of global coffee production. The heart of this thriving industry lies in the Central Highlands, a region blessed with a warm tropical climate and rich, fertile soil—ideal conditions for coffee cultivation. This area alone is responsible for approximately 80% of Vietnam’s total coffee output.

Vietnamese coffee production is predominantly centered around Robusta beans, which make up about 95% of the country’s total coffee output. These beans are known for their strong, bold flavor and higher caffeine content, making them a staple in many instant coffee blends. On the other hand, Arabica beans, which are prized for their smoother, more nuanced flavor profile, account for around 5% of Vietnam’s coffee production. This focus on Robusta coffee has positioned Vietnam as a key player in the global coffee market, particularly in the instant coffee segment.

World’s Top Coffee Producing Countries 2023/24

CountryProduction (million bags)% Global ShareNotes
Brazil64.335%World’s largest Arabica producer; mechanized harvesting; diverse growing regions
Vietnam31.817%Dominates Robusta coffee beans production (95% of output); small-scale farmers; Central Highlands focus
Colombia11.56%Premium Arabica coffee producer; high-altitude growing; known for hand-picking
Indonesia11.06%Mix of Robusta (85%) and Arabica (15%); island-based production; organic farming
Ethiopia8.24%Arabica’s birthplace; forest-grown coffee; diverse genetic varieties
Honduras5.73%Rising Arabica coffee producer; improving quality standards; smallholder farming
India5.53%Shade-grown coffee; mix of Robusta (70%) and Arabica (30%); monsoon processing
Uganda5.23%Africa’s largest Robusta producer; emerging specialty sector
Mexico3.82%Organic coffee leader; primarily Arabica; shade-grown
Guatemala3.52%High-altitude Arabica; volcanic soil; eight distinct growing regions

Key Players and Market Structure

The Vietnamese coffee market is competitive, featuring a mix of local and international players. Among the most prominent names are Trung Nguyen Coffee, Highlands Coffee, and Vinacafé. These companies have a strong presence in the market, known for their high-quality coffee products and innovative approaches to coffee culture. In 2022, we asked 1,000 Vietnamese about their favorite coffee place with Trung Nguyen Coffee emerging as the favorite one.

Our Research also highlights how Trung Nguyen was found to be the most popular coffee place brand in Vietnam, with 33.7% of respondents claiming it to be their favorite. Our study has also shown that men agreed with the overall general preference for Trung Nguyen Coffee (45.8%) among other brands, while the women admitted to preferring and drinking more Highlands Coffee (30.7%)

Favorite coffee place brand in Vietnam (overall).
Favorite coffee place brand in Vietnam (male vs. female).

However, the backbone of Vietnam’s coffee production lies with the small-scale coffee farmers, who account for around 90% of the country’s total coffee output. These dedicated farmers typically sell their coffee beans to local traders, who then export them to markets around the world. This structure not only supports the livelihoods of countless Vietnamese families but also ensures a steady supply of coffee beans for both domestic consumption and international export.

6 Challenges Facing the Vietnamese Coffee Industry

Despite being the world’s second-largest coffee producer and exporter, the coffee industry in Vietnam is currently facing many challenges:

1. Climate Change

Climate change and extreme weather conditions have put Vietnam’s coffee production and other coffee-growing regions in danger. Vietnam may lose 50% of its current Robusta production area by 2050 due to rising temperatures and changing rainfall (According to the CIAT, International Center for Tropical Agriculture).

2. Aging Coffee Trees

Nearly 50% of the Vietnamese coffee trees grown are from 10 to 15 years old, which delivers the highest yield. About 30% of other coffee trees come between 15 and 20 years old, and roughly 20% are over 20 years old. Coffee production in Vietnam will mainly rely on these trees in the forthcoming years. As a result, it is hard to guarantee productivity.

3. Unsuitable Area Conditions

The area of newly cultivated coffee trees has expanded significantly in recent years. Still, most are located in inconvenient areas with shallow, steep slopes and a lack of irrigation water. Therefore, even though newly planted acreage has been scaled up, achieving high economic efficiency is challenging due to increased production costs and low productivity.

4. Intensive Farming Practices

Intensive agriculture practices in the past required too much input (irrigation, fertilizer, and more) to acquire maximum yields. Consequently, this depletes coffee trees and results in seriously contaminated soil, leading to various diseases and pests, including fungi and root nematodes.

5. Highly Fragmented Industry

The small scale and fragmentation of household production have caused low-quality and unbalanced output. The differentiation in investment, harvesting, and processing among coffee farmers has influenced the quality of Vietnam’s coffee industry.

6. Outdated Irrigation Method

Old-fashioned but outdated irrigation is still the primary method in most coffee-growing areas, causing severe water loss.

The Future of the Coffee Industry in Vietnam

Vietnamese policymakers have introduced long-term reforms to cope with the coffee industry’s challenges. In 2014, the government proposed a sustainable coffee development plan for 2020 that looked out for a vision for 2030. This program aimed to sustain economic and environmental resources for the coffee industry.

They set specific economic targets for the sector’s performance and environmental goals. Specifically, the program raises a nationwide limit of coffee cultivation to 600,000 hectares and replaces old low-yielding coffee plants with new and more productive varieties.

These goals show a desire to maintain Vietnam’s position as a coffee “giant,” ensuring stable production conditions for the future.

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