Vietnam, on the other hand, has its biggest markets in Germany, Spain, the USA, Italy and Poland.

Germany is the main market for Vietnam, accounting for 14.5 percent of the total coffee exports,
followed by Spain with 11.28 per cent, the USA with 11.20 per cent, Italy with 7.15 per cent and Poland
with 5.16 per cent. European countries are the largest importers of Vietnam’s coffee, representing
approximately 40 per cent of the total (see Table I). According to interviewees, Spain, Italy and Poland
pay less than quality sensitive Germany (interviews carried out in Colombia and Vietnam, 2009).

Maria-Alejandra Gonzalez-Perez, Santiago Gutierrez-Viana. Journal of Agribusiness in Developing and

Emerging Economies Emerald Article: Cooperation in coffee markets: the case of Vietnam and
Colombia, (pp11)

An option to increase farm revenues is to move along the value chain, a task in which Colombia has
surpassed Vietnam. Both countries are trying to participate more in the processed and specialty coffee
markets, in order to move away from green coffees. Vietnam has been focusing in the low-priced
Robusta market and is timidly beginning to join the processed coffee segment. In 2010, 1.3 per cent of
its 17.4 million bags exported were processed coffees (1 per cent instant and 0.3 per cent ground)
(Landell Mills Commodities (LMC), 2011). It also has a minor market for specialty coffees with its Weasel
coffee (or Civet coffee), which is the most expensive in the world. This coffee was once obtained from
beans eaten by the Asian Palm Civet, but it is currently artificially produced (Powell et al., 2011). The
country is also beginning to identify the possibilities of producing Culi coffee as a high-end Robusta
selection. Culi coffee is made with small un-split beans (peaberries), and recently began to promote
Arabica planting. Colombia, on the other hand, is in the high-priced Arabica segment. It has built a
strong position in instant coffee and has successfully developed some specialty brands. According to an
interview with NFC’s general manager, 32 per cent of all exports in dollar terms have value added, (6 per
cent for processed and 26 per cent for specialty). This brand-building path to upgrading these countries’
GVC is not easy. Coffee has a buyer-driven GVC where players such as Altria, Nestle ́, Sara Lee and
Procter & Gamble play a major role (Bitzer et al., 2008; Muradian and Pelupessy, 2005 and interviews).
Nestle ́ has made relevant investments and a large share of instant coffee production in both countries
(46 per cent in Colombia and 33 per cent in Vietnam) (Ibrahim and Zailani, 2010). Nestle ́ is the largest
instant coffee producer in Colombia, followed by Colcafe ́, and it ranks second in Vietnam, behind
Vinacafe, which has 50 per cent of the market.

Maria-Alejandra Gonzalez-Perez, Santiago Gutierrez-Viana. Journal of Agribusiness in Developing and

Emerging Economies Emerald Article: Cooperation in coffee markets: the case of Vietnam and
Colombia, (pp11)

Two big markets in Asia, Japan and Korea, are also important customers for Trung Nguyen. The
permanent markets among Southeast Asian nations are the Philippines and Malaysia, and recently
Indonesia. Other countries, such as Poland, Russia and China, also buy coffee from Trung Nguyen,
Vietnam.

Trung Nguyen also has some new customers in Latin America, such as Ecuador, Mexico, Chile, Paraguay
and Nicaragua. It is noteworthy that Brazil – the leading coffee producing country in the world – intends
to buy Vietnamese coffee to increase domestic consumption and establish a cooperative relationship
with Vietnam. This market expansion may imply Vietnam’s comparative advantage in Robusta coffee.

Thi Tuong Vi Tran.MASTER THESIS: ENHANCING THE PARTICIPATION OF TRUNG NGUYEN COFFEE IN
THE GLOBAL VALUE CHAIN (GVC)(Pp 61)

In the instant coffee market segment, expensive investment in processing facilities and marketing
activities are the reasons that there are only a few large trademarks in Colombia and the rest of the
world, such as Nestlé. However, in Vietnam, many companies are planning to enter this segment. This
decision needs to be considered carefully because Vietnam already has some successful instant coffee
trademarks, such as Vinacafe, Nestle, G7 and Moment.

Adriana Roldán-Pérez, Maria-Alejandra Gonzalez-Perez, Pham Thu Huong, Dao Ngoc Tien. Coffee,
Cooperation and Competition: A Comparative Study of Colombia and Vietnam (Pp83)

Coffee’s production and consumption profile—production is dominated by developing countries that

populate the so-called ‘coffee belt’ around the equator, while consumption is concentrated in northern
regions—supports a high volume of international trade. By 2015, the global coffee industry was valued
at approximately US$77 billion with trade of US$66.5 billion (Euromonitor, 2016a; UNComtrade, 2016).
The total volume of green coffee trade—a good proxy for demand in all downstream categories—has
steadily increased over the past two decades; growth has continued despite fluctuations in price at
around 2% CAGR since 2011 (Figure 1). There are two main species of coffee grown for commercial
markets: Arabica and Robusta. Variety production options are largely determined by geographic
conditions. Arabica is best suited for higher altitudes of 1,000-2,000 meters and average temperatures
between 15° and 24°C (ICO, 2013a). Robusta is better suited to the lower altitudes. Arabica beans are
considered to impart a superior taste and therefore fetch a higher market price relative to Robusta,
which is more commonly destined for lower-value segments of the market such as instant coffee (ICO,
2013a; ITC, 2011; Ponte, 2002a). The highest differential in the past half-century was registered in 2010-
2011, where Arabica prices were on average US$2.84 higher per kilogram. The price differential
remained over US$1.40 over between mid-2014 and mid-2016 (World Bank Commodity Prices Pink List,
2016) (Figure 1).2 Robusta coffee trees, nonetheless, yield roughly 33% more beans per hectare
compared to Arabica (ICO, 2013a). Quality and marketing are thus key factors in Arabica profitability,
while high productivity and farm efficiency are the key factors in Robusta profitability.

Duke University Center on Globalization, Governance and Competitiveness (Duke CGGC) on behalf of
the USAID/Philippines, through the Science, Technology, Research and Innovation for Development
(STRIDE) Program. The Philippines in the Coffee Global Value Chain (Page 14)