Ho Chi Mihn Starbucks

"If Starbucks wants to succeed in Vietnam, they have to change the way they serve," says Nguyen Van Minh Khanh in a Wall Street Journal piece by James Hookway (5/18/13). Vietnam is "known for its nerve-jangling strong coffee," that’s "thick" and "oily." Maybe that doesn’t sound like much of a stretch for Starbucks. Then again, Vietnam also prizes its "weasel coffee," made from "beans that have been eaten and digested by civet cats." It’s said to impart a "darker, smoother, flavor," and "can sell for as much as $500 a kilo."

For its part, Starbucks is serving "roast-duck wraps and French-style baguettes," to customers in Ho Chi Mihn City, "which is still referred to as Saigon by locals." But they don’t "use drip filters perched on top of glass mugs" the way the locals like it. Vietnam’s "coffee culture dates back to the 19th century, when locals adopted the habit from French colonizers." So, unlike other Asian markets like India, it’s not a matter of converting people from tea to coffee; they’ve got to compete with well-established coffee purveyors like Trung Nguyen, which already has about 1,000 stores in Vietnam.

Starbucks CEO Howard Schultz says he’s not concerned because Starbucks is not just about the coffee. "The environment that we create, the store design, the experience … they all add up to a much different position to anything that anyone in Vietnam currently occupies," he says. Nguyen Ngoc Mai Huong, 22, agrees: "It was a fresh and exciting experience," she says, adding, "I like the location a lot, but the price is a little high compared with other coffee shops." Howard says that, so far, sales are exceeding expectations. Ms. Huong thinks Starbucks could be onto something, especially with younger consumers.

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