Robusta coffee and pepper are two of Vietnam's leading global exports, but the market share is increasingly falling into the hands of foreign companies.

Compared to the same period last year, pepper prices have increased by 30% and coffee prices have more than doubled. This significant price increase has attracted numerous domestic and international companies to engage in the purchasing, processing, and exporting of these high-profit agricultural products.

Foreign Companies Dominating

Vietnam has been the world leader in pepper production and export for the past 20 years. However, according to recent data from the Vietnam Pepper and Spice Association (VPSA), the top exporters of pepper in the first two months of 2024 are all foreign companies.

Specifically, Nedspice Vietnam (Netherlands) leads with 3,555 tons, up 44% compared to the same period last year, followed by Olam Vietnam (India) with 3,229 tons, an increase of 32%.

In contrast, the two leading Vietnamese companies have seen a decline in export volumes. Trân Châu exported 2,265 tons, down 33.4%, and Phúc Sinh exported 1,744 tons, down 31.5%.

The rankings for top pepper exporters also show Olam Vietnam and Nedspice Vietnam in the top positions, with Trân Châu and Phúc Sinh in third and fourth place.

Previously, Trân Châu and Phúc Sinh frequently held the top positions for pepper exports in Vietnam. Mr. Phan Minh Thông, founder of Phúc Sinh, was even known as the "Pepper King" for this reason.

In the processed coffee sector, foreign direct investment (FDI) companies also dominate the export market.

According to the Vietnam Coffee - Cocoa Association (Vicofa), in the first five months of the coffee season 2023-2024 (from October 2023 to February 2024), the top 10 exporters of roasted and instant coffee are mostly FDI companies.

Nestlé Vietnam (Switzerland) leads with approximately $57.5 million, followed by other names such as Outspan Vietnam (India), Cà phê Ngon (India), Trung Nguyên Group (Vietnam), Iguacu Vietnam (Japan), URC Vietnam (Philippines), Tata Coffee Vietnam (India), Instanta Vietnam (Europe), Sucafina Vietnam (multi-national), and International Food Choice Company. Among these, only Trung Nguyên Group is a Vietnamese brand.

In previous seasons, such as 2022-2023, FDI companies held about 33.1% of the market share for green coffee bean exports and 71.7% for processed coffee exports. In the 2021-2022 season, these percentages were 31.7% and 66%, respectively.

Mr. Nguyễn Nam Hải, Chairman of Vicofa, explained that FDI companies also hold membership in Vicofa and have advantages in terms of capital, technology, and market access.

"Recently, the market share of FDI companies has been increasing. One reason is that the rising coffee prices have exposed the capital weaknesses of Vietnamese companies. With the same amount of capital, they can only purchase about half the quantity of coffee compared to last year," Mr. Hải explained.

Challenges and Difficulties

Explaining why foreign companies dominate the processed coffee export market, Mr. Nguyễn Ngọc Luận, General Director of Toàn Cầu Trading Company (Meet More coffee brand), stated that investing in an instant coffee processing plant is very expensive, especially the extraction technology, which requires an initial capital of around 1 trillion VND.

This is a significant barrier for Vietnamese companies. In contrast, foreign corporations with hundreds of years of experience have strong capital, lower costs, technology, and global brands, giving them a decisive advantage.

"The instant coffee segment is growing very well globally at a rate of 30% per year due to its convenience and nutritional value; the future is very promising," Mr. Luận assessed.

For roasted coffee, Mr. Luận noted that Vietnamese companies struggle to meet international consumer preferences, as Vietnamese roasted coffee has a somewhat different flavor profile. Therefore, export volumes to other countries remain low. However, Professor Bùi Chí Bửu, former Director of the Southern Institute of Agricultural Science, believes that Vietnam, as the source of coffee and pepper, will naturally attract agricultural and food corporations from abroad to purchase these products.

"Vietnamese companies may not have the same capital as FDI companies, but they are very flexible and efficient. Many Vietnamese companies even buy coffee and pepper from Brazil, Indonesia, etc., to process and export, generating good profits despite not leading in export volume," Professor Bửu noted.

Professor Bùi Chí Bửu added that foreign investments in Vietnamese agriculture, especially in coffee and pepper, bring many benefits, helping these sectors develop systematically and improve competitiveness.

Overall, attracting FDI into agriculture offers many advantages and should be further encouraged. "In the value chain of many agricultural products, Vietnamese farmers and companies still hold a significant share," Professor Bửu compared.

Vietnamese Companies Leading in Green Coffee Bean Exports

According to Vicofa, in the first five months of the 2023-2024 coffee season, Vietnamese companies still lead in the export of green coffee beans. The top position goes to Vĩnh Hiệp Co., Ltd. with 81,025 tons. This company is owned by Mr. Thái Như Hiệp, who founded the L'amant Café brand. Next are Intimex Group, Tuấn Lộc Commodities, Simexco Daklak, Intimex Mỹ Phước, and Phúc Sinh.

In the 2022-2023 season, Intimex TP HCM, Vĩnh Hiệp, Simexco Daklak, and Intimex Mỹ Phước were the top Vietnamese companies in coffee bean exports. Intimex Group is led by Mr. Đỗ Hà Nam, who is also the Vice Chairman of Vicofa.

Source: Vietstock