Taste of Nature
Café Amazon’s Market Entry, Localization, and Growth Strategy in Vietnam
Café Amazon, a leading multinational Thai coffeehouse chain owned by PTT Public Company Limited, Thailand's largest state-owned oil and gas company, began its venture into the Vietnamese market in 2020. Despite its well-established presence and growth in Southeast Asia, the company found its Vietnamese expansion fraught with challenges due to an intensely competitive market, a different business environment, and the disruptions caused by the global COVID-19 pandemic.
Café Amazon entered the Vietnamese market through an exclusive Master Franchise agreement with ORCG, a joint venture in which Central Group held 40% shares, and PTT Oil and Retail Business (PTTOR) held 60%. The company's strategic collaboration with Central Group demonstrated a localized approach to market penetration and aimed to leverage the established supermarket system of the group for strategic store locations.
The first Café Amazon store in Vietnam opened its doors in the Go! supermarket in Ben Tre. Despite the ongoing pandemic, the chain managed to launch two more stores in My Tho (Tien Giang) and Tra Vinh, as well as an independent store in Ho Chi Minh City, all within the year 2020. The coffee chain showed resilience, marking its presence in the Vietnamese market while many food and beverage businesses worldwide were grappling with severe revenue losses.
Taking a unique approach to store design, the chain provided customers with a tropical forest theme experience, exuding an exotic appeal that set it apart from the local competition. The coffeehouse chain's unique fusion of Thai and Vietnamese coffee cultures also offered a distinct taste to the Vietnamese consumers, further augmenting its unique brand positioning.
Café Amazon also showed its adaptability and understanding of the local market by introducing Vietnamese-inspired dishes and Thai-styled food and beverages in its menu. With new additions like Tom Yum Lemon Tea, Bangkok Flute Coffee, and Yaowarat Soy Milk Tea, Café Amazon tried to cater to local tastes, offering a blend of Thai and Vietnamese culinary delights.
While the company had significant success with its model of opening coffee shops at gas stations in Thailand, this strategy couldn't be replicated in Vietnam due to the smaller size of the Vietnamese gas stations. The inability to apply this successful business model necessitated strategic adjustments and a refocus on menu diversification and store design to stand out from the competition. The coffee market in Vietnam is heavily saturated with both international and local chains, including giants like Highlands Coffee, The Coffee House, Phuc Long, and Trung Nguyen Legend. This intense competition presented significant challenges to Café Amazon's efforts to carve a niche for itself in this new market.
In addition to the competitive landscape, the ongoing COVID-19 pandemic significantly impacted Café Amazon's expansion plans, with many leading chains restructuring their operations. By 2023, despite the setbacks, Café Amazon had managed to establish 15 stores, primarily in Ho Chi Minh City and a few southern provinces, with plans to open five more by the end of the year.Despite a slower pace of growth than initially anticipated, Café Amazon remains optimistic about its future in Vietnam. The chain plans to expand to 20 stores by the end of 2023 and grow to 5,800 stores globally by 2025. In alignment with PTTOR's diversification plan, Café Amazon also sees potential in the future of electric charging stations. Envisioning these stations as an opportunity for expansion, the chain aims to offer customers a place to enjoy refreshments while their vehicles charge.
Café Amazon's journey in Vietnam presents a compelling case study of strategic adjustments, resilience, and long-term investment strategies in a new, competitive market. While it continues to face stiff competition and unique challenges in the Vietnamese coffee industry, its strategic local adaptations, innovative menu offerings, and global experience position it well for potential success in the future. Despite the hurdles, Café Amazon appears determined to expand its presence in Vietnam, contributing to the diversification and growth of the larger PTTOR business.
