Report Highlights: 

Post revises its coffee production forecast for Marketing Year (MY) 2014/15 to 29.3 million 60-kg bags (bags), or 1.76 Million Metric Tons (MMT) of green coffee beans, a slight drop from the previous crop due to lower yield and production loss in some Arabica growing areas. Post’s total coffee export forecast for MY 2014/15 is 26.6 million bags (1.59 MMT) Green Bean Equivalent (GBE). Post also revises its coffee production estimate in MY 2013/14 at about 29.8 million bags, or 1.79 MMT of green coffee, a slight increase from Post’s previous estimate, due to a larger than anticipated area expansion from 2013 to 2014. Total coffee exports for MY 2013/14 is estimated at 26.8 million bags, or 1.6 MMT GBE, an all-time record, due to record exportable supply.

Executive Summary:

Vietnam will begin this Marketing Year (MY2014/15) with very high beginning stocks, following record production and slow export pace during the first four months of the previous MY (MY2013/14). Although export pace picked up the last eight months of the last MY, stocks are forecast at a record high at just about 3.6 million bags (approximately 218 thousand metric tons (TMT)). 

Vietnam’s coffee cultivated area continues to expand in major coffee growing areas, despite the Government of Vietnam (GOV)’s recommendation to maintain area at 500,000 hectares (ha). Post’s estimate (taking into account information from the Ministry of Agriculture and Rural Development, Provincial Departments of Agriculture and Rural Development, and the local coffee industry) puts total coffee area at 670,000 ha in 2014, a 5 percent rise from 2013. Actual coffee area likely exceeds the GOV’s official estimate and trader estimates. 

Based on very good weather this growing year, Post revises its forecast of MY2014/15 production up slightly to 29.3 million bags, or 1.76 MMT, a slight drop from the record production of the previous MY due to slightly lower Robusta yield and weather-induced yield loss in some Arabica growing areas. Post forecasts MY 2014/15 total exports at 26.6 million bags, or 1.59 MMT GBE, slightly below the previous MY due to anticipated increased export competition from India and Indonesia. 

Post also revises its estimate of coffee production in MY 2013/14 up to 29.8 million bags or 1.79 MMT, a record level. Given record production and record exportable supply, green bean and total exports for MY 2013/14 are also revised upwards to 25.8 million bags or 1.55 MMT, and 26.8 million bags (1.6 MMT) GBE, respectively. 

Post maintains its estimate of MY 2014/15 domestic consumption at 2.08 million bags, or 125 TMT GBE, a growth rate of about 4 percent year-on-year.


Coffee cultivated area continues to expand in the major coffee growing areas in Vietnam, especially in Dak Nong, Gia Lai and Lam Dong (mainly Robusta coffee areas), according to local exporters and traders. In MY 2014/15, Vietnam’s total coffee area is estimated at 670,000 ha, a 5.4 percent increase from 636,000 ha in 2013. In 2014, Arabica cultivation, mainly in Lam Dong, Son La, and Quang Tri provinces, is estimated at about 45,000 ha, accounting for about 6.7 percent of total coffee area. Vietnamese farmers continue to expand coffee area in response to high world prices. 

Local growers and exporters observed that the weather, overall, was quite favorable for the development of coffee trees during the 2014/15 crop. The Central Highlands (Dak Lak, Gia Lai and Kontum Provinces) received good rains from the middle of April until August. After persistent rains, better sunshine in late August and early September provided for fairly good cherry development. 

According to some local exporters, coffee yield is forecasted to be slightly lower, but that loss is almost fully made up by continued area expansion. Some growers reported yield loss due to the coffee trees being stressed by the record production the previous MY. Additionally, some Arabica areas were damaged by cold weather and / or partial dryness. Although Post is forecasting Arabica production to drop 7 percent to almost 1.1 million bags (about 66 TMT), overall coffee production will remain very high. Post revises its forecast for MY2014/15 production up slightly to 1.76 MMT or 29.3 million bags.


Post forecasts domestic consumption to continue to grow, reflecting the expanding retail coffee shop industry. According to Euromonitor, the number of dedicated coffee shops in Vietnam increased from 7,100 locations to 10,100 locations from 2007 to 2012, this robust growth is mirrored in other retail food service subsectors which serve coffee. In Vietnam, the majority of cafés serve Robusta coffee, produced in the conventional “drip” format. However, western coffee shops are continuing to expand, offering many Arabica based coffee drinks. Take-away coffee is becoming more popular, as a convenient way for working adults to have their coffee. According to local industry, roughly two-thirds of domestic coffee consumption are roast and ground coffee products and one-third is instant coffee products. 

Given the above factors, Post maintains its estimate for domestic consumption at 2 million bags, or 120 TMT GBE in MY 2013/14. The expanding coffee retail sector will contribute to stronger consumption growth next MY, and into the foreseeable future. Post also maintains its forecast for domestic consumption in MY2014/15 at 2.1 million bags, or 125 TMT GBE, an increase of 4 percent over the previous MY. 



According to data from MARD, Global Trade Atlas (GTA), and local traders, Vietnam exported a record, 25.8 million bags, or 1.55 MMT of green coffee beans in MY 2013/14, an increase of about 8.3 percent from the previous MY. Export volume increased significantly from February 2014 to the end of the MY as export prices increased and farmers began to sell their stocks. Although the government imposed stricter enforcement of truck weight limits in different areas, which reportedly focused on the Central Highlands and affected the movement of coffee to ports in Southern Vietnam, monthly exports still exceeded monthly exports during the previous MY for each month after January.

Post estimates MY 2013/14 total coffee exports, including green beans, roasted and ground, and instant coffee, at 26.8 million bags GBE, or 1.6 MMT GBE, due to record green bean exports and increasing processed coffee product exports. Soluble, instant coffee exports grew about 20 percent in MY 2013/14 to 900,000 bags or about 54 TMT GBE. 

Vietnam’s processed coffee products, roasted and ground, and instant coffee exports have grown significantly in recent years. China, Philippines, Russia, South Korea, Japan, Taiwan, Israel, and the U.S. have become important export markets for Vietnam’s instant and roasted and ground coffee. Post estimates that MY 2013/14 processed coffee product exports (including roast and ground, and instant coffee) will increase to 1,020 thousand bags, or 61 TMT of GBE, about a 19 percent increase over the previous year due to growing instant coffee exports. 

Post estimates MY 2014/15 total coffee exports at 26.6 million bags, or 1.59 MMT GBE. Although exportable supplies are forecast at a record level in MY 2014/15, total exports are forecast slightly below the previous MY due to anticipated increased export competition from India and Indonesia.

In MY 2013/14, Vietnam exported coffee beans to 73 countries worldwide. The top fifteen markets accounted for 71 percent of total green coffee bean exports, down from 83 percent of total green bean exports the previous year. The United States remained the largest importer of Vietnamese green coffee beans; Germany remained the second largest importer.

According to official data from Vietnam’s General Customs Office (GCO), General Statistics Office (GSO), and MARD, in MY 2013/14, Vietnam exported 1.65 MMT (all types of coffee products, including green bean, roast and ground, and instant coffee) valued at about $3.35 billion. This is an increase of 14.7 percent in volume and 10 percent in value over the previous MY.


Vietnam continues to import small quantities of green coffee, as well as roasted and instant coffee, from countries such as Laos, Indonesia, China and the United States. Vietnam’s import of green coffee from the United States has increased in the past couple of years due to the expanding coffee retail sector; both Starbucks and McCafé have established operations in Vietnam in the last two years. According to data from traders, GCO, and GTA, total green coffee imports in MY 2013/14 are estimated at 476,000 bags, or about 28.6 TMT GBE. Post’s revises MY 2013/14 total coffee imports to 648,000 bags, or about 38.9 TMT GBE, down 21 percent from the MY 2012/13 level. 

Post’s MY 2014/15 forecast for total coffee imports are 622,000 bags, or about 37.3 TMT GBE. A decrease in green bean imports will drive total imports down 4 percent in MY 2014/15. 


Export prices: 

The average export price of Vietnam’s Robusta coffee in MY 2013/14 was $1,858/MT (FOB HCMC), a drop of 3 percent from the previous MY ($1,919/MT), and 6 percent from MY 2011/12. The decline can be attributed to a significant drop in world prices in the first five months of this MY. World and Vietnamese coffee prices started increasing in February and have been fairly stable until the end of the MY.

Vietnam coffee growers and local exporters remain profitable despite the large crops in MY 2012/13 and 2013/14, due to rising world prices, attributed to the drought problems in Brazil. This trend will continue into MY2014/15. The average export price in October 2014 was $2,072/MT, a rise of 5.3 percent over the previous month, and up 24.6 percent over the same month a year ago ($1,663/MT). On November 4, 2014, the export price was $2,011/MT (FOB Ho Chi Minh City basis) for ungraded Robusta green beans, according to the local coffee industry. The high prices will spur larger early season exports compared to the past two MYs. 

Domestic prices: 

Vietnam’s average domestic coffee price for Robusta common ungraded coffee beans in MY2013/14 was VND37,472/kg ($1.77) in Dak Lak province, VND 36,970/kg ($1.74) in Lam Dong province, VND37,506/kg ($1.77) in Gia Lai province, and VND 37,379/kg ($1.76) in Dak Nong province, the largest coffee growing areas in Vietnam. Prices dipped in November 2013 as the main harvest began but then steadily increased in December stabilizing by March 2014 between VND39,000 and 40,800/kg.

Average farm gate prices in Dak Lak and Lam Dong provinces in October 2014 were quoted between VND40,700/kg ($1.92) – 40,900/kg ($1.93), an increase over the previous month. Accordingly, prices above VND40,000/kg will motivate farmers to continue to sell their coffee beans into the export pipeline. At current prices, coffee growers will likely harvest and sell their crops quickly during the beginning of MY2014/15. 


According to local estimates, Vietnam will bring forward about 218 TMT of coffee beans (about 3.6 million bags), a record high stocks level, to start the MY 2014/15. As of the end of September 2014, beginning stocks for MY 2014/15 are estimated at about 12 percent of total coffee production in MY 2013/14. The carryover stocks include stocks in Ho Chi Minh City-based warehouses, stocks held outside the city by middleman and traders, and a small volume still held by growers. The beans carried over are often used for loading in October and early November before harvesting of the next crop peaks in the second half of November. Although there is no official data for coffee stocks available, Post’s initial forecast of MY 2014/15 ending stocks is about 4.9 million bags, or about 292 TMT, which is higher than previous years as green bean exports are forecast to fall slightly, due to strong competition, causing stocks to increase. 


Vietnam scraps 5 percent value added tax (VAT) on coffee, other agro products 

Vietnam has abolished a controversial 5 percent VAT on agricultural products, including coffee. As of January 1, 2014, raw and semi-processed agricultural, animal husbandry, and aquatic products are exempt from the VAT payment. Delays in processing tax refund claims on exports of coffee, rubber, and cocoa in the past years have held up shipments and caused much consternation among exporters. Despite the government pledging to streamline VAT rebate procedures, confusion over the process had deterred buyers and is one of the reasons why the VAT was abolished for these products. This move streamlines the transactional process that coffee beans in Vietnam must undergo to move from farmers’ plantations to port warehouses and will further incentivize exports. 

MARD launches restructuring action plan for crop production including coffee 

In order to implement GOV’s instruction from “the Master Plan for restructuring agricultural sector in Vietnam,” MARD recently launched the Restructuring Action Plan for Crop Production towards greater added value and sustainable development for 2014-2015 and the period of 2016-2020 with the Decision 1006/QD-BNN-TT dated May 13, 2014. According to this decision, coffee growing area should be maintained at 500,000 ha; a policy for replanting about 150,000 ha of aging and low yield coffee areas should be developed and implemented; and an appropriate policy for economic water irrigation should be developed and applied for coffee growing area. MARD’s Decision prescribes that Arabica coffee growing area should increase to up to 8 percent of total coffee area by 2020. The Decision encourages Public-Private Partnerships in the coffee industry. The Decision sets the goal for domestic coffee consumption to be 10-15 percent of total coffee production. Total processed coffee production including instant coffee, and ground and roasted coffee products, should reach 10,000-15,000 MT/year, of which 50 percent are for export by 2015. 

Vietnam Coffee Coordinating Board plans to promote local coffee processing sector 

The Vietnam Coffee Coordinating Board recently completed and submitted a proposal titled “Vietnam Sustainable Coffee Production up to 2020” to the Minister of Agriculture and Rural Development. One of the important components in the proposal is to promote development of the coffee processing sector in order to improve Vietnamese coffee quality. The Plan’s target is to use about 160 TMT of green coffee beans for the local coffee processing sector by 2015; increasing the amount to about 200 TMT by 2020. 


Nestlé Vietnam provides more breeding coffee trees to farmers for replanting program 

Nestlé Vietnam and the Western Highlands Agriculture and Forestry Science Institute (WASI) have provided about 6.9 million coffee trees, as well as about 16 metric tons of coffee seeds to farmers in Lam Dong, Dak Lak, Dak Nong, and Gia Lai over the past three years to assist with replanting efforts. WASI & Nestlé also have conducted trainings for over 21,000 farmers in these provinces on 4C sustainable coffee production. Experts and specialists from WASI have trained farmers in the five major coffee growing provinces on sustainable water utilization techniques, teaching how to reduce water usage from the current level of 700 liters per tree down to a level of 400 liters per tree.

Nestlé Vietnam receives ministerial award for environmental achievements 

Nestle Vietnam received the 2014 National Green Environment Certificate awarded by the Vietnam Environment Administration under the Ministry of Natural Resources and Environment and the country’s Association for Conservation of Nature and Environment. The award recognizes Nestle Vietnam’s achievements in reducing waste and energy use in its operations, as well as its contributions to raising public awareness of environmental protection. In recent years, the company has reduced the amount of water used in production by 35 percent, saving 65 million liters of water per year. 

Buon Ma Thuot coffee registers geographical indication in foreign markets 

Dak Lak has registered for European Union recognition of the geographical indication (GI) for its Buon Ma Thuot coffee to protect the brand in the EU market. The Buon Ma Thuot Coffee Association has worked on the documentation under the auspices of the European Trade Policy and Investment Support Project (EU-Mutrap), and is currently putting the final touches on the dossier to submit to the EU. The Buon Ma Thuot coffee brand has been illegally used in China by a Chinese company in Guangzhou, and the Chinese Ministry of Commerce revoked this company’s patent for this brand earlier this year. After the China case, the Buon Ma Thuot Coffee Association has applied for trademark protection in 17 countries and territories around the world. The price of these branded coffee products is about 15 percent higher than its noncertified counterpart. According to the Thailand Intellectual Property Department, Thailand will also soon register this GI. 

Geographical indication benefits Dak Lak coffee producers 

A geographical indication (GI) for the Buon Ma Thuot coffee trademark in the Central Highlands province of Dak Lak has helped increase the value of coffee beans shipped abroad, according to the Buon Ma Thuot Coffee Association. As many as 10 coffee producers in the province are entitled to use the GI managing a combined growing area of 15,067 ha, yielding around 46,620 MT of coffee beans annually. Protected geographical indication (PGI) for Buon Ma Thuot coffee was registered in Vietnam in 2005. The local authorities have also encouraged coffee processors, which are allowed to use the GI, to label their products with the Buon Ma Thuot coffee trademark and educate customers about the distinctive characteristics of these branded products. 

Lam Dong province gets geographical indication protection for Arabica coffee 

The National Office of Intellectual Property of Vietnam has granted a geographic indication for Arabica coffee produced in Lac Duong District of Lam Dong Province. Products are labeled “Lang Biang Arabica Coffee.” Other places in the province like Da Lat, Lam Ha, Don Duong, and Duc Trong Districts can also register for the “Lang Biang Arabica Coffee” brand if they have similar farming conditions as Lac Duong. 

Starbucks Expands Coffeehouse to Hanoi, Vietnam 

In July 2014, Starbucks celebrated the opening of three stores in Hanoi after entering the market in Ho Chi Minh City in February of last year. The Starbucks stores in Hanoi will offer a variety of local, unique beverage options, most notably the Asian Dolce Latte - created specifically for the distinct taste preferences of coffee-lovers across the Asia region. So far, Starbucks has opened eight stores in Ho Chi Minh City and three stores in Hanoi, totaling eleven stores across Vietnam