Situation Analysis

HIGHLANDS COFFEE

Louis | MKT304 | 29/01/2021

Group members
Lê Huy Hoàng
Đỗ Việt Hoàng
Nguyễn Đức Huy
Nguyễn Hoàng Sơn
Phan Hoài Khánh Ly
Table of Contents:

I. Industry analysis……………………………………………………………………………………………………….

- Industry size, Growth rate, Sales…………………………………………………………………………

- Projections………………………………………………………………………………………………………...

- Industry structure……………………………………………………………………………………………....

- Nature of Participants…………………………………………………………………………………………

- Key success factor……………………………………………………………………………………………....

- Industry trends……………………………………………………………………………………………………

- Long-term prospects…………………………………………………………………………………………...

II. Company description……………………………………………………………………………………………...

- Company history…………………………………………………………………………………………………

- Vision, Mission, and Core Value…………………………………………………………………………

- Products and Services…………………………………………………………………………………………

III. Market Analysis…………………………………………………………………………………………………………

- Market segmentation and Target market selection…………………………………………….

- Buyer behavior…………………………………………………………………………………………………....

- Competitor Analysis……………………………………………………………………………………………

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I. Vietnamese Food and Beverages Analysis
1. Industry size, Growth rate
- Revenue in the Food & Beverages segment reached US$488m in 2020
- Revenue growth rate in the Food & Beverages segment shows 53.6% in 2020
2. Projections
- Revenue in the Food & Beverages segment is projected to reach US$559m in
2021.
- Revenue is expected to show an annual growth rate (CAGR 2021-2025) of 5.0%,
resulting in a projected market volume of US$678m by 2025.
- User penetration will be 11.8% in 2021 and is expected to hit 16.9% by 2025.
- The average revenue per user (ARPU) is expected to amount to US$48.11.
- In global comparison, most revenue will be generated in China (US$176,857m
in 2021).
- In the Food & Beverages segment, 0.7% of total market revenue will be
generated through online sales by 2023.
3. Industry structure
 Competitors:
- In Beverage market, there are a lot of coffee chains which compete
directly with the ‘Highlands Coffee’. They are: The Coffee House, CONG
Coffee, Urban Station Coffee, Trung Nguyen Legend, Phuc Long Coffee and
Tea, Gemini Coffee, StarBucks, …etc.
- They all have 30-130 stores nationwide
- They shared similar products offering and strategies, especially The
Coffee House, Phuc Long Coffee and Tea and StarBucks are a lot likely to
Highlands Coffee.
- All of their fixed costs are really high due to their fee of location of store
premises, cost of high quality raw materials, cost of equipment and
furniture.
 Potential competitors:
- Since the Revenue in F&B segment reached US$ 488m in 2020 and still
going up and projected to show a market volume of US$678m by 2055. This
is a big pie for the worldwide investors to come in.
- To entry this segment of market, it requires huge investments and larger
gestation periods that increase the risk.
 Distribution channels:
- Gaining distribution in Beverage market can be extremely difficult and
costly. When you not only have to pay for a good location but also need to
compete with your rally to get customers.
- In Beverage market, there are two ways to distribute your products to
customer: Offline Store or Distribute by third party market like a shelf on
Big C or by some delivery company.

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  Product differentiation:
- Established firms may have high levels of customer loyalty caused and
maintained by protected product features, a brand name and image,
advertising, and customer service. Industries in which product
differentiation barriers are particularly high include soft drinks, beer,
cosmetics, over-the-counter drugs, and banking.
 Substitute products:
- In Beverage market, it’s so much easy to find a substitute drinks for your
need. In Coffee, in the market right now exist coffee cans on sale for your
need, you can find any kind of drink on a can in any super market. This is
really a potential threat for Coffee shop.
 Customer power:
- When customers have relatively more power than sellers do, they can
force prices down or demand more services, thereby affecting profitability.
- In this market, customers are king. You not only sell your drinks but also
services, most of customers come to the coffee shop to buy services not
drink because most of the drinks they can made them self at home.
 Supplier power:
- When the supplier industry is concentrated and sells to a variety of
customers in diverse industries, it will have relative power that can be used
to influence prices. Power will also tend to be enhanced when the costs of
customers to switch suppliers is high.
4. Nature of participant
5. Key success factor
6. Industry trends
7. Long-term prospect

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II. Company Description
1. History of Highlands Coffee

From love for Vietnam and passion for coffee, in 1999, Highlands Coffee brand was
born with the desire to elevate Vietnam's long-standing coffee heritage and spread
pride, harmonious connection between transmission. system with modernity.

In 2002, the first Highlands Coffee shop in Ho Chi Minh City was opened at the
Metropolitan Building, opposite Notre Dame Cathedral. A week later, the first coffee
shop in Hanoi was born, marking the company's continuous development.

In 2008, Highlands Coffee served more than 5 million visitors, with 2 million meals
and over 4 million cups of coffee.

As of 2009, the company has opened 80 points of sale in six provinces across Vietnam
(Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, Vung Tau and Dong Nai).

In 2011, Viet Thai International (owner of Highlands Coffee) sold 49% of its sales in
Vietnam and 60% of its sales department in Hong Kong to the Philippines Jollibee
Group for $ 25 million. At this time, Highlands has 50 coffee shops.

Also in this year, Highlands purchased Pho 24 chain stores of Mr. Ly Qui Trung for
about 20 million USD.

In 2015, Highlands expanded the number of stores to 75, as of the end of March 2017,
the company has a total of 180 stores, in 14 provinces and cities in Vietnam. As of
February 2019, the company has 211 stores.

2. Highlands Coffee’s Vision, Mission, and Core Value

Vision: To become Vietnam favorite café and coffee and proudly share this
with the world
Mission: Highlands Coffee’s mission is to champion deliciously affordable
modern Vietnamese coffee and café lifestyle experience. Everywhere, everyday
Core Value:
- Customer focus: If we don’t take our customer, someone else will
Respect and Integrity: If people respect you, respect them back, if they
disrespect you, respect them back. They represent their ideology you present
yours.
- Commitment: Motivation is what gets you started, Commitment is what keeps
you going.
- Proudly Vietnamese and Community: We proud to serve Vietnam by superior
Vietnamese Coffee Quality in a modern comfortable environment that reflects
the appeal of modern Vietnamese life.

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3. Highlands Coffee’s Products and Services
- Vietnamese Coffee: A unique mix between Robusta and Arabica coffee beans,
slow drip-brewed through a Vietnamese traditional “Phin” filter. Add ice
and condensed milk
Size: Small/Medium/Large
Price: 29,000 vnd/35,000 vnd/39,000vnd
Benefits: Keep you awake, bring a slower pace of life and enjoy conversation in a
slowly way.
- Tea: Made from Vietnam’s rich tea heritage, with fresh fruit and topping, serve
with or without milk
Size: Small/Medium/Large
Price: 39,000 vnd/49,000 vnd/55,000vnd
Benefits: Fresh, good for health, for customer who cannot drink coffee
- Freeze: Natural Vietnam ingredients with blended with ice and jelly topping
Size: Small/Medium/Large
Price: 49,000 vnd/59,000 vnd/65,000vnd
Benefits: cold drinks, a good way to indulge your day
- Banh Mi: Vietnamese traditional bread
Price: 22,000-25,000 vnd
Benefits: provide a wider choice about food for customers.
- Packaged Coffee: Packaged roasted coffee beans
Size: 200g/1kg
Price: 47,000 vnd/235,000 vnd
Benefits: easy to make a cup of coffee at home with deliciously bold taste and
alluring aroma or just be a gift not too fussy, but boldly meaningful
- Pastry: hand-crafted pastries made at Highlands Coffee bakery with typical
flavors of Vietnamese cuisine
Price: 19,000 vnd- 29,000 vnd
Benefits: provide a wider choice about food for customers.
- Packaging: Highlands coffee start with glass cup and then switch to plastic
cup with Highlands coffee logo and pattern.

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III. Market Analysis
1. Market segmentation and Target market selection
1.1 Market segmentation:
Highlands Coffee focus on the group of customer from urban areas from
middle class. Buying motive for Highlands Coffee is their high quality products
and services. Also the atmosphere in Highlands Coffee will suitable for many
type of customer need. Highlands Coffee could be suitable for businessman
who come to the coffee shop to work, for couples, friends and family to
meeting, and have some good cup of coffee or tea. Highlands Coffee products
consumption:
 Vietnamese young generation (15 to 25)
 Office workers
They are group of people who are imaginative, lively and dynamic, searching
for agreeable place with moderate cost
1.2 Target market:
Highlands Coffee concentrates on creating a comfortable space for all
customers and the decoration is the combination between classic and
modern styles so the target market is various.
 Demographics:
- Age ranges: the age from 25 to 54 years carry 44.4 per cent of the whole
population in Vietnam (Vietnam Demographics Profile 2013, 2013) which is the
main target of Highlands Coffee.
- Income: Low – Medium.
 Potential customers:
- The medium class and young people are main customers of Highlands Coffee.
They would like to drink coffee that has a brand like Highlands Coffee rather
than unknown ones (Solution to marketing services for Highlands Coffee,
2012).
- The customers are business people who discuss about their contracts or find
new partnership here.
- Highlands Coffee also attracts lots of foreigners because they think it has a
familiar style and taste with the famous coffee brands around the world.
 Geographic:
- Location: in big cities as Ho Chi Minh City, Ha Noi or tourist center like Da
Nang City and Nha Trang City.
 Site:
- Office Buildings
- Commercial Buildings
- At the corner of intersection, lake view.
2. Buyer behavior

3. Competitor Analysis

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