UNIVERSITY OF ECONOMICS HO CHI MINH CITY

ANALYSIS OF SUPPLY AND DEMAND

IN COFFEE MARKET IN THE PERIOD
2018-2023

Group members:
Trần Song Lam - 31231022036
Trần Thị Ngọc Phương - 31231022928
Trần Quý Khiêm - 31231024363
Ngô Quốc Thái - 31231024095
Nguyễn Ngọc Thùy Trang - 31231023789

Date: 19/11/2023
Course name: Microeconomics
 2

I. Abstract

Being the world's second-largest producer of coffee, Vietnam enjoys strong local and
international demand and it tends to increase. Research in the period from 2018-2023, the
analysis shows that the market experiences a scarcity of readily available replacements.
Generally, most of the factors that affect coffee demand and supply increase or improve in the
given period such as the number of buyers and sellers, consumer income, and technology.
Many policies have been introduced by the governments to increase both demand and supply
due to the market interruption caused by the COVID-19 pandemic. The coffee price is
inclined to increase, however, it is expected to witness a decrease in supply in a few more
years due to some external factors.
Keywords: supply, high demand, increase, scarcity.

Table of Contents

I. Abstract..................................................................................................................................2

II. Introduction..........................................................................................................................6

1. Reasons to choose the topic..............................................................................................6

2. Research objectives...........................................................................................................6

3. Subjects of study................................................................................................................7

4. Research methods..............................................................................................................7

5. Scheme contribution.........................................................................................................7

III. Theoretical basis.................................................................................................................7

1. Market:...............................................................................................................................7

2. Demand..............................................................................................................................7

2.1 Quantity Demanded (Q🇩):..........................................................................................8

2.2 Law of demand.............................................................................................................8

2.4.3. Prices of related goods.........................................................................................9

2.4.4. Tastes.....................................................................................................................9
 3

2.4.5. Expectations..........................................................................................................9

2.4.6. Government policies............................................................................................9

2.4.7. Other factors.........................................................................................................9

3. Supply.................................................................................................................................9

3.1 Quantity supply (Qs):..................................................................................................9

3.2 Law of supply...............................................................................................................9

3.3 Supply Curve..............................................................................................................10

3.4.3. Input Prices.........................................................................................................10

3.4.4. Government Policies..........................................................................................10

3.4.5. Expectations........................................................................................................11

3.4.6 Other factors:......................................................................................................11

IV. Analysis of the topic's current status during the period (2018-2023)..........................11

1. The current status of Vietnam's coffee production market (2018-2023)...................11

1.1. Causes affecting supply:...........................................................................................12

1.1.1. Number of sellers...............................................................................................12

1.1.2. Technology..........................................................................................................13

1.1.3. Input prices.........................................................................................................14

1.1.4. Expectations........................................................................................................14

1.1.5. Policy...................................................................................................................16

1.1.6. Other factors.......................................................................................................18

2. The coffee consumption market in Vietnam 2018-2023..............................................18

2.1. Causes affecting demand:........................................................................................19

2.1.1. Number of buyers..............................................................................................19

2.1.2. Income.................................................................................................................20

2.1.3. Prices of substitute goods..................................................................................21

2.1.4. Expectations........................................................................................................21

2.1.5. Taste....................................................................................................................21

2.1.6. Policy...................................................................................................................24
 4

2.1.7. Other factors.......................................................................................................24

3. Proposed solutions and forecasts...................................................................................25

3.1. Solutions....................................................................................................................25

3.2. Forecasts....................................................................................................................25

V. Conclusion...........................................................................................................................26

1. Statement of Research Findings.....................................................................................26

2. Limitations.......................................................................................................................27

3. Further research directions............................................................................................27

VI. References..........................................................................................................................27
 5

Image Catalog

Figure 1: Demand curve...........................................................................................................7

Figure 2: Supply curve.............................................................................................................9
Figure 3: Coffee output from crop year 2018 - 2019 to 2021 - 2022 and forecast for 2022
- 2023........................................................................................................................................11
Figure 4: Vietnamese growing coffee area............................................................................11
Figure 5: Number of Vietnamese F&B service restaurants in 2016 - 2022.......................12
Figure 6: Vietnamese coffee price trends from 6/2023 up to now (tapchicongthuong.vn)
...................................................................................................................................................13
Figure 7: Supply curve shift...................................................................................................14
Figure 8: Vietnamese coffee production output 2012 - 2020...............................................15
Figure 9: Vietnam's coffee consumption/output ratio in the last 10 crop years...............18
Figure 10: Average income over years (million VND/month)............................................19
Figure 11: Percentage of beverages bought in the last week by 1000 Vietnamese people
in 2022......................................................................................................................................22
Figure 12: Percentage of male and female consuming beverages in the last week in 2022
...................................................................................................................................................23
Figure 13: Graph of reasons for drinking coffee in 2019....................................................24
Figure 14: Favorite coffee place brand in Vietnam according to 1000 Vietnamese
customers in 2022....................................................................................................................25
 6

II. Introduction

1. Reasons to choose the topic

Coffee is one of the world's most important agricultural products, with high output and
commercial value. The data for coffee consumption is increasing day by day thanks to each
person's personal needs and the development of cafes and coffee shop chains that provide a
variety of delicious coffees. This shows that the coffee market has great potential for
development.

Currently, the world's total coffee supply is about 165 pounds. While the world's total
demand for coffee is about 168 pounds, surplus supply is about 3 pounds. For the world
coffee market in general, according to statistics from the USDA, coffee consumption demand
increases by about 2.4%/year. Coffee sources depend heavily on the season and conditions of
coffee-growing countries in the world.

Although the Vietnamese market is gradually gaining a foothold in the coffee sector, it
still faces many challenges and opportunities. Although Vietnam is one of the second-largest
coffee-producing countries in the world, it still faces many difficulties in enhancing product
value and establishing the reputation of Vietnamese coffee in the international market.
Currently, coffee prices are tending to increase, which is also good news for farmers.
However, that is not necessarily a good thing because our country is in a situation of scarce
coffee supply. Vietnam's coffee output also varies due to the influence of other factors.

Researching the supply and demand of coffee is an important research area, helping to
better understand the factors affecting the coffee market and forecasting future market
development trends as well as providing some solutions. Appropriate measures to increase the
value of coffee in the Vietnamese market. For that reason, our group would like to propose a
research topic "Analysis of supply and demand of the coffee market in Vietnam in the period
2018-2023".

2. Research objectives

After the steps of gathering and processing data, we get an overview of the
Vietnamese coffee market, factors affecting supply, demand, and the processes of supply and
demand affecting each other. The other objective is providing specific solutions and
 7

predictions about the market to increase profits for the Vietnamese coffee market and
businesses.

3. Subjects of study

The topic focuses on researching market structure, factors affecting coffee supply and
demand, price fluctuations and posing challenges and opportunities for the coffee industry in
Vietnam. Market assessment based on actual data from 2018 - 2023, focusing on the period
2022 (achieving many remarkable export achievements) up to now for analysis and
quantification.

4. Research methods

 Search and collect information from reputable websites, data from economic
journals...
 Collect, analyze, compare and synthesize data and information

5. Scheme contribution

Theoretical aspect:
● Briefly summarize and explain the definitions of supply and demand, law of demand,
supply and the factors that affect the supply and demand of Vietnamese coffee market.
Practical aspects:
● Help readers to understand the market overview as well as the supply and demand
aspects of the Vietnamese coffee industry.
● Propose some solutions so that the domestic coffee market can advance and promote
economic development.

III. Theoretical basis

1. Market:

A market is a gathering place for people to enable the trade of products and services.
Typically, the buyer and seller are the people engaged. marketplaces may be virtual or real,
like online marketplaces, where individuals can interact face-to-face as in a retail setting.
 8

2. Demand

Demand (D): It is an economic concept that refers to consumers' desire to purchase goods
and services and their willingness to pay a certain price for them.

2.1 Quantity Demanded (Q🇩):

Definition: The total amount of a good or service demanded by consumers in a given period
of time.

2.2 Law of demand

 Definition: According to the law of demand, when a good's price rises, the quantity
desired of the commodity falls, all other things being equal.
 Price and quantity demanded of goods and services are inversely proportional to each
other.
2.3. Demand Curve
When everything else is equal, the connection between the price of a good or service and the
quantity of that good or service required over a specific amount of time is referred to as a
downward curve. This relationship may be seen graphically, where the vertical axis refers to
price (P) and along the horizontal axis refers to quantity (Q).
The price of the product has a negative
relationship with the quantity demanded.
The curve shows that as the price was at P ₂,
the quantity of the product demanded was
Q₂ which shows that the lower price of the
product has an effect on the purchasing
power of the consumer, and thus the
demand is higher. However, when the price
Figure 1: Demand curve was P₁, the quantity of the demanded
product was Q₁. which shows that when product price increases, people lose the capacity to
buy the product, and thus demand for the quantity decreases.
Factors other than price change will shift the demand curve.
2.4. Demand curve shifters
2.4.1. Number of buyers
The quantity demanded will go up as the number of purchasers rises. They have a favorable
relationship with one another.
2.4.2. Income
 9

 A normal good's demand is correlated with income. The D curve would move to the
right as income grows because there would be greater demand for the product at any
price.

 Income has an inverse relationship with the demand for inferior goods. The quantity
required at each price would decline as income increased, moving the D-curve for
inferior commodities to the left.

2.4.3. Prices of related goods

 When the price of one commodity rises and the demand for another rises in response,
then two goods are substituted for one another.
 If the demand for one commodity declines due to a rise in its price, then the two
goods are complementary..

2.4.4. Tastes

Price of any goods and service are positively related with its quantity demanded.

2.4.5. Expectations

 Expectations in the rise of future income will increase demand.

 Worries about the fall of future income will decrease demand.

2.4.6. Government policies

 Tax is inversely related to demand.

 Subsidize is in accordance relation with demand.

2.4.7. Other factors

For instance: weather, disease, advertisements...

3. Supply

Supply (S): Supply is the amount of a specific good or service that's available in the market,
other things equal.

3.1 Quantity supply (Qs):

It is defined as the quantity of goods that suppliers are prepared to create and sell at a specific
market price.
 10

3.2 Law of supply

 Definition: the claim that an item's supply rises in tandem with its price, barring other
factors remaining constant.
 Price and supply are in accordance related to each other.

3.3 Supply Curve

An upward curve represents the relationship between the

cost of the goods and services related to the supplied
quantity over a period of time, with others equal. The
price is shown on the vertical axis and the delivered
amount is shown on the horizontal axis in the graphical
depiction of the supply curve. The price of the quantity
has a positive relationship with the quantity supplied.
Figure 2: Supply curve
When the price is P₂, the supplied quantity is Q₂, on the other hand, the P₁ directly resembles
Q₁. Hence, the graph shows that suppliers are inclined to produce more goods when the price
increases. Factors other than price changes will shift the supply curve.
3.4. Supply curve shifters
3.4.1. Number of sellers
The quantity supplied at each price would rises as there are more sellers, which causes the S
curve to move to the right.
3.4.2. Technology
 The amount of inputs needed for manufacturing a unit of output is determined by
technology.
 A decrease in input costs has the same impact as a cost-saving technical advancement,
which causes the S curve to move to the right.

3.4.3. Input Prices

Input price is inversely related to supplied .

3.4.4. Government Policies

Include:
 Tax and supply are inversely related to each other.
 Supply would rises in response to higher subsidies.
 11

 Price of substitutes in production increases lead to an increase in supply and vice

versa.
 Price of complements in production increases lead to a decrease in supply and vice
versa.

3.4.5. Expectations

Sellers can modify supply in response to changes in their projected prices.

3.4.6 Other factors:

For example: weather, disease…

IV. Analysis of the topic's current status during the period (2018-2023)

1. The current status of Vietnam's coffee production market (2018-2023)

According to the Department of Cultivation, in the year 2018, the coffee-growing area
in Vietnam has exceeded 664,000 hectares, with a coffee production of over 1.5 million tons
per year. Robusta coffee dominates the landscape, accounting for a significant 93%, while the
remaining portion is Arabica coffee.

For the next 3 years, in terms of production, the coffee crop of 2021-2022, Vietnam's
coffee output exceeded 1.8 million tons. Vietnam is the world's second-largest coffee
producer, following Brazil, and is the largest producer of Robusta coffee globally. Its coffee
productivity is the highest globally. The average coffee yield in Vietnam is 1.4 times that of
Brazil, 2.8 times that of Colombia, and 4.5 times that of Indonesia.
 12

Figure 3: Coffee output from crop year 2018 - 2019 to 2021 - 2022 and forecast for 2022 -
2023 (ViRac)

In 2022, the rainy season began earlier than in previous years, aiding coffee plants in
blooming and thriving. The wetter weather conditions reduced irrigation costs for businesses.
However, fertilizer prices surged by up to 70% in 2022, prompting coffee growers to reduce
fertilizer usage, resulting in an expected decrease in productivity and output. By the end of
2022, the total coffee-growing area in Vietnam reached 710,660 hectares. Among these, the
area dedicated to commercial coffee cultivation amounted to 653,100 hectares. Coffee is
cultivated across 19 provinces nationwide, with a predominant focus on the Central Highlands
region, specifically in the five provinces of Tây Nguyên, which account for 91.2% of the total
nation.

Figure 4: Vietnamese growing coffee area (Vietnam Commodity Exchange)

However, the expected coffee production for the crop year 2022-2023 is projected to
decrease by around 10-15% compared to the 2021-2022 crop year. The primary reason for
this decline stems from a reduction in the coffee cultivation area, as farmers are shifting
towards other more lucrative crops such as durian, and avocado, or adopting intercropping
practices in their orchards.
 13

1.1. Causes affecting supply:

1.1.1. Number of sellers

Currently, Vietnam has 97 coffee bean processing facilities, 160 coffee roasting and
grinding facilities, 8 soluble coffee processing facilities, and 11 coffee blending facilities.
Specifically, there are: 97 coffee bean processing facilities with a total designed capacity of
1.503 million tons, achieving an actual capacity of 83.6%; 160 coffee roasting and grinding
facilities with a total designed capacity of 51.7 thousand tons per year; 8 soluble coffee
processing facilities with a total designed capacity of 36.5 thousand tons per year, reaching an
actual capacity of 97.9%; and 11 coffee blending facilities with a total designed capacity of
139.9 thousand tons per year, achieving an actual capacity of 81.6%.

By the end of 2022, Vietnam has nearly 338,600 restaurants/coffee shops, with
hundreds of new coffee shops opening every day. The estimated revenue for the F&B industry
in 2022 is around 610 trillion VND, and the trend is expected to continue to rise in 2023.

Figure 5: Number of Vietnamese F&B service restaurants in 2016 - 2022 (ViRac)

1.1.2. Technology

In this current era, one of the essential keys to the development of coffee output is
advances in technology. Applying science and technology in the production process helps
farmers and manufacturers solve difficulties in controlling prices and yields, which are greatly
affected by climate change.
 14

For example:
 Application of economic irrigation technology in Tay Nguyen: Drought and traditional
irrigation methods have caused coffee growers in Tây Nguyên to face frequent and
increasingly severe water shortages. Data shows that economical irrigation
technologies have higher economic efficiency than traditional irrigation technologies.
However, the rate of applying economical irrigation technology is still very low,
mainly due to lack of investment capital, limited awareness and ineffective transfer
process.
 The Development of roasted coffee production technology: Hot Air is a technology
that uses hot air to cook coffee beans, using heat from the fire to directly impact the
roasting pan or drum. This technology meets the most important goals of the roasting
process: keeping the temperature stable, increasing or decreasing the temperature
according to the roasters' wishes, and helping coffee beans ripen evenly from the
inside to achieve the desired color and flavor.

1.1.3. Input prices

From 2020 to 2022, prices of necessary materials for agricultural, forestry, and fishery
production escalated to dizzying levels. For example, Phú Mỹ urea fertilizer in June 2020 in
Ho Chi Minh City was at 6,200 VND/kg. By August 2021, it jumped to 12,500 VND/kg. Less
than 1 year later, by May 2022, it reached 17,800 VND/kg. In just 2 years, the price of urea
fertilizer had increased by 11,600 VND/kg, an increase of 187%. Gasoline 92 on August 8,
2022 was 102.48 USD/barrel, by August 12, 2022 it jumped to 110.19 USD/barrel.
 15

Figure 6: Vietnamese coffee price trends from 6/2023 up to now (tapchicongthuong.vn)

However, in reality, agricultural land areas are covered every year. Even if we only
consider the coffee growing area, nationwide, the coffee growing area has not seen any signs
of removal. Most are being replanted or changing their farming system from monoculture to
intercropping with fruit trees like durian.

1.1.4. Expectations

Pandemic 2019:
 One of the events that greatly affects all production activities in the world is the
Covid-19 epidemic. When the epidemic broke out, trade activities were stagnant and
tightly controlled, leading to a backlog of coffee supplies. After the Covid-19
epidemic was under control, to compensate for the years affected by the Covid-19
epidemic, manufacturers with optimism promoted the production to compete with
other countries, this is not only a driving force to improve the quality of coffee beans
but also increase the quantity of coffee supplied. At this time, the supply curve for
coffee will shift to the right.
Shortage of trucks (at the end of 2020):
 On the contrary, when there is a shortage of container trucks. Empty inventory is
becoming an obsession for businesses at the end of the year and this situation becomes
even more serious during the epidemic period. There are not enough container trucks
 16

to carry goods, so they shrink production to ensure safety, which leads to coffee
supply in the market decreasing and the supply curve shifts to the left.

Figure 7: Supply curve shift

A general increase in coffee exports (from 2015 to 2022)

 One of the stepping stones for promoting Vietnam's coffee supply is that export
volume and value have gradually increased over the years, giving the Vietnamese
coffee market a positive and hopeful outlook.

Figure 8: Vietnamese coffee production output 2012 - 2020 (ViRac)

1.1.5. Policy

General guiding policies:

To promote competition and sustainable development of Vietnam's coffee industry.
The Ministry of Agriculture and Rural Development has approved the Vietnam Coffee
Industry Development Plan to 2020 and vision 2030.
 17

 Central Highlands coffee replanting project 2014-2020: Vietnam's coffee

productivity in 2011 was 23.5 quintals/ha, which increased to 28.2 quintals/ha in
2021 and output increased from 1.27 million tons to 1.81 million tons.
 Project for sustainable coffee development to 2020: Coffee area in the 2018-2019
crop year is 203,063 hectares, average yield reaches 25.44 tons/ha, an increase of
0.89 tons/ha, total output is estimated at 478,083 tons/ha. tons, an increase of
18,298 tons compared to the previous crop year.
Production support policy:
 Restructuring support policy:
o Robusta coffee replanting process (July 3, 2013).
o Economic and technical norms for replanting robusta coffee.
o A credit package of VND 12,000 billion is available to support 5
provinces. Extend the loan period to a maximum of 36 months for coffee
exports.
o Implementing a loan policy for coffee replanting in the Central Highlands
provinces in the period 2014 - 2020.
 Input support policies (irrigation fees, seeds, fertilizers...).
- Policies of Tax:
 Implement a decree to reduce value-added tax on inputs such as fertilizers,
pesticides, and growth stimulants to 5%.
 The Ministry of Trade exempts import taxes on production materials and imported
supplies for farming.
- Institutional innovation policy:
 Establishment of the Vietnam Coffee Industry Coordination Committee.
 Establishment of Provincial Coffee Producers Associations.
 Consulting on new construction and strengthening the Central Highlands coffee
model.
- Policy on production linkage: Policy on developing cooperation, linking production
with consumption of agricultural products, and building large fields.
 For businesses:
o When allocated land by the state, they are exempted from land use fees or
land rent to carry out projects to build processing factories, warehouses,
housing for workers, and projects in large fields.
o Prioritize participation in implementing agricultural export contracts.
 18

o Funding support for implementing planning, improving fields, and

completing transportation, irrigation, and electricity systems to serve
agricultural production in large field projects.
o Support up to 50% of the funding for organizing training and technical
guidance for farmers producing agricultural products.
 For representative organizations of farmers:
o When allocated land by the state, they are exempted from land use fees or
land rent to carry out projects to build processing factories, warehouses,
housing for workers, and projects in large fields.
o Prioritize participation in implementing agricultural export contracts.
o Maximum support of 30% in the first year and 20% in the second year of
actual costs (plant protection drugs, labor, machine rental to perform the
service).
o One-time support of up to 50% of the cost of organizing training for
officials on management, economic contracts, production techniques,...
o Support up to 100% of the funding for organizing training and technical
guidance for farmers producing agricultural products under contract.
 For farmers:
o Receive free training and technical guidance on production and market
information related to the types of products participating in large fields.
o Get a one-time support of up to 30% of the cost of purchasing plant
varieties.
o 100% support for storage costs at the enterprise, maximum term is 3
months.

1.1.6. Other factors

Objective factors
 Weather: The effects of climate change with extreme weather have put coffee growing
areas in dangerous positions. Rising temperatures and changes in rainfall may cause
our country to lose 50% of the current Robusta coffee production area by 2050. This
will lead to a decrease in supply.
Subjective factors
 19

 Geographical farming: Most of the newly planted coffee tree areas are located in
unsuitable areas - shallow soil, high slopes, lack of irrigation water, etc. Therefore,
although the planted area has improved, it has not achieved economic efficiency.
economy, due to low productivity and high production costs.
 Coffee farming: To achieve maximum productivity, intensive farming methods
applied in the past used too many inputs (fertilizers, irrigation,...) to achieve maximum
productivity. This leads to rapid depletion of coffee trees, contamination of
groundwater and soil pollution - causing many diseases and pests to grow.

2. The coffee consumption market in Vietnam 2018-2023

Based on statistics from the General Statistics Office, from 2018 to 2023, Vietnamese
people's demand for coffee consumption tends to grow steadily. In 2018, Vietnamese coffee
consumption demand reached 1.2 million tons, equivalent to 2.3 billion USD. In 2023, the
figure increases to 1.8 million tons, equivalent to 3.5 billion USD. It can be said that coffee is
not only a drink but also the culture and lifestyle of Vietnamese people. According to a new
survey, 44% of Vietnamese respondents are willing to spend between 41,000 VND and
70,000 VND ($1.75 to $3) on coffee and bubble tea, which is more than an entire dinner.
Almost 54% of respondents said they go to a coffee shop once or twice a month. Coffee is
commonly drunk in cities. The average consumption level of city dwellers is roughly double
that of rural dwellers. This is an unsurprising phenomena, given income in metropolitan
regions is sometimes several times more than income in rural areas of Vietnam or maybe
because of different lifestyles. From these information, the Vietnamese coffee industry is
growing thanks to many attributes.
 20

2.1. Causes affecting demand:

2.1.1. Number of buyers

Figure 9: Vietnam's coffee consumption/output ratio in the last 10 crop years (Vietnam
Commodity Exchange)

During the period from 2018 to the end of 2023, according to compiled data sources, the
number of consumers and buyers increased and will not decrease in the future. Due to the
popularity of domestic and foreign brand coffee shop systems, coffee consumption in
Vietnam in the 2018-2019 crop year is approximately 2.6 pounds, an increase of 100,000
pounds compared to the 2017-2018 crop year.

In 2020, Vietnam's domestic coffee consumption will reach about 200,000 tons/year,
equivalent to 2 kg/person/year for each Vietnamese person. According to data published from
2018-2019, this number stopped at 162 tons of coffee. 5-10 years ago, the domestic coffee
consumption rate was only about 6-7% of national output, which is 0.5 kg/person/year.

According to the Vietnam Coffee and Cocoa Association (Vicofa), the amount of green
coffee used for processing and domestic consumption will reach about 16% of the entire
industry's output by 2022. This is an encouraging number in the context of The average
domestic consumption rate of the entire industry in the past 10 years is just under 10%. With
VICOFA's activities, processing factories, especially instant coffee or roasted ground coffee,
and the development of domestic coffee shop chains, coffee consumption in the domestic
market can increase from 1.68kg/person/year to 3 kg/person by the end of 2023. It also shows
that the division of labor in pepper coffee in Vietnam is very clear, instant coffee accounts for
half of the total amount of coffee consumed, the remaining 2 ⁄ 3 is roasted and ground coffee.
 21

2.1.2. Income

Buyer income represents the amount of money consumers are willing to use to buy
items, especially non-essential items. When the income of a person or group of people
increases, the quantity they demand also increases. In addition, the price of the underlying
commodities have the ability to change the income of buyers.

The average monthly income per person per month in 2018 was estimated at 3.76
million VND, in 2019 at current prices is about 4.2 million VND, and in 2022 is about 4,67
million VND.

The average monthly income of workers in the third quarter of 2023 is 7.1 million
VND, an increase of 146.000 VND compared to the second quarter of 2023 and an increase of
359.000 VND compared to the same period last year. The labor market has recorded a strong
recovery and workers' lives have improved significantly, with the average income growth rate
of workers reaching 30.1% compared to the third quarter of 2021.

Figure 10: Average income over years (million VND/month)(source: compiled from many
sources)

As income increases, demand for most goods increases. Considering the correlation
between income and consumption, it can be said that coffee is a common good. So when
income increases, demand for coffee increases.

2.1.3. Prices of substitute goods.

Due to many factors such as taste, price, and health effects, many people may choose to
buy some products other than coffee, such as:
 22

 Matcha green tea: a cup currently costs from 25,000 - 35,000 VND, a 110g box of
canned matcha green tea costs about 170,000 VND. The current price of this item is
very competitive with coffee.
 Hot cocoa: a box of cocoa powder costs about 75,000 VND for 150g. Despite its good
price, hot cocoa is still not really popular.
 Types of tea: Canned jasmine tea costs about 90.00 VND for 110g. 500g black tea
costs about 180,000 VND. Milk tea fluctuates widely, as low as 10,000 VND or as
high as 50,000 VND. This item has its own market value, not depending too much on
coffee.

2.1.4. Expectations

Good for health: Currently, there are many articles and scientific studies showing the
health benefits of filter coffee. Since then, many people have been interested in coffee and
demand in the Vietnamese coffee market has increased.
 Nutrients contained in coffee beans such as vitamins (B1, B2, B3 and B5), manganese,
potassium, magnesium, folate, phosphorus,... are added to the body.
 Changes the fat storage process but also supports gut health.
 Consuming coffee before exercising can improve endurance, prolong exercise time
while significantly reducing fatigue. Because this drink helps prevent chemicals that
cause muscle fatigue during intense physical activities.
The higher your income is, the better coffee you drink: If people expect their incomes to
rise, their demand for more delicious and expensive coffee may increase now.

2.1.5. Taste

Coffee is a drink that is not unfamiliar to each of us. It can be said that this is the
favorite drink of many people. It is suitable for many occupations from manual labor to
mental labor. According to Standard Insights’ latest study, which looked into the
consumption, opinion, habits, and perception of over 1,000 Vietnamese customers on
different brands and topics, Vietnamese consumers buy coffee the most (39.6%), followed by
soft drinks (35.6%) and bubble tea (30.7%).
 23

Figure 11: Percentage of beverages bought in the last week by 1000 Vietnamese people in
2022 (Source: Standard Insights)

The Vietnamese coffee market may be an appealing option for foreign investors;
however, they should make sure they understand the market well in advance and be well
prepared to satisfy local tastes. This means gaining insight about the types of coffee
Vietnamese consumers enjoy, how they enjoy their coffee, and learning from the experiences
of foreign coffee brands exiting the market.
 Gender: Furthermore, we could see the number of men consuming coffee outweighed
that of women.

Figure 12:Percentage of male and female consuming beverages in the last week in 2022
(Source: Standard Insights)
 24

 Purpose: Coffee in Vietnam is not a ‘quick drink’ to get a buzz like it often is in
Western cultures. Vietnamese people go for coffee for leisure—they like to sit and sip
and consider something. These differences in coffee culture can make foreign brands
less attractive than local brands. So even if the price is changed, people who love
having a coffee sip will still buy it. From here we can conclude that coffee goods have
a less price elastic demand.

Figure 13: Graph of reasons for drinking coffee in 2019 (Source: maybanhang.net)

 Taste: Vietnamese like the strong and bitter taste of Robusta coffee beans. For
Vietnamese consumers, a delicious cup of coffee must be rich in natural flavor, have
the right amount of bitterness, and have the soft aroma of wood. However, most
foreign coffee brands use Arabica beans that feature a milder taste and are less bitter
with the aroma of nuts and fruit.
 Age: According to the Food and Beverage Business Market Report 2022, Vietnamese
people aged 23 to 30 are the most likely to buy a beverage, more often. Vietnam’s
younger consumers are more open to foreign products, including Arabica beans.
 Brand: In the same study, Trung Nguyen was found to be the most popular coffee
place brand in Vietnam, with 33.7% of respondents claiming it to be their favorite.
The study has also shown that men agreed with the overall general preference for
Trung Nguyen Coffee (45.8%) among other brands, while the women admitted to
preferring and drinking more Highlands Coffee (30.7%).
 25

Figure 14: Favorite coffee place brand in Vietnam according to 1000 Vietnamese customers
in 2022 (Source: Standard Insights)

2.1.6. Policy

In recent years, some policies have been applied by the government to increase
demand. One of them is the VAT reduction policy which reduces the tax for normal products
and services from 10% to 8% which applies to coffee-related products. As a result, many
coffee brands have decreased their prices, leading to an increase in coffee demand.

2.1.7. Other factors

The epidemic affects coffee demand:

 The complicated outbreak of COVID-19 has a major impact on the amount of coffee
consumed directly and indirectly. The tense situation from the end of 2019 until now
has caused a series of stores to close many times, disrupting supply, and causing the
domestic market to fluctuate in an upward price trend. The epidemic also directly
affects the income of people in general and coffee consumers in particular, as a result,
consumers are more hesitant in deciding to buy coffee products. However, coffee
consumption is still increasing due to consumers' need to consume coffee at home
during the pandemic.
Advertisement:
The coffee business has become very popular with many people but it is also hard to
predict. To ensure brand success, suitable advertisement is required to capture more value
from customers. Some popular marketing campaigns to promote coffee shops.
 Appealing storefronts to attract customers.
 26

 Offer Buy-one-get-one-free deals.

 Apply loyalty cards campaign.
 Give Half-Priced Refills.
 Make it a combo.
 Seasonal Drink Specials…
Generally, many coffee businesses have successfully applied these campaigns to enhance
recognition among consumers and seek potential customers, so that leverage the demand for
coffee in the market.

3. Proposed solutions and forecasts

3.1. Solutions

Regarding production and processing, it is necessary to promote effective restructuring

of the coffee industry, such as: creating concentrated, specialized growing areas, applying
technological advances, promoting linkages between raw material areas and processing
facilities to create a source of goods that ensures stability in quality and quantity, meeting
market requirements.

Brand building must be given more attention and attention. Currently, the work of
building and developing brands has not been fully recognized and implemented effectively by
businesses, which is a reason why Vietnamese agricultural products in general and coffee in
particular are not recognized by consumers around the world. Businesses need to survey
market needs in areas including: market share, tastes, quality, and price. From there,
determine the value of products, build promotion, marketing, and brand positioning strategies
appropriate to your capabilities.

3.2. Forecasts

From the beginning of November until now, coffee farmers in the Central Highlands
region have begun to enter the harvest season of 2023 - 2024. The price of green coffee is
currently fluctuating at 60,000 VND/kg, nearly 1,5 times compared to the same time in 2022.

It is predicted that coffee prices in the 2023 - 2024 crop year will be stable, not
decreasing compared to current prices thanks to the increasingly improved quality of
Vietnamese coffee. Furthermore, the coffee consumption market has become more stable and
 27

cooperatives are encouraging farmers to harvest ripe coffee beans and keep coffee acreage
stable.

Although coffee prices in 2023 will increase, many coffee areas have converted to
growing fruit such as durian. The reason is that coffee prices have been driven too low in
recent years, so farmers have not invested much in coffee trees (except for coffee companies
and some cooperatives). Along with that, climate change, especially the El Nino phenomenon
causing drought, have greatly affected Robusta coffee nationwide.

VICOFA predicts that the 2023 - 2024 coffee crop will be harvested later than the
previous crop. Some localities such as Gia Lai, Kon Tum, and Sơn La will harvest coffee
earlier in late October, early November and late December 2023.

Regarding output, VICOFA forecasts that the 2023-2024 coffee crop will have a 10%
decrease in output due to the impact of climate change and the increase in intercropping areas,
farmers will invest in crops with high economic efficiency such as durian and fruit trees. In
addition, because coffee prices are trending down, some areas have a phenomenon named
green picking, which greatly affects the quality of coffee at the beginning of the season.

V. Conclusion

1. Statement of Research Findings

The above study provides a comprehensive overview of the dynamics and

characteristics of the coffee industry in Vietnam. Consequently, it is evident that the
Vietnamese coffee market has achieved impressive growth rates in both value and output
compared to the global market, presenting favorable conditions for development. Increased
consumer demand comes with expectations for quality, pricing, and diversity. However, it
also brings forth challenges for the market to progress further.

In 2024, Vietnam's coffee industry holds very positive prospects as domestic supply is
comprehensively ensured in terms of both quality and quantity, meeting export requirements
even to demanding markets such as the United States and Europe.
 28

2. Limitations

The lack of detailed data on specific figures regarding production, prices, and other
factors may diminish the accuracy and granularity of the research. Furthermore, the coffee
industry in Vietnam is susceptible to rapid changes influenced by various factors, potentially
causing the research information to become outdated. Finally, it should be noted that the
industry's forecast for the future could be affected by unpredictable elements like global
market fluctuations, climate change, and other unknown variables.

3. Further research directions

In the next topics, the research team can expand the topic by focusing more deeply on
factors affecting supply and demand such as economics, society, culture, etc. From there,
manufacturers, investors can better understand how the market operates and come up with
future development strategies. Second, the authors can learn more about the applications of
supply and demand in the coffee industry so that coffee businesses can improve operational
efficiency.

VI. References

 AGROINFO (21/01/2017). Chính sách ngành hàng cà phê. Available at:

https://thitruongnongsan.gov.vn/vn/tID24992_Chinh-sach-nganh-hang-ca-phe-.html
 B.T (2023), Để người tiêu dùng thế giới biết đến nhiều hơn cà phê Việt Nam:
https://dangcongsan.vn/cung-ban-luan/de-nguoi-tieu-dung-the-gioi-biet-den-nhieu-
hon-ca-phe-viet-nam-633954.html
 Bệnh viện Đa khoa MEDLATEC (16/01/2023). 7 LỢI ÍCH SỨC KHỎE CỦA CÀ
PHÊ ÍT NGƯỜI BIẾT. Available at:
https://medlatec.vn/tin-tuc/7-loi-ich-suc-khoe-cua-ca-phe-it-nguoi-biet-s195-n31808
 Chiến Trần Hữu. Phân tích cung, cầu và giá cả của cà phê tại Việt Nam giai đoạn 2017
- 2021. Available at:
https://www.studocu.com/vn/document/truong-dai-hoc-thuong-mai/kinh-te-vi-mo/
2273miec0111-nhom-2-cung-cau-va-gia-ca-thi-truong-mat-hang-ca-phe-giai-doan-
2017-2021/39743629?
fbclid=IwAR3IcSiNpst_xc0Dt_xJNVP33PGy4K3nlTDytBr46J4HtbIneguchOQ9cZY
 29

 Chính phủ (2023), TOÀN VĂN: NGHỊ ĐỊNH SỐ 44/2023/NĐ-CP VỀ GIẢM THUẾ
GIÁ TRỊ GIA TĂNG: https://xaydungchinhsach.chinhphu.vn/toan-van-nghi-dinh-44-
2023-nd-cp-ve-giam-thue-gia-tri-gia-tang-119230630185610998.htm
 Công nghệ rang Hot Air hiện đại giúp hạt cà phê chín đều từ trong ra ngoài (2021)
Kapha. Available at: https://kapha.vn/cong-nghe-rang-hot-air-hien-dai-giup-hat-ca-
phe-chin-deu-tu-trong-ra-ngoai/ (Accessed: 2023).
 Cong Nguyen (07/12/2016). PH N TÍCH THỊ TRƯỜNG CÀ PHÊ VIỆT NAM NĂM
2016. Available at: https://blog.maybanhang.net/2016/12/phan-tich-thi-truong-ca-phe-
viet-nam-nam-2016
 DHNguyen, P.L. (2020) Evaluating Economic Efficiency of Coffee Production Based
on Water Saving Techniques in Central Highland: A Case Study in Cu M’gar District,
Dak Lak Province, Research Gate. Available at:
https://www.researchgate.net/publication/353914704_DANH_GIA_HIEU_QUA_KIN
H_TE_SAN_XUAT_CA_PHE_UNG_DUNG_CONG_NGHE_TUOI_TIET_KIEM_
O_VUNG_TAY_NGUYEN_NGHIEN_CUU_DIEN_HINH_O_HUYEN_CU_M
%27GAR_TINH_DAK_LAK_Evaluating_Economic_Efficiency_of_Coffee_Producti
on_Bas (Accessed: 2023).
 Đức Anh - Đình Dũng (14/12/2020). Đắk Lắk: Thực hiện đề án phát triển Cà Phê bền
vững đến năm 2020 và định hướng đến năm 2030. Available at:
https://moitruongvaxahoi.vn/dak-lak-thuc-hien-de-an-phat-trien-ca-phe-ben-vung-den-
nam-2020-va-dinh-huong-den-nam-2030-150659038.html
 Đức Anh – Đình Dũng (2020), Đắk Lắk: Thực hiện đề án phát triển Cà Phê bền vững
đến năm 2020 và định hướng đến năm 2030:
https://moitruongvaxahoi.vn/dak-lak-thuc-hien-de-an-phat-trien-ca-phe-ben-vung-den-
nam-2020-va-dinh-huong-den-nam-2030-150659038.html
 Forbes (2022) Forbes: GDP bình quân đầu người Việt Nam tăng trưởng ấn tượng nhất
thế giới trong 15 năm qua Giang Anh, CAFEF. Translated by Giang Anh.
https://cafef.vn/forbes-gdp-binh-quan-dau-nguoi-viet-nam-tang-truong-an-tuong-nhat-
the-gioi-trong-15-nam-qua-20221125034856218.chn
 Hà, L. (2023) Sản lượng sụt giảm, giá cà phê sẽ tiếp đà tăng trong niên vụ 2023 -
2024, Công Thương.
https://congthuong.vn/san-luong-sut-giam-gia-ca-phe-se-tiep-da-tang-trong-nien-vu-
2023-2024-284833.html
 Hồng, K. (2023) Thu nhập bình quân của lao động năm 2022 là 6,7 triệu đồng/tháng,
Vietnamplus.
 30

https://www.vietnamplus.vn/thu-nhap-binh-quan-cua-lao-dong-nam-2022-la-67-trieu-
dongthang-post840466.vnp
 Huỳnh Ngọc Dương. (2023, March 22). Phát triển thị trường tiêu thụ cà phê nội địa là
xu hướng tất yếu trong giai đoạn hiện nay. Socongthuong.daklak.gov.vn.
https://socongthuong.daklak.gov.vn/vi/news/hoat-dong-nganh-cong-thuong-34/phat-
trien-thi-truong-tieu-thu-ca-phe-noi-dia-la-xu-huong-tat-yeu-trong-giai-doan-hien-
nay-4137.html
 Huỳnh, N. (2023, April 20). Tổng Quan giới thiệu thị trường cà phê Việt Nam & Thế
Giới. Gia Cát Lợi.
https://dautuhanghoa.vn/thi-truong-ca-phe/
 Khôi Nguyên. (2018, August 23). Áp Lực từ nguồn cung mùa vụ, giá cà phê thiết lập
mức đáy mới. Nhịp sống kinh tế Việt Nam & Thế giới.
https://vneconomy.vn/ap-luc-tu-nguon-cung-mua-vu-gia-ca-phe-thiet-lap-muc-day-
moi.htm
 Lê Bửu, Y. (2023) Thu nhập bình quân người lao động Việt Nam quý 3 và 9 tháng
năm 2023 tăng bao nhiêu?, Thư Viện Pháp Luật. Available at:
https://thuvienphapluat.vn/lao-dong-tien-luong/thu-nhap-binh-quan-nguoi-lao-dong-
viet-nam-quy-32023-la-bao-nhieu-10689.html
 Mankiw, N. G. (1991). Mankiw principles of microeconomics. Cengage.
https://www.cengage.com/c/principles-of-microeconomics-9e-mankiw/978035713348
4/
 Minh, H. (2009, May 11). Cà phê và thị trường nội địa. Nhịp sống kinh tế Việt Nam
& Thế giới.
https://vneconomy.vn/ca-phe-va-thi-truong-noi-dia.htm
 Ngọc Ánh - Phương An. (2023, March 3). Nâng giá trị cà phê Việt (*): Thị trường
trong nước đang lên. https://nld.com.vn.
https://nld.com.vn/kinh-te/nang-gia-tri-ca-phe-viet-thi-truong-trong-nuoc-dang-len-
2023030222305758.htm
 Ngọc Diệp. (2023, February 15). Sau 10 năm bị “vua cà phê” chê “nước đường vị cà
phê”, hiện có bao nhiêu người Việt sẵn sàng chi hơn 100.000 đồng cho một ly
Starbucks? Kênh thông tin kinh tế - tài chính Việt Nam.
https://cafef.vn/sau-10-nam-bi-vua-ca-phe-che-nuoc-duong-vi-ca-phe-hien-co-bao-
nhieu-nguoi-viet-san-sang-chi-hon-100000-dong-cho-mot-ly-starbucks-
 31

 Nguyen, C. (n.d.). Phân tích thị trường cà phê Việt Nam năm 2016. PHÂN TÍCH THỊ
TRƯỜNG CÀ PHÊ VIỆT NAM NĂM 2016.
https://blog.maybanhang.net/2016/12/phan-tich-thi-truong-ca-phe-viet-nam-nam-2016
 Nguyen Ha Linh (2022). Đề tài phân tích cung, cầu và giá cả thị trường cà phê tại Việt
Nam.
https://www.studocu.com/vn/document/truong-dai-hoc-thuong-mai/kinh-te-vi-mo/
phan-tich-cung-cau-ca-phe/23701213?fbclid=IwAR0dV-
R59mvymlKmFHWyEX62CF1ghV81WjuepzQ54_oZ-2InV7QX6cmY3dY
 Nguyễn Thị Mỹ Hằng - Nguyễn Thị Minh Thúy (14/06/2020). Thực trạng và giải pháp
phát triển cho ngành Cà phê Việt Nam.
https://tapchicongthuong.com.vn/bai-viet/thuc-trang-va-giai-phap-phat-trien-cho-
nganh-ca-phe-viet-nam-72337.htm
 NGUYỄN THỊ MỸ HẰNG - NGUYỄN THỊ MINH THÚY (2020), Thực trạng và
giải pháp phát triển cho ngành Cà phê Việt Nam:
https://tapchicongthuong.vn/bai-viet/thuc-trang-va-giai-phap-phat-trien-cho-nganh-ca-
phe-viet-nam-72337.htm
 Nguyễn, Q. (2019, September 25). Giá cà phê khó khởi sắc do nguồn cung dồi dào.
https://vov.gov.vn/gia-ca-phe-kho-khoi-sac-do-nguon-cung-doi-dao-dtnew-156031
 Nhật Anh (2023), Xây dựng chuỗi ngành hàng cà phê Việt Nam chất lượng cao:
https://baochinhphu.vn/xay-dung-chuoi-nganh-hang-ca-phe-viet-nam-chat-luong-cao-
102230312155540856.htm
 Nhóm PV TTXVN Tại Tây Nguyên (05/04/2023). Nâng tầm giá trị cà phê Việt – Bài
2: Mở rộng Chương trình tái canh cà phê.
https://bnews.vn/nang-tam-gia-tri-ca-phe-viet-bai-2-mo-rong-chuong-trinh-tai-canh-
ca-phe/286755.html
 Nhóm PV TTXVN Tại Tây Nguyên (2023), Nâng tầm giá trị cà phê Việt – Bài 2: Mở
rộng Chương trình tái canh cà phê:
https://bnews.vn/nang-tam-gia-tri-ca-phe-viet-bai-2-mo-rong-chuong-trinh-tai-canh-
ca-phe/286755.html
 Pham Nguyen (15/09/2023). Vietnamese Coffee Market: A Deep Dive into Its
Consumers, Challenges, and Prospects.
https://www.vietnam-briefing.com/news/vietnam-coffee-market-a-deep-dive-into-its-
consumers-challenges-and-prospects.html/
 32

 Phong, H. (2023, January 26). Many Vietnamese spend more on drinks than main
meals: Report - VnExpress International. VnExpress International – Latest news,
business, travel and analysis from Vietnam.
https://e.vnexpress.net/news/business/data-speaks/many-vietnamese-spend-more-on-
drinks-than-main-meals-report-4563606.html
 Phuoc An coffee joint stock company (15/10/2020). SẢN LƯỢNG GIẢM NHƯNG
GIÁ CÀ PHÊ VIỆT NAM VẪN CHƯA PHỤC HỒI.
http://phuocancoffee.com.vn/san-luong-giam-nhung-gia-ca-phe-viet-nam-van-chua-
the-phuc-hoi
 PV (2022) Giá vật tư tăng cao, người trồng cà phê có lời không?, CôngThương.
https://congthuong.vn/gia-vat-tu-tang-cao-nguoi-trong-ca-phe-co-loi-khong-
231902.html.
 Sở Giao dịch Hàng hóa Việt Nam (2023), Ngành cà phê Việt nhiều dư địa phát triển :
https://baochinhphu.vn/xay-dung-chuoi-nganh-hang-ca-phe-viet-nam-chat-luong-cao-
102230312155540856.htm
 Sở Giao dịch Hàng hóa Việt Nam (2023), XUẤT KHẨU CÀ PHÊ: ĐIỂM SÁNG
TRONG NHIỀU THÁCH THỨC:
https://www.gso.gov.vn/tin-tuc-khac/2023/02/xuat-khau-ca-phe-diem-sang-trong-
nhieu-thach-thuc/

 STANDARD INSIGHTS (12/12/2022). The Coffee Industry in Vietnam. Available at:

https://standard-insights.com/blog/the-coffee-industry-in-vietnam/

 Tâm, A. (2023) Nỗi buồn cà phê Việt: Xuất khẩu top đầu thế giới, giá xếp chót bảng,
Vietnamnet.
https://vietnamnet.vn/gia-ca-phe-viet-nam-xuat-khau-chot-bang-du-xep-trong-top-dau-
2129440.html
 Tcct, B. (2020, August 25). Nắm lợi thế, cà phê hòa tan Việt Nam kỳ vọng mục tiêu
lớn ở châu u. Tạp chí Công Thương.
https://tapchicongthuong.com.vn/bai-viet/nam-loi-the-ca-phe-hoa-tan-viet-nam-ky-
vong-muc-tieu-lon-o-chau-au-74389.htm
 Thông tin điện tử Tổng cục Thống kê (2023). XUẤT KHẨU CÀ PHÊ: ĐIỂM SÁNG
TRONG NHIỀU THÁCH THỨC.
https://www.gso.gov.vn/tin-tuc-khac/2023/02/xuat-khau-ca-phe-diem-sang-trong-
nhieu-thach-thuc/
 33

 Thụy, M. (2018) Thu nhập bình quân đầu người năm 2018 đạt 2.587 USD,
VnEconomy. https://vneconomy.vn/thu-nhap-binh-quan-dau-nguoi-nam-2018-dat-
2587-usd.htm
 TNL (2023), Tại sao thế giới say mê cà phê Việt Nam? :
https://thanhnien.vn/tai-sao-the-gioi-say-me-ca-phe-viet-nam-
18523030711405284.htm
 TNL (2023), Cà phê Việt Nam đang ở đâu trên tầm nhìn 20 tỉ USD? :
https://thanhnien.vn/ca-phe-viet-nam-dang-o-dau-tren-tam-nhin-20-ti-usd-
185230310084428855.htm
 Tổng Hợp (2023) Kết thúc niên vụ 2022-2023, cà phê Việt Nam ‘mất mùa được giá’,
ĐÀI PHÁT THANH VÀ TRUYỀN HÌNH ĐẮK NÔNG.
https://truyenhinhdaknong.vn/news/ket-thuc-nien-vu-2022-2023-ca-phe-viet-nam-mat-
mua-duoc-gia-23329.htm
 Tường, V. (2023) Giá cà phê hôm nay 25/8: Giá trong nước hiện đã tăng tới 65% so
với cuối năm 2022, Tạp Chí Công Thương.
https://tapchicongthuong.com.vn/bai-viet/gia-ca-phe-hom-nay-258-gia-trong-nuoc-
hien-da-tang-toi-65-so-voi-cuoi-nam-2022-109677.htm
 Tường, V. (2023) Giá cà phê hôm nay 8/11: Dự báo giá cà phê niên vụ 2024 sẽ ổn
định, Tạp Chí Công Thương.
https://tapchicongthuong.com.vn/bai-viet/gia-ca-phe-hom-nay-811-du-bao-gia-ca-phe-
nien-vu-2024-se-on-dinh-113467.htm
 VietnamBiz. (2017, November 1). Niên vụ cà phê 2016 - 2017 Kết thúc với mức thâm
hụt 1,2 triệu bao. vietnambiz.
https://bom.so/r1uL