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Tonkin Coffee considering stake sale

Released at: 13:38, 20/03/2017

Tonkin Coffee considering stake sale

Photo: Hong Nhung

Famous Hanoi-based coffee chain weighing up potential partners.

by Khanh Chi

Quite popular at one time in the past, food and beverage chain Tonkin Coffee, which was founded in Hanoi in 1997, has announced it is seeking partners in a 90 per cent stake sale because of changes in the company’s business strategy, according to owner Ms. Nguyen Quynh Nga.

The coffee chain was previously reported by local media as about to be acquired by Founder Team, a newly-established venture building team in Vietnam, which was to enter into an agreement to acquire a 90 per cent interest for more than $1 million.

“We are still considering partners,” Ms. Nga confirmed with VET. “Founder Team is merely one of a number of partners hoping to take over and franchise our brand, and the price of $1 million is not the final figure.”

“Tonkin Coffee is a long-standing coffee chain that we took great pains to build, so we will thoroughly consider and choose a partner with suitable capability together with the financial capacity to develop and expand the chain’s scale,” she added.

Tonkin Coffee was launched in 1997 as a family-owned business. It had been a popular hangout for local residents before it began shutting down several outlets in 2012. Local media reported that the collapse was because the company found itself in an expansion trap, where it could not facilitate its growth.

Others believe that one of the brand’s biggest mistakes was the decision to sell breakfast and fast food. It therefore had to employ more staff and buy more ingredients, while its administration struggled to cope and cash flow was poor.

Founder Team has said it would revive the brand, combining Tonkin’s founder’s expertise in operating coffee shops with its own retail experience to keep the business sustainable. Tonkin Coffee would be expanded through the franchising model around the country.

According to a report by market researcher Euromonitor, the number of coffee shops in Vietnam is growing at about 7 per cent each year. It is estimated there were more than 26,000 around the country in 2015, of which only 2 per cent (about 500) are part of chains. Chains are forecast to grow strongly over the next few years, however, compared to growth in independent coffee shops or franchises.

According to a survey conducted by the UK market researcher Mintel on the coffee market in Vietnam and other Asian countries, Vietnam leads the way in terms of authentic coffee, typically ground or full-grain coffee.

In terms of average annual per capita coffee consumption, Vietnam ranked fourth out of the five leading Asian countries, with 1.15 kg. The leader was Japan, with 2.9 kg, followed by South Korea with 2.42 kg.

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