TRUNG NGUYEN CORPORATION AND STRATEGY PENETRATE INTO

PHILIPPINES MARKET

GROUP 4

1996

2000

2002

Establishment of Trung Nguyen Coffee Company

Over 100 Trung Nguyen coffee shops were set up in Vietnam

The company has establish three factories where manufacture mixed coffee, drip coffee, and a range of kinds teas with regional branches at Ban Me Thuot, Binh Duong and Lam Dong

TN has established the franchised shop system nationwide and also in Japan, Thailand, Cambodia, Malaysia, China, and outside of Asia opened in Germany and US

COMPANY BACKGROUND

Trung Nguyen trademark was established in Singapore and Thailand

ANALYZING PHILIPPINES COFFEE MARKET BY USING 12C FRAMEWORK

1. Country:

- Philippines is the world's 12th most populous country

- The national language is Pilipino but English is both spoken and understood throughout the country, especially in business negotiations and in the government

- The national economy of the Philippines is the 48th largest in the world, with an estimated 2009 gross domestic product (nominal) of $161 billion

- The economy of the Philippines is the 4th largest economy in South East Asia and the 35th largest economy in the world by purchasing power parity according to the World Bank in 2009

- In the Philippines, coffee has a history as rich as its flavor. The first coffee tree was introduced in Lipa, Batangas in 1740 by a Spanish Franciscan monk.

- The Philippines is one of the few countries that produces the four varieties of commercially-viable coffee: Arabica, Liberica (Barako), Excelsa and Robusta. Climatic and soil conditions in the Philippines – from the lowland to mountain regions – make the country suitable for all four varieties

- Philippines is raked the 15th in 2005 Top twenty green coffee producers (FAO estimate)

ANALYZING PHILIPPINES COFFEE MARKET BY USING 12C FRAMEWORK (cont)

2. Concentration- Target Philippine white collar workers –

officer special in call centers 24-7 (Many foreign enterprises located customer care center in Philippines) aged between 25 – 40.

- Second target: 18 – 24 young Filipinos (students and foreign-students)

3. Culture- Philippine culture is a combination of Eastern and

Western cultures. The Philippines exhibits aspects found in other Asian countries with a Malay heritage, yet its culture also displays a significant amount of Spanish and American influences.

- Philippines had long had a thriving coffee-drinking culture with a populace that favored coffee over tea, and this was becoming stronger as society modernized

4. Choice- Philippines domestic market can supply rich

coffee beans.- International competitors: STARBUCKS.

Starbucks has 2 main products: Coffee shop and instant coffee

- The Philippine Coffee Board have a lot of exotic coffees and that is the way to present our products

- Competitive strengths and weaknesses • Strengths: Starbucks: penetrate into the

market sooner; powerful finance potentiality. Understand the Filipino’s gourmet coffee (for small coffee shops of The Philippine Coffee Board)

• Weakness: TRUNG NGUYEN has cheaper coffee input from Vietnam. Starbucks has import inputs from Africa and South America with higher transportation costs

ANALYZING PHILIPPINES COFFEE MARKET BY USING 12C FRAMEWORK (cont)

5. Consumption- Coffee is considered a high-value crop in both

the local and international trade markets .- Most Philippines drink coffee, but it's usually

that freeze-dried instant stuff. So, Demand for coffee was buoyed by the increased popularity of products focusing on convenience, as the lifestyles of Filipino consumers are evolving to become busier and more time-pressed.

- The Philippines today consumes about 65,000 tons of coffee a year but is only able to produce a maximum of 30,000 tons, providing a huge market opportunity to coffee farmers.

6. Contractual obligation- The Law of obligations and contracts is the

body of rules which deals with the nature and sources of obligations and the rights and duties arising from agreements and particular contracts – Republic Act 386 – Civil Code of the Philippines.

7. Commitment- No restriction on trade regulation.- Low barriers for new entrant

8. Channel- Specialist coffee shops in the Philippines are

expected to continue growing in coming years.

9. Communication- 2009: Internet users in the Philippines is

24,00,000 ~ 24.5 % population (Nielsen)

10. Capacity to pay- Pricing: put the premium price, fluctuate

around: 1,810-1,945 USD/ton

11. Currency - Philippine Peso PHP/USD = 43.71662

12. Caveats - Philippine Coffee production in MY 2010

(which starts in July 2009) is projected to decline by 2-3 percent as a result of El Nino

Philippines market is potential to Trung Nguyen Coffee’s long term growth

prospects.

CONCLUSION