Vietnam may be a coffee-exporting country but local consumers have grown fond of tea-based drinks, a report by Kantar Worldpanel shows.

Tea-based drinks, including RTD (ready-to-drink) and RTS (ready-to-serve) beverages, are now consumed by over half of Ho Chi Minh City’s population.

Coffee, on the other hand, reaches just one-third of the city’s population, according to the Out-of-Home (OOH) Panel.

Among tea-based drinks, bubble tea, also known as milk tea or boba, appears to be the top option, followed by peach tea and matcha or green tea, a Japanese-inspired drink whose popularity seems to be on the rise. 

According to the survey, at least one in five Ho Chi Minh City residents bought milk tea at least once in September.  

Not only are the tea-based products more popular than coffee, but consumers are also willing to pay 1.5 to 2 times higher for the top three tea-based choices mentioned above. 

The trend has given way to a boom in milk tea outlets throughout the city, ranging from streetside to high-end establishments, with the favored brands being Gong Cha, Koi Thé, and The Alley.

Share of wallet of total RTD and RTS beverages excluding beer. Photo: Kantar Worldpanel

On the other hand, despite Vietnam being the world’s second-biggest coffee producer, coffee earns less from consumers for out-of-home beverage consumption as it tends to have less mass appeal than tea and attracts a more unique consumer base of frequent coffee drinkers.

Traditional Vietnamese black coffee (ca phe den) and milk coffee (ca phe sua) are among the most popular coffee choices, but the market observes modern or western-influenced coffees like cappuccino, mocha and ice-blended coffees (frappe) are rising in popularity, accounting for a fourth of the categories' revenue.

In terms of places consumers usually go to for tea and coffee, the top three brands which attract the most consumers in Ho Chi Minh City are The Coffee House, Phuc Long, and Highlands.

Even though these are all well-known coffee shops, half of their revenue comes from drinks other than coffee. 

In other words, coffee drinks account for half of the consumer spending while other beverages such as tea, fruit juice, and soft drinks dominate the other half.

Looking forward to 2021, Ho Chi Minh City is being ranked as the second-fastest growing city among the top 20 in Asia, just after Delhi (India), by Oxford Economics, according to Kantar Worldpanel.

It promises huge opportunities amidst fierce competition driven by high demand and fickle-minded consumers that are less likely to be loyal to any particular brand.

Kantar Worldpanel officially launched Out-of-Home (OOH) Panel in Vietnam in September, which regularly measures major convenience foods and beverages that Vietnamese individuals purchase for consumption away from home.

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