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How Vietnam Became a Coffee GiantTuesday, August 05, 2014 > 09:31:12
Think of coffee and you will almost certainly think of Brazil, Colombia, or maybe Ethiopia. It might surprise you but nowadays the world's second largest exporter is Vietnam. The country is actively exporting coffee, which grows in large areas. Its market share managed to jump from 0.1% to 20% in just 30 years. How have these rapid changes affected the country?
The Vietnam war ended in 1975, and economic policies introduced by the government at that time did nothing to help.
Collectivizing agriculture proved to be a disaster, so in 1986 the Communist Party placed a big bet, on coffee.
Coffee production grew considerably by 20%-30% every year in the 1990s. Today the industry employs about 2.6 million people. Coffee beans are grown on half a million smallholdings of two to three acres each.
As we see this reform proved to be highly successful. It helped transform the Vietnamese economy. For instance, in 1994 60% of Vietnamese lived under the poverty line, today less than 10% do.
The Vietnamese traditionally drank tea, like the Chinese, and still do," says Vietnam-based coffee consultant Will Frith.
Vietnamese people do drink it - sometimes with condensed milk, or in a cappuccino made - but coffee is mainly grown as an export crop.
Coffee was introduced to Vietnam by the French in the 19th Century and a processing plant manufacturing instant coffee was functioning by 1950.
Some big companies, like Nestle, have their processing plants in Vietnam, which roast the beans and pack it.
Thomas Copple, an economist at the International Coffee Organization in London, says most of the crop is exported as green beans and then processed in other countries, in Germany for example.
Some local entrepreneurs in Vietnam are planning to set up an international chain of Vietnamese-style coffee shops.
"We want to bring Vietnamese coffee culture to the world. It isn't going to be easy but in the next year we want to compete with the big brands like Starbucks," Chairman Vu says.
"If we can take on and win over the US market we can conquer the whole world."