Gloria Jean's Coffees quits Vietnam after decade of slow-drip expansion

By Minh Nga   April 28, 2017 | 02:45 pm GMT+7
Gloria Jean's Coffees quits Vietnam after decade of slow-drip expansion
A store of Gloria Jean’s Coffees in HCMC before it was closed. Photo by VnExpress/Minh Thu

Tough competition has forced the Australian coffee franchise out.

Australia's Gloria Jean’s Coffees has closed its last shop in Vietnam, ending a 10-year stint in Ho Chi Minh City and Hanoi due to slow expansion, high rents and an unsuitable business model, local media reported.

The Sydney-based company did not immedialy respond to VnExpress International's request for comment on the closure.

Gloria Jean's Coffees arrived in Vietnam in 2006 after a local firm was awarded a franchise contract with expectations the business would expand like in Thailand and Malaysia, the online Young Intellectual newspaper reported.

This projection was based on the fact the chain served arabica coffee, which was a relative novelty in Vietnam where the robusta bean rules. 

Vietnam, the world's number two coffee producer after Brazil, has one of the fastest growing retail coffee markets, trailing behind Indonesia, Turkey and India, global market intelligence agency Mintel said in a report last month.

However, the coffeehouse chain was only able to open six outlets in Ho Chi Minh City and another in Hanoi during its first six years in Vietnam.

In 2012, the company was forced to close a store in downtown Ho Chi Minh City, blaming the high rent. This was followed by further cuts in 2015 that saw only two stores left in the city as of last year.

One of them was sold to Vietnamese chain Highlands Coffee, and the last one in District 7 was shut last week. The firm's Facebook page has been inactive since December last year.

The online newspaper quoted Nguyen Phi Van, the first franchisee of Gloria Jean’s Coffees in Vietnam, as saying the demise was due to the adoption of a business model that had been developed in Australia for the local and regional markets.

Later on, even when Gloria Jean’s Coffees International allowed its franchise in Vietnam to make changes to adapt to the local market, business remained tough due to fierce competition from both foreign and domestic rivals such as Starbucks, The Coffee House, Phuc Long, Urban Station and Trung Nguyen, Van said.

Before Vietnam, Gloria Jean’s Coffees set up shop in Indonesia in 1992 and opened 15 stores, but only two currently remain.

The firm has expanded to 39 markets worldwide, with more than 400 shops alone in Australia, it said on its website.

Last year, New York Dessert Cafe (NYDC) said goodbye to its customers in Vietnam via its Facebook page, promising to “return someday”, said a Insider Retail Asia report.

Brought to Vietnam in 2009 by Singapore’s SUTL Group, NYDC used to be one of the most popular foreign coffee chains in HCMC.

Two factors that likely led to the downfall of NYDC Vietnam were the increasing dominance of affordable local coffee chains and the more recent arrival of international chains like Starbucks.