Experts Suggest Vietnam Redefine Competitive Advantages to Attract UK Investment
	UKVFTA and Its Impacts on Trade and Investment

2024 is considered as a special year for the coffee industry as Vietnamese coffee prices have reached the world's highest for the first time.

Since the beginning of the year, Vietnam's coffee export prices have risen continuously. In January, the price was just over 3,000 USD per tonne, but it surged to 5,855 per tonne in October. It shot up over 90% within just 10 months. Export prices during the first 11 months of 2024 averaged 4,037 USD per tonne, up 56.9% compared to the same period in 2023, according to the Ministry of Agriculture and Rural Development.

In 2024, the average export price of Vietnamese coffee to the UK rose by 68.4%, highlighting the positive effects of the UKVFTA and Vietnam's increasing global reputation.

Photo: Hanoitimes

Significant price increase

The DakLak September 2nd Import-Export Company Limited (Simexco DakLak) said the UK is a strategic market for its speciality coffee products. Le Duc Toan, its sales director in charge of the southern region, said the company exports around 100,000 tonnes of coffee beans a year, with the US, EU and China being its major markets.

“We primarily export specialty coffee to the UK, averaging around 20-30 containers per year. This is a niche market for Simexco.” Speciality coffees offer exceptionally high added value, with their prices three to four times that of regular coffees, but the cost of producing them is also significantly higher, he added. The UKVFTA has greatly helped it export to the UK, he said.

According to the Ministry of Industry and Trade’s Export and Import Department and Vietnam Customs, the average export price of Vietnamese coffee to the UK reached $3,941 per ton in 2024, reflecting a significant 68.4% increase compared to the previous year.

In June 2024 alone, Vietnam exported 2,180 tons of coffee to the UK, valued at $9.1 million. This represented a monthly increase of 24.4% in volume and 15.1% in value. However, compared to June 2023, the export volume declined by 44.6% and the value dropped by 17.5%. Despite the lower volumes, the substantial price increase per ton offset these decreases, highlighting the rising value of Vietnamese coffee.

In the first half of 2024, Vietnam exported 16,540 tons of coffee to the UK, generating $65.2 million in revenue. While the export volume fell by 22.8% year-over-year, the value surged by 29.9%, underlining the growing international recognition of Vietnamese coffee's quality and competitiveness.

According to the International Trade Centre (ITC), the UK imported 94,210 tons of coffee globally in the first five months of 2024, valued at $553 million. This represented an 8.1% growth in volume and a 2.6% increase in value compared to the same period last year.

Vietnam’s coffee stood out with a remarkable 45.4% increase in average import price, reaching $3,378 per ton. This was in stark contrast with the declining coffee prices from other major suppliers such as Brazil, Germany, and Colombia. The impressive performance of Vietnamese coffee in the UK market is a testament to its growing reputation and the effectiveness of the UKVFTA in facilitating trade between the two countries.

Challenges and opportunities

According to the “Connecting the UK and Vietnam in Agriculture, Food and Drinks” report, commissioned by the British embassy in Hanoi and done by Edelman Global Advisory, Vietnam holds the potential to emerge as a significant supplier of products to UK retailers. Processed products like coffee, cashew and pepper are already widely available in major UK supermarkets.

Despite the potentials and positive developments, Vietnam remained the second-largest coffee supplier to the UK, exporting 15,330 tons valued at $51.79 million during the same period. Although the export volume declined, the value of Vietnamese coffee experienced a significant year-over-year increase of 12.2%.

However, Vietnam’s market share in the UK coffee market decreased from 22.8% to 16.27% in the first five months of 2024, while Brazil’s share expanded substantially during the same period.

This shift underscores both the challenges and opportunities for Vietnamese coffee exporters. To sustain and expand their presence in the UK market, they must focus on enhancing the quality of their products, diversifying their product offerings, and improving their marketing strategies. By doing so, they can compete more effectively with other global suppliers and ensure the continued growth and success of Vietnamese coffee on the international stage.

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