VietNamNet Bridge - Spending $25 million to buy Highlands Coffee from a Vietnamese boss, Jollibee Group of the Philippines has taken steps to be considered very in developing this brand in Vietnam.

A Highland Coffee shop in Vietnam.

The Viet Thai International Co., of overseas Vietnamese David Thai caused a stir in the public when it conducted big M&A affairs. Firstly, it bought Pho 24 brand and then sold nearly half of the shares to Jollibee. Shortly after that, this company sold half of its shares in Highlands Coffee to also the Filipino investor. Particularly, Jollibee paid $25 million to buy 49 percent of Viet Thai International’s business in Vietnam and 60 percent of business in Hong Kong (China).

Jollibee Group has also agreed to loan Viet Thai International $35 million with interest rate of only 5 percent to “invest in the future,” as saying by representatives of Jollibee. This loan will be paid in 2016.

In this affair, Jollibee said, besides continuing to develop this coffee chain in Vietnam, they will add products of Highlands Coffee in the other systems of the Jollibee restaurants in Asia. This will be a significant added value for Jollibee, because Vietnamese coffee has gained worldwide recognition for top quality.

Highlands Coffee did not face difficulty as other companies but it sold shares to the Filipino partner because of the pressure from competition with Starbucks. Despite its predominance of experience and the understanding of the taste of Vietnamese consumers, Highlands Coffee does not take advantage compared to Starbucks because of the domestic consumers’ “love for foreign things.”

Vietnamese consumers’ “love for foreign things” was clearly shown in the early days of the first coffee shop of Starbucks in HCM City. Earlier in February this year, hundreds of young people lined up under the sun to buy a cup of Starbucks coffee though the product is not cheap. The price for a cup of regular Starbucks is VND85,000 ($4) and VND150,000 ($7) for a special cup. So soon finding ways to cope with Starbucks is a wise step.

Jollibee affirmed to add Highlands Coffee products in the other systems of Jollibee restaurants across Asia. This is true, but apparently that's not their greatest goal of this investor. On the contrary, it seems to rely on this brand to penetrate deep into the Vietnam market.

A Highland Coffee shop in the Philippines.

The evidence is that after buying Highlands Coffee, Jollibee also add this coffee brand in its restaurant chain outside Vietnam but this group does not publish development plans to promote Highlands Coffee.

However, Highlands Coffee has taken big steps in the Philippines. After opening a new shop at Eton Emerald Lofts in Ortigas, more Highlands Coffee shops will soon be put into operation at Timog and Katipunan Avenues in Quezon City and Pioneer Road, Shaw Boulevard in Mandaluyong. Jollibee expects to have 100 Highlands Coffee shops in the Philippines in three years.

Before selling shares to Jollibee, Highlands Coffee franchised its brand to other Filipino firms, the Digital Paradise Inc. and IP Ventures Inc, which have a close relationship with each other.

In the Philippines, Highlands Coffee uses Vietnamese and confirmed to use Vietnamese coffee beans. Photo: PV

IP Ventures is an information technology company that owns a chain of Internet Cafes, managed by Digital Paradise. Digital Paradise owns Netopia, which is also a chain of Internet Cafés. In particular, IP Ventures has a subsidiary specializing in game, named IP E-Game, which holds 75 percent of stake in Digital Paradise.

In late November 2011, IP Ventures Inc. signed a franchise contract with Viet Thai International to bring Highlands Coffee stores to the Philippines. This company is allowed to use the trademark and the brand of Highlands Coffee for its coffee shops in the Philippines.

The agreement was signed at the Vietnam - Philippines Business Forum 2011, under the witness of Vietnamese President Truong Tan Sang and many other senior officials of both countries.

Since the implementation of the franchise, Digital Paradise has built 36 Highlands Coffee stores in the Philippines. To compete, Highlands Coffee has had quite effective policies, such as low prices, free wi-fi service, diverse food, music and spaces and the most special thing being coffee beans from Vietnam.

It seems that though Highlands Coffee comes to the Philippines, it is still considered a Vietnamese brand.

S. Nam