The Vietnamese retail group said last year's outlet expansion made losses ‘inevitable’ as its flagship The Coffee House café chain faces increased competition from domestic and international operators
Seedcom operates 155 The Coffee House outlets across Vietnam | Photo credit: The Coffee House
Vietnam’s Seedcom has reported its third successive annual loss, despite robust sales growth for the 12 months ended 31 December 2022.
The retail group, which operates 155 The Coffee House outlets across Vietnam, reported losses widened 14.5% last year to VND 270bn ($11.5m).
Seedcom chairman Nguyen Hoanh Tien said losses were ‘inevitable’ following the expansion of its retail networks in 2022.
Ho Chi Minh-based Seedcom, which also operates the Kingfoodmart supermarket chain and Juno and Hnoss fashion brands, achieved 60% group revenue growth during the period to reach VND 1.6trn ($712m).
In November 2022, Seedcom reported The Coffee House contributing 37% of its total sales in the first nine months of last year, with the coffee chain generating year-on-year sales growth of 53%.
Amid rising competition in the Vietnamese branded coffee shop market, The Coffee House launched a new ‘exclusive and upscale’ coffee shop brand – SIGNATURE by The Coffee House – in January 2023.
The Coffee House CEO Ngo Nguyen Kha said the specialty coffee shop caters to increasing consumer demand for premium café experiences across the country.
Among operators vying to gain a stronger foothold in the Vietnamese branded coffee shop market, Starbucks said its long-term goal in the country is to become consumer’s ‘everyday café’. The US coffee giant previously set a target to reach 100 stores in the country by the end the first quarter of 2023.
In February 2023, Masan Group outlined plans for Phuc Long Coffee & Tea to become the largest coffee and tea chain in Vietnam ‘within a few years’. The retail conglomerate plans to grow the coffee chain’s domestic footprint in 2023 and expects to increase its revenues by approximately 75% over the next 12 months.
Phuc Long Coffee & Tea currently operates 111 flagship stores across Vietnam, alongside 21 smaller format outlets and an expanding kiosk presence in Masan Group’s WIN convenience store network.
In March 2023, Filipino fast food group Jollibee Foods Corporation reported strong year-on-year outlet growth for its Highlands Coffee chain, which operates 553 stores nationwide.
World Coffee Portal research forecasts the Vietnamese branded coffee shop market, led by Milano Coffee with more than 2,000 stores, will exceed 5,200 outlets by 2025.