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The supply chain diagram of Trung Nguyen Coffee is one of the key factors that has helped the brand achieve its current position. With the efforts of Mr. Đặng Lê Nguyen Vũ in developing coffee and collaborating with partners within the supply chain, Trung Nguyen has established a large and robust supply system. Let’s dive into the details of Trung Nguyen Coffee’s supply chain in this article by Kamereo!
Overview of the Trung Nguyen Coffee Brand
Trung Nguyen Coffee is considered one of the leading coffee brands in Vietnam. Here is the foundation of its success:
History of Development
Trung Nguyen Coffee was founded in 1996 by Mr. Đặng Lê Nguyen Vũ. Initially, the brand started as a small coffee shop in Buôn Ma Thuột, Đắk Lắk province. Mr. Vũ continuously expanded the business and developed the brand and products to where they are today.
Currently, Trung Nguyen owns about 1,000 franchised coffee shops across the country and exports products to over 60 countries. The brand has also developed a system of over 1,000 convenience stores and G7 Mart distribution centers nationwide.
By 2024, Trung Nguyen has expanded operations to South Korea, China, and more. The company also introduced the World Coffee Center conference center and initiated the construction of the “Loving” and “Happy” educational areas in the Coffee City urban area. In 2023, Trung Nguyen Coffee also marked the 20th anniversary of the G7 brand’s global expansion.
Trung Nguyen Coffee’s Raw Material Sources
Trung Nguyen Coffee always prioritizes the quality of raw materials to create products with unique and distinctive flavors. The types of coffee used, such as Arabica, Robusta, Chari (Excelsa), Catimor, and Culi, are all grown according to international standards.
Their purchasing process differs from other businesses, focusing on quality rather than market price. The company has established a direct coffee purchasing system from farmers through purchasing stations and coffee testing centers. Notably, Trung Nguyen Coffee is harvested manually to ensure quality.
In addition to purchasing, Trung Nguyen supports farmers in cultivation techniques, care, harvesting, and processing, which helps to improve productivity and product quality.
Furthermore, Trung Nguyen has exclusive products such as Legendee Civet Coffee, Weasel Civet Coffee, and Creative 8 Coffee. These are all selected from the finest coffee beans and undergo meticulous processing with a secret recipe to ensure their distinctive flavor.
Goals for Developing Trung Nguyen’s Distribution System
Goals serve as the guiding principle for any business’s development, including Trung Nguyen Coffee. Here are the short-term and long-term goals the company has planned:
- Develop a model for sustainable development, where local communities autonomously implement solutions.
- Aim to become a large corporation with 10 member companies, operating in various fields such as coffee cultivation, processing, export, real estate business, and developing domestic distribution channels.
- Plan to open about 10,000 retail stores organized in a standardized manner.
- Inspire the community and consumers worldwide about Vietnamese coffee.
- Develop different segments of coffee shops to expand the F&B market.
- Expand the E-Coffee franchise system quickly and cost-effectively, aiming to maintain 3,000 stores across 63 provinces.
- Continuously improve coffee quality to enhance its reputation both domestically and internationally.
- Commit to professionalizing service quality to expand the market more strongly.
Trung Nguyen Coffee Supply Chain Diagram
Trung Nguyen’s supply chain strategy is executed effectively, with specific elements as follows:
Trung Nguyen’s Suppliers
Emphasizing the quality of coffee beans has helped Trung Nguyen create unique and distinctive products. The company carefully selects high-quality coffee beans from four renowned growing regions, including Robusta Buôn Ma Thuột, Arabica Jamaica, Ethiopian coffee, and Brazilian coffee.
Located in Vietnam’s coffee hub, Trung Nguyen easily sources raw materials through two channels: from private enterprises, traders, or directly from farmers. However, the company mainly focuses on investing in and managing farmers’ coffee farms, turning them into part of the business, which helps better control strategic raw materials and strengthen bilateral relationships.
Additionally, Trung Nguyen prioritizes buying coffee from smallholder farmers with sustainable farming certifications and is willing to pay higher prices to ensure quality. The company also collaborates with reputable packaging suppliers such as Phương Nam Packaging Co., Ltd., and Vinapackink Packaging and Printing Ink Co., Ltd., to ensure aesthetics.
Moreover, Trung Nguyen is supplied with processing machinery and equipment from Neuhaus Neotec, a leading company in coffee processing equipment manufacturing in Hoykenkamp, Germany.
Trung Nguyen Coffee Production Plants
Trung Nguyen is a renowned coffee corporation known for combining modern technology with Eastern secrets. Furthermore, the company applies environmentally friendly technologies transferred from leading global corporations.
Trung Nguyen’s coffee production process involves several stages, from raw materials to finished products, including roasting, grinding, extraction, filtering, concentration, drying, packaging, chemical treatment, and shell grinding.
Currently, Trung Nguyen owns five coffee roasting and instant coffee production plants in Bình Dương, Đắk Lắk, and Bắc Giang. The company has invested over USD 1,000 million in total capital to achieve a total capacity of 83,000 tons per year. With this output, Trung Nguyen not only serves the domestic coffee supply chain but also the international market.
Trung Nguyen Coffee Distributors
Trung Nguyen is the pride of Vietnam’s coffee industry. The company’s products stand out for their quality and distinctive flavor, conquering many markets both domestically and internationally. To bring products to consumers, Trung Nguyen has built a diverse and efficient distribution system, including:
- Traditional Distribution System: Trung Nguyen’s products are distributed through wholesalers, supermarkets, bookstores, bakeries, etc. Currently, the company has 121 wholesalers, 7,000 sales points, and 59,000 retail outlets nationwide.
- Franchise System: Trung Nguyen was the first business to apply the franchise model in Vietnam since 1998. Currently, the company has over 1,000 franchised coffee shops across Vietnam and 8 shops overseas. These shops offer customers a special experience in terms of space, service, and products.
- International Distribution System: Trung Nguyen has expanded into international markets and is now present in more than 60 countries (United States, Canada, UK, France, Germany, Japan, South Korea, China, Singapore, Malaysia, Thailand, Cambodia, Laos, etc.).
Success of Trung Nguyen Coffee’s Supply Chain
Trung Nguyen Coffee is known for its effective and sustainable supply chain strategy. The company has invested in training and technical support for coffee farmers to improve the quality and yield of raw materials. At the same time, Trung Nguyen has built long-lasting, reliable relationships with the world’s leading coffee processing equipment suppliers to update and apply the most advanced technology.
Additionally, Trung Nguyen has created unique and innovative products with distinctive flavors, such as Legendee Civet Coffee, Weasel Civet Coffee, and Creative 8 Coffee. These products are loved by customers thanks to being selected from the finest coffee beans and going through meticulous processing.
Trung Nguyen has minimized costs and increased efficiency in logistics operations, from raw materials, production, and distribution to consumption. According to the company’s report, logistics costs only account for about 10% of revenue, helping achieve significant success in the coffee supply sector, contributing to increased revenue and market share.
Lessons Learned from Trung Nguyen’s Supply Chain
Analyzing Trung Nguyen Coffee’s supply chain diagram reveals some important lessons for managing the supply chain in business, including:
Establishing a Specific and Consistent Supply Chain Goal
The strategic supply chain goal plays an important role in shaping principles and strategies for business operations within the supply chain. Therefore, this goal must be aligned with the company’s vision, mission, and core values, while reflecting customers’ needs and desires.
Trung Nguyen Coffee’s supply chain strategy aims to create the perfect cup of coffee, bringing creativity and distinction to customers. This goal not only drives the company to focus on producing high-quality coffee beans, ground coffee, instant coffee, and iced milk coffee but also reflects the entrepreneurial spirit, innovation, and ambition of the company.
Focusing on the Customer
Not just Trung Nguyen Coffee, customers play a decisive role in the success of every business. Therefore, listening to and understanding their needs is extremely important in supply chain management.
Trung Nguyen has applied market research methods, including collecting customer feedback, analyzing purchasing behavior, and consumption trends, to understand customers’ preferences and requirements. Based on that, the company has adjusted its supply chain to better meet customers’ needs.
Cost optimization
In a highly competitive business environment, optimizing supply chain costs is critical to maintaining competitive advantage and increasing profits. Trung Nguyen has well implemented these optimal measures across the entire supply chain from raw materials to consumption such as:
- Raw material sources: Build a linkage system with reputable coffee suppliers, helping to ensure raw material quality and reasonable prices.
- Production: Applying modern, environmentally friendly technology to increase productivity, save energy and reduce waste in the production process.
- Distribution: Take advantage of available resources such as store systems, franchises, agents, and online sales channels to reduce transportation and storage costs.
- Consumption: Cooperate with restaurants, hotels, supermarkets, convenience stores to expand access and market penetration.
Improve quality
Quality is the core factor that creates brand reputation. This factor not only affects customer satisfaction but also contributes to the sustainable development of the business. Therefore, Trung Nguyen coffee always focuses on improving quality throughout the entire supply chain including:
- Raw material selection: Only use coffee beans grown according to VietGap standards. The harvesting and processing process follows a closed process to ensure flavor and nutrition.
- Production process: Applying international standards for quality, food safety and ISO 9001:2015 quality management system to strictly control each stage in the supply chain.
- Quality control: Implement strict quality testing procedures to ensure products meet standards before reaching customers.
- Storage and transportation: Pay attention to preserving and transporting products safely and effectively. This is to preserve product quality throughout the process from factory to consumer.
Strengthen links
In a globalized and volatile market, strengthening supply chain links is a smart strategy. Thereby, businesses can take advantage of the resources, experience and knowledge of relevant parties. This not only helps businesses effectively solve arising problems but also creates added value for customers.
Trung Nguyen Coffee has built good, sustainable relationships with all stakeholders in the supply chain including: suppliers, manufacturers, distributors and customers. In particular, the company has established long-term, fair and beneficial contracts for suppliers. These contracts not only ensure a stable, high-quality supply but also create trust and long-term cooperation.
Conclusion
The supply chain diagram of Trung Nguyen Coffee is one of the key factors contributing to the brand’s success. The company has built a sustainable and effective supply chain by focusing on raw material quality, investing in technology, building a strong distribution system, and creating unique products with distinctive flavors.
The lessons learned from Trung Nguyen Coffee’s supply chain can help businesses develop and implement effective supply chain strategies to achieve long-term success. If you want to learn more about the supply chain and other information related to business operations, visit Kamereo!
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