Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton 0 A study of Export Demand for Coffee: The Case of Intimex Vietnam JSC Name : Nguyen GiaPhuc English Name : Clinton Date of Birth : 25/09/1963 Hanoi – 2013 Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton i ACKNOWLEDGMENTS I would like to thank Dr. Eduardo T. Bagtang and the International center Education of Thai Nguyen University, Southern Luzon State University for guiding me throughout this research and for providing me with the opportunity to conduct this research and for helping me to carry out the necessary revisions to this dissertation. I would also like to express my deep gratefulness to Vietnam Intimex Company for providing me with useful and necessary information for doing this research, to my wife, my son and daughter, my colleagues for encouraging, inspiring me when I conduct this research, giving necessary feedbacks for making this dissertation successful. Finally, I would like to thank all my classmates for giving me constant support and encouragement as well as helping me with needed materials and reference. Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton ii APPROVAL SHEET x CHAPTER I: THE PROBLEM AND ITS BACKGROUND 11 1.1. Background of the study 14 1.2. Statement of the problem 18 1.3. Objectives of the study 18 1.4. Hypotheses of the study 20 1.5. Significance of the study 20 1.6. Scope and Limitations of the Study 20 1.7. Location of the study 21 CHAPTER II: REVIEW OF RELATED LITERATURE AND RELATED STUDIES 23 2.1. Coffee Production in Vietnam 23 2.1.1. Coffee Export into USA‘s market 26 2.1.2. Vietnam coffee export: Lesson learnt 29 2.1.3. Vietnam coffee industry at present 31 2.2. Future of Vietnam Coffee Export 36 2.2.1. Quality Improvement for Vietnam coffee 37 2.2.2. Production cost reduction 37 2.2.3. Variety and product shifting, production adjustment to the market demands 38 2.2.4. Coffee consumption promotion in the domestic market as well as to great potential countries 39 2.2.5. Reorganization of production and export structure in a better scientific, modern, effective and steady way 39 2.3. Major Market For Coffee Exports 40 Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton iii 2.3.1. Problems Encountered in Doing Business in the US 41 2.3.2. Countries Considered by Vietnam as Competitors 42 2.4. Company Analysis: The Intimex JSC Vietnam 43 2.4.1. Features 43 2.4.2. Organizing structure 45 2.4.3. Management 46 2.4.4. Achievements of Intimex Vietnam 50 2.5. Other Related Studies 51 2.6. Conceptual Framework 61 CHAPTER III: METHODOLOGY 64 Methods and Procedures 64 3.1. Research Design and Methodology 64 3.2. Respondents of the Study 64 3.3. Data Gathering Tools 65 3.4. Treatment of Data 67 CHAPTER IV: RESULT AND DISCUSSION 69 4.1. The Current Status of the Coffee Exporting Companies of Vietnam 69 4.2. Qualitative Data Analysis 89 4.2.1. Existing competitors and market structure of coffee export 89 4.2.2. Product Quality 91 4.2.3. Coffee drinking trends in the American 92 4.3. Test of Significant Relationship 94 4.3.1. Hypothesis testing 100 4.3.2. Individual partial coefficient test 102 4.3.3. Testing overall significance of the multiple regressions 105 Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton iv 4.3.4. Testing the drop variable in the regression model 106 4.3.5. Errors in the model 108 CHAPTER V: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 116 5.1. Summary of Findings 116 5.2. Conclusions 119 5.3. Recommendations 120 BIBLIOGRAPHY APPENDICES Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton v ABSTRACT Following the trend of globalization, especially after Vietnam joins the WTO, in order to enter the international playing field, Vietnam has determined that it needs to boost exports. In terms of agricultural products, the export of coffee is one of the first priorities. With that business orientation, enterprises specializing in processing and exporting coffee are looking for strategy to penetrate international markets. One of the leading enterprises pursuing this direction is the Vietnam Intimex Joint Stock Corporation (Intimex). With its export turnover reaching an annual average of nearly $300 million, Intimex is the leading enterprises in Vietnam of which product lines have been certified by many associations of coffee in the world, namely 4C, UtzKappeh, Organic coffee. For several years, the United States (U.S) has become one of the biggest importers of coffee products. The Intimex‘s export value of coffee to this market accounts for US Dollar 200 million in 2009. With a view to maintaining its dominant status in this field and increasing its market shares in the U.S, Intimex always place much importance to the marketing activities, having the good marketing mix will bring efficiency to the company‘s export business. Given the above-mentioned rationale, I have decided to choose the topic: A study of export demand for coffee: The case of Intimex Vietnam JSC. After collecting data from both primary sources by utilizing questionnaires, interviews and secondary sources: articles, published documents, books and online articles, regression analysis models were utilized to find out the factors affecting coffee import demand of the US. By statistical approaches, the dissertation points out Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton vi different qualitative and quantitative factors that have influence on the coffee import demand. These factors are:  Quantitative data: commodity price, coffee beverage price index, price of the biggest substitute, and coffee market share. In data analysis, E-view program was used to deal with figures from secondary sources. By statistical methods, I draw the conclusion about the dependent variables as follow On the hypothesis of significant relationship, it was found out that the key factors affecting coffee import demand are commodity price, price of the biggest substitute (tea) and coffee market share of Vietnam in the US market. The commodity beverage price index of the U.S. as one of the four has no significant impact on the dependent variable. The model of regression analysis has been checked for errors: multi-co linearity, heteroskedasticity and autocorrelation. In general, after conducting a set of statistical treatments, the model proves to be quite reliable and can explain the dependent variable based on independent variables. After data analysis using regression models, results are drawn and conclusions are made. Based on those results and conclusions, I have point out the recommendations to improve current situation of coffee export to the US markets in Chapter 5. These conclusions are based on findings from the data analysis and qualitative data assessment. Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton vii LIST OF FIGURES Figure 1: Organizational Chart of Intimex Vietnam 17 Figure 3: Coffee productivity, area, and output in province Daklak in period 2006– 2012 (%) 25 Figure 4: Vietnam coffee export market share 2st half of 2013 26 Figure 5: Amount and value of coffee export into USA‘s market for period 2006– 2012 27 Figure 2: Conceptual Paradigm 63 Figure 6: Data collection and process 66 Figure 7: Coffee market shares 80 Figure 8: World's export value of coffee 90 Figure 9: Heteroskedasticity graph 111 Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton viii LIST OF TABLES Table 1: Vietnam Coffee export to the world 36 Table 2: List of respondents 70 Table 3: No. of Companies with Coffee as Major Export 71 Table 4: Coffee Export destinations 72 Table 5: Type of Coffee being exported to USA 72 Table 6: Possible problems when doing business in the US for Vietnam coffee enterprises 73 Table 7: Opportunities for Vietnam coffee exporters 74 Table 8: Solutions posed by respondents 75 Table 9: US Import Policies That Affected the Coffee Export Business of Intimex Vietnam JSC to US 76 Table 10: Factors that affected the market share of Vietnam Coffee Export 77 Table 11: Vietnam Government Interventions to Help Coffee Industry 78 Table 12: Countries Considered as Competitors in Coffee Export 79 Table 13: Marketing Strategies Adopted and Found to be Effective as Identified by Intimex Vietnam JSC 81 Table 14: Product Policies Adopted and Found to be Effective by Intimex Vietnam JSC as Marketing Strategy 82 Table 15: Distributor chain Policies Adopted and Found to be Effective as Marketing Strategy as Identified by Intimex Vietnam JSC 83 Table 16: Price Policies Adopted and Found to be Effective as Identified by Intimex Vietnam JSC 84 Table 17: Advertisement Policies Adopted and Found to be Effective as 85 Table 18: Challenges experienced by Intimex 86 Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton ix Table 19: Measures and Strategies Recommended by Intimex Vietnam JSC to Increase Volume of coffee Export to the US 88 Table 23: Analysis of Covariance 100 [...]... 20 Export demand for coffee: The case of Intimex Vietnam JSC The study investigates current situations of coffee exporting in Vietnam It also points out the personalities of American market and key players in coffee industry INTIMEX Vietnam is the chosen company who has been exporting coffee to American market over the years Because of the nature of this study, the results and findings will be mainly... Vietnam JSC propose to increase volume of coffee export to the US? Nguyen Gia Phuc– Clinton 19 Export demand for coffee: The case of Intimex Vietnam JSC 11 To establish if there is a correlation of the coffee price in the USA, commodity beverage price index of the US, tea price in the US, with the market share of Vietnam in the US with the coffee export to the US? 1.4 Hypotheses of the study - Coffee export. .. coffee The Companies in Vietnam Exporting Coffee 2.1 Coffee Production in Vietnam The total coffee area of Vietnam reached 400,000 hectares in year 2000, and about 500,000 hectares in year 2006, accounting for 4.14% of total area for all kinds of cultivation plants Vietnam has acquired world‘s second place on coffee export, after Brazil, and world‘s first place on production of Robusta coffee with market... International Coffee Association, Doan Trieu Nhan, Chairman of the Vietnam Coffee- Cocoa Association, described a state plan to diversify the country's Robustasaturated coffee growth and output, growing more Arabica in the northern region of the country It is thus agreed upon domestically and internationally that Vietnam needs to attract the attention of premium coffee lovers One of Vietnam' s domestic offerings,... This study shows an in-depth analysis of coffee export to American market However, the other markets like EU and Asia have not been given enough consideration US are the biggest and most potential market for Vietnam s coffee export It is the biggest coffee importer of the world in general and of Vietnam in particular This is the reason why the study aims mainly at US market and compare with other markets... Street, Hoan Kiem District, Hanoi) and World Bank (8th Floor, 63 Ly Thai To Street, Hanoi, Vietnam) Nguyen Gia Phuc– Clinton 22 Export demand for coffee: The case of Intimex Vietnam JSC CHAPTER II: REVIEW OF RELATED LITERATURE AND RELATED STUDIES This chapter presents the literature and studies relative to the export demand for coffee of Vietnam and the experience of Intimex JSC, Vietnam in exporting coffee. .. offerings, "weasel coffee, " has the potential to appeal to the palates of high-end drinkers the world over Kay Johnson describes the colorful history of this drink in the Straits Times Weasel coffee was originally made from coffee beans that had been eaten and excreted by weasels, enhancing the taste of the beans A chain of coffee shops in Vietnam specializes in weasel coffee, although these days the beans never... role, accounted for more than 50% total area for coffee production in Vietnam Coffee production in Daklak has been conducted by householders, began largely from year growth currently 1990 and get further Many householders of coffee production in the past were Nguyen Gia Phuc– Clinton 24 Export demand for coffee: The case of Intimex Vietnam JSC workers of coffee state farms, and they began coffee cultivation... demand for coffee: The case of Intimex Vietnam JSC washing stations The ultimate goal for 2010 is to have a stable production at 600,000 tons, consisting of 70% Robusta and 30% Arabica Vietnam should not be underestimated and assumed to be a "low quality" producer of coffee Quality improvement measures will be taken up at the same speed as coffee cultivation 10 years ago As long as labor costs remain.. .Export demand for coffee: The case of Intimex Vietnam JSC THAI NGUYEN UNIVERSITY Socialist Republic of Vietnam SOUTHERN LUZON STATE UNIVERSITY Republic of the Philippines APPROVAL SHEET This thesis, entitled A STUDY OF EXPORT DEMAND FOR COFFEE: THE CASE OF INTIMEX VIET NAM JSC , prepared and submitted by Nguyen Gia Phuc in partial fulfillment of the requirements for the degree of Doctor . Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton 0 A study of Export Demand for Coffee: The Case of Intimex Vietnam JSC Name :. situation of coffee export to the US markets in Chapter 5. These conclusions are based on findings from the data analysis and qualitative data assessment. Export demand for coffee: The case of. terms of? Export demand for coffee: The case of Intimex Vietnam JSC Nguyen Gia Phuc– Clinton 19 a. Major business of the company b. Major market for coffee exports c. Types of coffee exported