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THE GLOBALIZATION OF COFFEE

exeqfind | 25.06.2013

As a consumer first and a headhunter second, I’m a bit more curious than most about how companies succeed or fail at introducing their products into new regional markets.  If it’s done right and the company is the first on the ground, the rewards can be astounding.  If it’s done wrong, then it can prove costly.

Starbucks, Trung Nguyen, KFC & Goya Foods Serve Up Examples of Successes & Challenges

As a consumer first and a headhunter second, I’m a bit more curious than most about how companies succeed or fail at introducing their products into new regional markets.  If it’s done right and the company is the first on the ground, the rewards can be astounding.  If it’s done wrong, then it can prove costly.

During a recent flight to Vietnam for business, I read an article titled “Starbucks Brings Its Culture to Vietnam”  from my online edition of The Wall Street Journal.  Given my love of coffee and the fact that this was actually my first trip to Vietnam, I was even more interested in reading James Hookway’s article.

The article moved me to adjust my agenda during the week to include a visit to Starbuck’s primary rival in Vietnam – Trung Nguyen.  Fellow IRC Board Member – Hamilton Teixeira of IRC Brazil accompanied me on this visit and given Brazil’s world renowned reputation for coffee consumption, I was very interested in getting his response.  Before creating his own search practice in Brazil, Hamilton held key leadership roles including CEO of such consumer products companies as Kellogg’s, Tropicana Juices and Rayovac.  Our stop to try Vietnamese coffee at Trung Nguyen prompted us to share some prior experiences involving foreign markets and sometimes the need to slightly adjust to local culture and tastes.

The visit to Trung Nguyen further reinforced my opinions.  I’ve always liked Vietnamese coffee with its intensely strong flavor juxtaposed to the sweetness of condensed milk and there’s really nothing like it in the Starbucks repertoire.   If you want Vietnamese or Thai style coffee in the US, you’d best head to your nearest Vietnamese or Thai restaurant.  Despite the fact that it’s enjoyed by both natives and Americans alike doesn’t seem to have prompted Starbucks to adjust their menu in the US.

But opening a Starbucks in Vietnam and then not doing so?  Starbucks didn’t seem to address the varied Vietnamese style with their February opening in Ho Chi Minh City (Saigon).  Hookway’s article mentioned that some of the early customers at the new store in Ho Chi Minh City were more interested in sampling the ambience of the store than the taste of Starbucks coffees.  After tasting the delicious iced Vietnamese coffee pictured with this post, I would say Starbucks would do well to amend their menu in both Vietnam and in other markets to also include local style coffee.  And as for ambience?  We found the modern interior lounge and exterior patio seating with a gurgling pump-fed spring running through the midst of the store to offer more ambience than our neighborhood Starbucks in San Diego or Sao Paulo.

With Starbucks on just about every street corner in America, the company is being forced to expand more aggressively internationally.  They currently have ambitious plans to expand on the 4,000 stores it operates in the Asia-Pacific region but Vietnam may prove to be different.

As I finished off my Vietnamese iced coffee in complete satisfaction of the “way they do it”, Hamilton brought up the three time failure of Kentucky Fried Chicken in Brazil.  KFC’s move to enter Brazil sounded like a due diligence failure from the start.  Brazil is the world’s largest exporter of chicken and they prefer their chicken grilled – not fried.  KFC’s heavy focus on fried chicken proved to be an obstacle they couldn’t overcome despite three attempts to do so.

As I tasted the coffee ground sludge at the bottom of this delicious Trung Nguyen iced drink, I remembered the recent obituary of Mr. Joseph Unanue.  Mr. Unanue was the former CEO of Goya Foods which he grew from an $8 million speciality food company into the largest Hispanic owned food company in the US.  He did so by recognizing that the Hispanic populations from the Caribbean, South America and Mexico had varied tastes that were not being adequately served.  He introduced different beans into the US market such as red, black and refried beans that were favored by regional Hispanic tastes and in reference to the diversity of the Hispanic market liked to say:

“We’re united by language.  We’re separated by the bean.”

Warren Carter is the practice leader of San Diego, California-based – ExeQfind (IRC San Diego & Mexico) and also serves on the Executive Board of IRC Global Executive Search Partners.   Hamilton Teixeira is the principal of DRH-Talent Search (IRC Brazil) in Sao Paulo, Brazil and also serves on the Executive Board of IRC Global Executive Search Partners.  The IRC Board of Directors meets quarterly in key locations around the world.  Warren and Hamilton enjoyed their conversation about coffee and globalization during a visit in June to Ho Chi Minh City (Saigon), Vietnam and at the same time welcoming a new member firm to the IRC alliance.

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