The visionary leader of An Thai Group, embracing challenges and staying ahead of the market.
"We don’t disclose revenue or discuss profits," said Mr. Nguyen Xuan Hung, Chairman of An Thai Group, set clear ground rules. "A fat pig is the first to be slaughtered," he repeated an old Chinese proverb, his tone reflective.
The reserved nature of this businessman from Nghe An is why few people know that An Thai is currently Vietnam's largest domestic exporter of instant coffee. The company now operates four instant coffee production plants with a combined capacity of 4,000 tons per year—an eightfold increase compared to 2005, the year it officially began producing instant coffee.
The Spirit of an Engineer
An Thai’s instant coffee uses Italian technology with a localization rate of about 70%. Specifically, Mr. Hung only imports the core components of the production line. This bold decision addressed both short-term and long-term challenges.
In the short term, it allowed An Thai to save on initial investment costs, spending only $6 million compared to $20 million for a full import.
In the long term, the localization strategy helped An Thai avoid hiring expensive foreign experts to operate the system. “With my background in mechanical engineering and strong connections in the field, I was confident in fabricating the missing parts and assembling the production line smoothly,” Mr. Hung explained.
Even so, it took Mr. Hung and his team three years to stabilize the production line. Before that, he spent over a year building trust with leading global equipment suppliers. “Little by little, the ant builds its nest.” With a foundation in machine manufacturing and an engineering education in Czechoslovakia, Mr. Hung quietly absorbed knowledge from his partners. “Once we mastered the technology, we negotiated to buy only the core production line. This was the solution to our limited initial capital,” he said.
This wasn’t the first time the entrepreneur from Nghe An had to tackle funding challenges. In 1992, upon leaving the state sector, he chose a business that suited his limited capital. “I entered the essential goods distribution sector after convincing suppliers to allow deferred payments. Although the Central Highlands was a promising market, few ventured into it due to poor transportation. I distributed goods to consumers via mobile sales vehicles,” Mr. Hung recalled. By prioritizing trust, his company quickly became the largest distributor in the Central Highlands.
However, the attractive profit margins soon drew suppliers directly into the distribution market. Small agents also joined the network, instead of exclusively buying from An Thai. “The pie being divided was inevitable,” Mr. Hung admitted, acknowledging the economic realities.
According to him, distribution is unsustainable if reliant on producers. Traditional distribution systems will inevitably be replaced by modern, professional ones like retail chains, supermarkets, and shopping centers.
Recognizing that An Thai lacked the capacity to compete directly with foreign distributors, the company pivoted to coffee processing and built a coffee powder factory while maintaining its retail distribution network. Thanks to its pre-established distribution channels, An Thai’s coffee powder was distributed across the country.
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An Thai’s Strategic Spiral
“Filter coffee is rare outside Vietnam, which limits ground coffee to domestic consumption,” Mr. Hung observed. In contrast, instant coffee production is an industry with global appeal, meeting the needs of diverse international markets.
Before An Thai’s involvement, only Nestlé and Vinacafé Bien Hoa produced instant coffee in Vietnam. Recognizing its potential, An Thai entered the market, offering a product with 70% pure coffee extract compared to the 20% found in ground coffee. Instant coffee production also demands advanced technology and expertise.
An Thai eventually faced market share pressure from new foreign players like Olam and Ngon Coffee entering the domestic market. “Commercial coffee products are a natural fit for An Thai, leveraging our advantage in instant coffee raw materials,” Mr. Hung noted.
The transition to commercial coffee represents a new phase in An Thai’s continuous growth: evolving from ground coffee to instant coffee and now to commercial products.
Mr. Hung emphasized that commercial coffee products, including 3-in-1 coffee, canned coffee, and coffee-flavored confections, offer greater value addition.
China, currently An Thai’s largest export market, accounts for over 30% of its total exports. In response, the company established a commercial coffee distribution branch in Guangzhou earlier this year. This expansion aligns with their plan to build a commercial coffee factory in China. Could technology theft pose a threat? “We maintain strict control over instant coffee production, which remains a critical input they can’t produce themselves,” Mr. Hung assured.
From NCĐT
SAI GON AN THAI JSC
Address: 263 Vuon Lai, Phu Tho Hoa Ward, Tan Phu District, Ho Chi Minh City.
Hotline: (028) 6656 1122 – 028 22 48 48 46 (CSKH)
Email: info@anthaigroup.vn
