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Highlands Coffee started percolating coffee in 1999 in Hanoi, founded by Vietnamese-American entrepreneur David Thai. It was groundbreaking as the first private company registered by an Overseas Vietnamese in post‑Đổi Mới Vietnam. Inspired by Seattle’s burgeoning coffee culture—where Starbucks was transforming from a local café to a global behemoth—Thai envisioned a Vietnamese brand that could stand proud on its own soil.
Originally, Highlands Coffee focused on packaged coffee products distributed to supermarkets, hotels, restaurants, and cafés. In 2002, it transitioned into a retail chain by opening its first coffee shop opposite Notre-Dame Cathedral in Ho Chi Minh City.
By 2009, Highlands had grown to 80 outlets across six cities and provinces—Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, Vũng Tàu, and Đồng Nai . During this period, it began selling RTD (“Ready‑To‑Drink”) iced coffees in cans, extending its reach to over 17 Asian countries and even the U.S., by around May 2010.
In 2011, Highlands acquired the pho chain Phở 24 for approximately US $20 million. Then in 2012, it sold a 50% stake to the Philippines’ Jollibee Foods Corporation (JFC) for US $25 million. Under Jollibee, Highlands contributes to the joint‐venture “Superfoods Group” alongside Pho 24, boasting an ambitious expansion plan and rapid growth rates (36% revenue increase in the first nine months of a given fiscal year, and ultimately 78% growth year‑on‑year).
Strategic Pillars of Success
A. Product Differentiation & Brand Identity
Highlands Coffee’s core brand strategy blends traditional Vietnamese flavors with modern café culture. Its signature offerings include cà phê sữa đá (Vietnamese iced coffee with condensed milk), trà sen vàng (lotus‑scented green tea), and trà xanh đá xay (crushed‑ice green tea blends). These beverages reflect local heritage, leveraging high-quality coffee beans sourced from regions like Lâm Đồng and Đắk Lắk.
Highlands also revamped its product line to include Western-style drinks—espresso, latte, cappuccino—as well as RTD canned coffees that helped expand its reach regionally and internationally by 2010.
B. Marketing & Brand Positioning
The marketing strategy emphasizes “pure Vietnamese ingredients,” combining Robusta and Arabica from Vietnam’s fertile highlands. The storytelling approach, including visual imagery and social media engagement, aims to evoke national pride and authenticity . Highlands has leveraged digital platforms (e.g., TikTok, Facebook, Instagram) to strengthen brand visibility and loyalty.
Upselling—like pairing beverages with food, or offering premium options—and having a loyalty program are additional strategic moves to increase average transaction value.
C. Store Design & Customer Experience
Highlands carefully designs its cafés to blend traditional Vietnamese motifs with modern comfort—small round tables, cozy lighting, art-inspired decor—and offer amenities like Wi‑Fi and power outlets for work or study. The ambiance plays a significant role in encouraging customers to linger and return – and I can personally testify to that!
D. Staff Training & Service Quality
Employee training emphasizes maintaining brand identity through uniform appearance, coffee knowledge, attentive service, and responsiveness to customer feedback and complaints. Highlands fosters a friendly, consultative service environment, contributing to high levels of customer satisfaction.
E. Supply Chain Excellence
Highlands sources coffee directly from nearly 1,000 farms across Vietnam, ensuring consistency and quality. The supply chain includes processing at their facilities, decaffeination, blending, roasting, packaging, and distribution to outlets, supermarkets, and exports. They maintain tight control and foster long-term supplier relationships.
F. Adaptation During the Pandemic
During Covid‑19 lockdowns in mid‑2021, Highlands pivoted toward e‑commerce, partnering with logistics provider Boxme to deliver products online—keeping revenue flowing despite many store closures.
G. Sustainability & CSR
Highlands integrates sustainability practices: waste reduction, potentially responsible sourcing, plus involvement in community initiatives—further strengthening its reputation and customer goodwill .
3. Competitive Landscape & Market Position
Vietnam’s F&B coffee segment is projected to hit US $678 million by 2025, growing at around 5% annually. Competitors include local chains like The Coffee House, Cộng, Phúc Long, Trung Nguyên Legend, as well as international brands like Starbucks.
Highlands positions itself as an accessible “affordable premium” option for youth, office workers, and middle‑income customers—leveraging strategic location selection and appealing to national pride.
Academic Insight: Service Factors Affecting Customer Satisfaction
A 2023 study explored how service price, service quality, and store atmosphere correlate with customer satisfaction in the post‑COVID era. Analysis based on customer surveys found that while all three factors influence satisfaction, service quality had the strongest impact. Interestingly, the store atmosphere had a negative but statistically non‑significant effect—suggesting that other factors might override ambiance in this context.
Challenges & Areas for Improvement
- Product Variety: Highlands could explore more specialty and international beverage options to compete with chains like Starbucks, partner curly savoury options for breakfast and lunch.
- Loyalty Program Enhancement: Its program may lack the breadth and appeal of giants like Starbucks; expanding perks could drive deeper loyalty.
- International Expansion: While present in the Philippines and some export markets, global brand recognition remains modest. This presents both a challenge and an opportunity.
Conclusion & Strategic Outlook
Highlands Coffee’s success is built on a harmonious blend of local authenticity and global business acumen. The brand has skillfully merged Vietnamese coffee culture with modern retail strategies—leveraging product excellence, immersive store design, strong supply chain, adaptable marketing, and customer-centric service.
To continue rising, Highlands could expand its beverage palette, enhance loyalty benefits, increase international footprints, and maintain agility in evolving digital and sustainability landscapes. If it preserves its commitment to quality and cultural identity, Highlands is well-poised to strengthen both its domestic leadership and global potential.
