Vietnam’s coffee king says it will take several years to reverse damage caused to the business by his divorce.
Speaking to the press for the first time since the ruling on his divorce last March, Trung Nguyen Group (TNG) chairman Dang Le Nguyen Vu admitted the business was hit hard by the conflict between him and his ex, former deputy general director Le Hoang Diep Thao.
He conceded that TNG’s profit has consistently decreased in recent years, from VND1.29 trillion ($55.18 million) in 2014, VND808 billion ($34.56 million) in 2015, VND768 billion ($32.85 million) in 2016 and VND681 billion ($29.13 million) in 2017 to only VND347 billion ($14.89 million) last year.
Vu also pointed out that while his business was suffering from his marital discord, the competitors had not been sleeping. Two other big players that formed the “coffee triad” along with TNG, accounting for 75 percent of the domestic coffee market share, Vinacafé Bien Hoa and Nestlé, have been making new moves continually, he said.
New names such as NutiFood and Ajinomoto Vietnam, as well major coffee houses with chain stores like Highlands Coffee and The Coffee House have been expanding, he added, implying that TNG’s recovery was complicated further by the competition factor.
“All systems and products must be changed to differentiate (TNG products) from other goods on the market. Trung Nguyen must be investing, converting, upgrading technology, training people and giving them time to develop,” Vu said.
“It may take 2-3 years for the business to recover,” he added.
Vu remained confident about Trung Nguyen’s recovery despite recent setbacks.
Last June, he started off with announcing a new name for the group, Trung Nguyen Legend, and gave it a new strategy to be “different, special, unique.” He envisaged comprehensive changes to products, business model, organization and business motto. He also announced the group’s first three types of instant roasted coffee.
Previously, in an article for VnExpress, economist Dr. Lam Minh Chanh had commented said that when Vu and Thao no longer had a dispute over management, it would not be difficult for Trung Nguyen to return to stable business and achieve VND1 trillion ($42.8 million) in profit.
The discord between Vu and Thao and their dispute over TNG’s management began six years ago. Vu said he had prepared to build a coffee ecosystem for years based on what he called “human philosophy”, but Thao had been hindering the process.
Thao accused Vu of neglecting the company and authorizing a group of people to run it. Those people have been squandering the company’s funds to buy supercars, she alleged.
“Thao had been hindering the development strategy I have proposed for Trung Nguyen, making life difficult for my junior staff,” Vu said. “There is no group manipulating Trung Nguyen.”
“All of Trung Nguyen’s overseas activities were affected because Thao’s side had been intervening, issuing documents, and using company seals to do business with partners,” he said.
Vu said he and Thao also had disagreements on marketing, social and altruistic activities.
Thao claimed Trung Nguyen spent nearly VND1 trillion ($42.8 million) on social relations, VND300 billion ($12.85 million) buying supercars, and VND200 billion ($8.59 million) on a programme to boost “entrepreneurship spirit” between January 2015 and January 2017.
Trung Nguyen Group is a leading coffee firm in Vietnam. It was founded in 2006 by Dang Le Nguyen Vu, who is currently the company’s chairman.
Vu and Thao got divorced early this year. After months of litigation, the Ho Chi Minh City People’s Court ordered in March that the stocks and cash assets of TNG shared by Vu and Thao be split 60:40 in Vu’s favor in their divorce settlement. Thao has appealed, and Vu is expecting the appeal hearing to take place in July this year, he said.