Trung Nguyen’s dreams of global ambition drown in divorce dispute

Trung Nguyen's coffee shop in Singapore. Photo: VTC News

Three year divorce with no end in sight

Most recently, the dispute between Trung Nguyen Group and Le Hoang Diep Thao, the group’s former deputy general director, is causing a stir again as it has been revealed that the group’s subsidiary—Trung Nguyen Instant Coffee JSC (Trung Nguyen IC)—in mid-2017 sued Thao at the Bac Giang People’s Court for illegally seizing the company’s seals and the Bac Giang branch’s legal documents. Trung Nguyen IC asked Thao to pay a compensation of $75.2 million.

On May 16, Thao rejected Trung Nguyen IC as well as her husband Dang Le Nguyen Vu’s accusations. Thao argued that Vu was not Trung Nguyen IC’s legal representative because at the time Vu was the legal representative of Trung Nguyen Group, thus his dual representative positions would have led to a clash of interests and was against the company’s charter.

The dispute exploded in April 2015, when Vu suddenly dismissed Thao from her position as the group’s deputy general director. In a complaint sent to the Binh Duong People’s Court in November 2015, Thao said that in October of the same year Vu organised a board management meeting without her to dismiss her from her positions as the chairman of the board of management and deputy general director.

Thao filed for divorce at the Ho Chi Minh City People’s Court in November 2015. Until now, after nearly three years, the divorce proceedings have yet to end, mainly because of the division of common assets. Accordingly, in August 2017, the Ho Chi Minh City People’s Court applied the urgent interim measures to ensure the joint ownership rights over their common assets, which include 93 per cent of Trung Nguyen Group’s tangible and intangible assets, including the subsidiary Trung Nguyen IC.

Broken ambitions of dominating the global coffee market

Dang Le Nguyen Vu Dang Le Nguyen Vu, the founder of Trung Nguyen, Vietnam's leading coffee branch, was called the “Vietnamese coffee king” by Forbes magazine in 2012. Western businesses in Vietnam estimated that Vu’s total assets may reach $100 million. To date, Trung Nguyen’s coffee products are present in 60 markets in the world, including the US and China.

Vietnamese coffee legend Dang Le Nguyen Vu’s dream of dominating the global coffee market has been set back by the dispute which covers all of Trung Nguyen’s business activities.

When the US coffee giant Starbucks opened its first coffee shop in Vietnam in 2013, Vu announced plans to beat Starbacks at its home market, the US.

“We will definitely take over Starbucks by supplying real coffee to US consumers. Despite the US not having put much value on our products, we will conquer the market,” Vu announced.

Accordingly, Vu shared plans to sell 15 per cent of Trung Nguyen Group’s shares to buy coffee grinder factories in the US and open coffee shops in Seattle, New York, and Boston.

However, between the plans that have yet to come true, at the end of 2013, Trung Nguyen’s boss appeared on mass media with a different image: starving himself and meditating for 49 days for a healthy mind to think bigger.

In early 2014, Vu shared his business philosophy with the media, talking about his desire to conquer the world for young Vietnamese people. Meanwhile, in the US, Trung Nguyen’s business activities ran into strict competition from competitors, including Starbucks.

According to a survey of the US Coffee Association, 70 per cent of coffee consumed in the country is imported from Colombia, Brazil, and Mexico, while the remaining 30 per cent is imported from Vietnam and Indonesia.

According to the Vietnam Coffee Cocoa Association, in the 2013-2014 crop year, Trung Nguyen only ranked 36^th among the 100 leading coffee exporters, behind many smaller enterprises, including Tin Nghia Corporation, Intimex JSC, and PETEC Coffee JSC.

According to VTC News, only a modest volume of Trung Nguyen coffee was consumed in the US, while the overall demand for coffee was huge (one million tonnes per year). Coffee cannot be grown in the US, which means the entire demand needs to be satisfied from imports.

VTC News also stated that Vietnamese coffee enterprises made up 10-15 per cent of the US market, meaning Trung Nguyen only had a small market share as its annual export turnover is quite modest.

These numbers show that Trung Nguyen is having difficulties with entering this picky market. In addition, the long divorce may affect the group’s Vietnamese business activities, too, placing the dream of global domination even farther away.