LDC and Instanta forge joint venture in crafting Vietnamese instant coffee

With its abundant supply of Robusta coffee, Vietnam is becoming a global instant coffee manufacturer.

03 Oct 2023 --- Louis Dreyfus Company (LDC) and Instanta Sp. z o.o. have teamed up to inaugurate ILD Coffee Vietnam, a freeze-dried instant coffee facility. Together, the companies hope to serve consumers across established markets.

With its abundant supply of Robusta coffee, the key ingredient for instant coffee production, Vietnam is becoming a global instant coffee manufacturer. This joint venture, nestled in the heart of Binh Duong province, is set in the bustling heart of Asia’s thriving coffee culture.

The country’s coffee scene is known for its tough competition and discerning customers. Vietnam is one of the most price-sensitive regions in Southeast Asia, presenting a challenge to foreign entrants like LDC and Instanta as local brands and international coffee-store chains jostle for the best, from upscale cafes to humble sidewalk vendors.

Supercharge competitiveness with new technology
LDC and private-label coffee company Instanta formed a joint venture agreement in 2021, culminating in the construction of an instant coffee factory in Vietnam. The previous year, Nestlé and Starbucks ILD Coffee Vietnam has been established to meet the escalating demand for instant coffee (Image credit: Louis Dreyfus Company).launched a new instant coffee product featuring the signature flavors of Starbucks coffee, further fueling the coffee frenzy.

Jacek Szymczyk, chairman at Instanta, states, “ILD Coffee Vietnam marks a significant milestone in our journey at Instanta. This state-of-the-art facility in Binh Duong province demonstrates our passion for coffee. We are excited to bring our expertise to this strategic joint venture with LDC, a renowned global merchant and processor of agricultural goods.”

Currently, ILD Coffee Vietnam has been established to meet the escalating demand for instant coffee, with a particular emphasis on premium freeze-dried varieties. The site’s equipment is designed to minimize its environmental footprint, including the use of a biomass boiler that harnesses spent coffee grounds to generate steam. The facility’s product range is carefully tailored to the diverse preferences of consumers in regional markets.

Asian instant coffee market
Busy lifestyles and increasing working hours are driving a surge in demand for instant coffee in Vietnam. To tap into this vibrant and competitive market, many major players have expanded their portfolios to include instant coffee options. In fact, the demand for instant coffee in Vietnam is expected to grow in the coming year.

Meanwhile, instant coffee maintains its stronghold in the neighboring coffee markets, overshadowing other coffee formats consumed at home. The changing lifestyles of people and the acceptance of customers toward new cultural trends are contributing to the increasing demand for Vietnamese instant coffee in China.

South Korea has also witnessed a surge in demand for affordable coffee options as inflation continues to influence consumer choices. Instant coffees priced at around 1,000 KRW ($0.75 USD) have gained immense popularity in convenience stores, reflecting the growing preference for cost-effective alternatives. Vietnamese businesses like TNI King Coffee and Phuc Long have already ventured into South Korea.

This joint venture, blending global expertise with local passion, is making Vietnam a hub in the global coffee trade. Ben Clarkson, LDC’s global head of Coffee, says, “This venture with Instanta supports our global strategy to diversify through more value-added products, reflects our ongoing commitment to Vietnam as a key market for LDC, and complements our existing global Robusta green coffee business, expanding our product portfolio to meet customers’ needs.”

By Sichong Wang

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