Winning the Brew Battle: Highlands Coffee’s Enduring Leadership and the Future of Vietnam’s Café Market

Vietnam’s café landscape, long synonymous with street-side brews and social gatherings, is experiencing an extraordinary transformation. In 2024, with the café sector growing at double-digit rates and per capita coffee consumption nearly doubling, Highlands Coffee stands as a market titan. With over 777 stores and a commanding 35–40% market share, the brand’s ascent reflects not just entrepreneurial success but also the dynamic interplay of youth culture, digital innovation, and evolving consumer aspirations.
This exposé unpacks Highlands Coffee’s journey, the fierce competition it faces, and how the strategic pivots in Vietnam’s coffee culture are redefining local and global industry standards.

From Highlands to High Street: The Evolution of Vietnam’s Café Culture

Historical Roots and Modern Shifts: For decades, Vietnamese coffee was an emblem of tradition—drip filters (“phin”), condensed milk, and leisurely conversation. But, as urbanization surged and international brands like Starbucks entered, consumer expectations shifted toward premium experiences, convenience, and seamless digital interactions. According to recent market reports, annual per capita coffee consumption nearly doubled to 3kg by 2023, signaling both robust local demand and a new openness to diverse coffee styles.
The Rise of Highlands Coffee: Launched with a vision to blend local heritage with international standards, Highlands Coffee’s expansion into 777 stores in 2024 and its ambition for 1,000 outlets by 2026 demonstrates strategic foresight and operational strength. By combining quality sourcing, digital convenience, and locally-inspired products, Highlands has calibrated its brand to match Vietnam’s evolving tastes—especially among young, urban consumers.

The Engine of Growth: Consumer Dynamics and Market Expansion

Demographic Shifts Driving Demand: The café market’s double-digit growth is propelled largely by urban youth and young professionals. These consumers—51% of whom now visit F&B venues three to four times weekly, double last year—seek not only great coffee but also experiences that align with their social, digital, and lifestyle needs.
Convenience and Quality Experience: Consumers are gravitating toward convenience (takeaway, ready-to-drink products) but also demanding specialty beverages, locally-inspired flavors, and immersive digital engagement. Highlands Coffee’s focus on “end-to-end digitization” and loyalty platforms has been pivotal, as highlighted by industry analyses. Mobile ordering, personalized offers, and integrated rewards systems have become the norm for modern café experiences.
Secondary City Expansion: While major cities remain a hotbed, Highlands is rapidly entering tier-2 and tier-3 centers, leveraging scalable store formats and localized menus. This expansion taps into untapped consumer bases and amplifies brand reach across urban-rural divides.

Competitive Landscape: Local Authenticity vs. Global Aspirations

International Entrants: Starbucks and other global brands have staked their claim on Vietnam’s café market, bringing global flair but facing challenges with localization and price sensitivity.
Local and Independent Innovators: Beyond chains, a wave of independent cafés and smaller regional brands are innovating with specialty drinks, unique atmospheres, and direct connections to local producers. The independent scene is fragmented but fiercely creative, pushing larger players to continually refresh their offerings.
Highlands Coffee’s Differentiation: Highlands maintains its edge through a fusion of local identity and menu innovation—think phin-style cold brews, regionally-sourced beans, and seasonal specialty drinks. Its omnichannel reach, through physical stores and digital platforms, sets a benchmark for multi-layered engagement.

Digital Transformation: The New Frontier for Café Success

Accelerating Digital Engagement: As the Vietnamese café market embraces technology, digital agility has become a vital lever for growth. Highlands’ investment in loyalty platforms, e-commerce, and data-driven personalization is not just about operational efficiency—it’s about meeting consumers where they are, in-app, online, and in-store.
End-to-End Digitization: The brand’s seamless integration of mobile ordering, digital payments, and personalized promotions creates frictionless experiences that foster customer loyalty and drive repeat visits. According to GrowthHQ, these strategies have proven crucial for sustained growth and set the pace for digital transformation across the market.

Product Innovation and Localization: Satisfying a Nation’s Palate

Expanding Product Mix: Vietnamese consumers increasingly seek specialty, ready-to-drink beverages and authentic flavors. Highlands has responded by expanding its product mix—offering phin-style cold brews, Vietnamese teas, and fusion drinks that blend global trends with beloved local traditions.
Menu Localization: Tailoring menus to regional tastes isn’t just good business—it’s essential for relevance and repeat business. Through cross-promotions and limited-time offers tied to cultural events, Highlands deepens its connection with local consumers and stays top-of-mind.
Supply Chain and Sustainability: Underpinning menu innovation is a renewed focus on traceable sourcing and partnerships with local farmers. With over USD 170 million invested in supply chain upgrades and sustainability initiatives, Highlands is positioning itself as a steward of both quality and social responsibility—a move increasingly demanded by Vietnam’s emerging middle class.

Comparative Perspectives: Newcomers, Observers, and Industry Insiders

Global Brands’ Challenge: For newcomers like Starbucks, winning Vietnamese hearts means localizing menus, controlling costs, and building genuine community ties—a complex dance in a market where authenticity and value matter.
Local Chains and Independents: Regional players and independents, unburdened by global standardization, can experiment freely. Many thrive by creating unique atmospheres, facilitating social connection, and collaborating directly with producers, but their scale is limited.
Insider’s Advantage—Highlands Coffee: For Highlands, the advantage lies in scale, an agile supply chain, and deep local understanding. Yet, maintaining leadership requires constant evolution—digitally, operationally, and culturally—as consumer expectations rise and competition intensifies.

Strategic Action in a Changing Market: Insights and Imperatives

Digital Agility: Industry players must accelerate digital transformation, ensuring seamless omnichannel experiences—from app-based ordering to AI-driven personalization.
Localization at Scale: Brands must balance scalable models with genuine regional adaptation, tailoring menus, store formats, and marketing to diverse local needs.
Sustainability and Transparency: Investments in traceable sourcing, sustainability, and local partnerships are no longer optional—they are requirements to win trust and loyalty among increasingly discerning consumers.
IPO-Ready Governance: With Highlands Coffee reportedly planning an IPO by 2026, the spotlight is on financial transparency, investor relations, and sustained growth metrics. For others aspiring to public listings, the bar for governance and strategic clarity has been raised considerably.

Strategic resilience in Vietnam’s café market now means blending local identity with digital excellence—those who harmonize tradition, convenience, and innovation will define the next era of coffee consumption.

Real-World Implications: What This Means for Business, Culture, and Community

Reshaping Daily Life: Café visits have become central to urban lifestyles, serving as social hubs, workspaces, and sites of cultural exchange. The retreat of traditional coffee stalls and the rise of branded chains reflects broader shifts in taste, socialization, and urban design.
Opportunities for Entrepreneurs: Booming demand and a projected USD 552.6 million market size by 2025 offer fertile ground for new entrants, but sustained success requires differentiated offerings and deep market understanding.
Risks and Rewards: The sector faces external threats—global entrants, price volatility, and shifting consumer sentiment. Agile promotion, collaboration, and locally-attuned experiences will be critical for mitigating these risks and sustaining growth.

The Road Ahead: Future Trajectories and Strategic Importance

Continued Growth: With consumption estimated to rise to 4.9 million 60kg bags in 2025/26 and Highlands Coffee’s store count projected to surpass 830 in 2025, the café sector shows no signs of slowing.
Deepening Digital Transformation: Expect loyalty platforms, mobile commerce, and data-powered personalization to become baseline expectations. Brands that innovate here will capture market share and consumer mindshare.
Locality as Brand Currency: Vietnamese consumers increasingly value brands with authentic local roots and transparent practices. Highlands Coffee’s sustained focus on menu localization, sustainable sourcing, and regional engagement will be crucial for ongoing relevance.
Global Aspirations: As public listings loom, Vietnamese café brands must demonstrate world-class governance and growth to attract international capital and expand beyond national borders.

Conclusion: Brewing Competitive Advantage for Vietnam’s Next Café Era

Highlands Coffee’s commanding market position—built on scale, digital innovation, and deep local engagement—offers an instructive blueprint for navigating Vietnam’s fast-expanding, youth-driven café sector. For competitors, digital agility, product differentiation, and targeted regional strategies are not just advantageous—they are existential.
Looking ahead, sector leaders must harmonize tradition with technology, local tastes with scalable operations, and sustainability with profitability. The next chapter in Vietnam’s café market will belong to those who understand that coffee is not only a beverage, but a bridge—connecting culture, commerce, and community. Ignoring these strategic imperatives means risking irrelevance in one of Southeast Asia’s most vibrant consumer markets.
Read further strategic insights from GrowthHQ.
The brew battle continues, and its victors will be those who combine the best of Vietnam’s coffee heritage with the demands of the digital, global age.