It’s Tuesday, and today we’re focusing on Every Half Coffee Roasters, a Vietnamese specialty coffee company founded by Vo Duy Phu and Tran Le Minh Truc. The company recently announced a pre-Series A round led by Openspace Ventures and DSG Consumer Partners.

In many ways Every Half is a traditional coffee shop. They’ve taken the model pioneered by Starbucks—creating an experience around coffee drinking—and made it their own. All the usual coffee shop attributes are there:

But beyond the basics, there are two product elements worth mentioning.

First, and this is just being tested, they offer a coffee subscription. It’s really simple: you choose your favorite flavor, select a delivery frequency, and enjoy your coffee. The UX/UI still feels under construction, so it’s not super smooth yet—but it’s there.

They’re also testing another subscription, called BRIGHT COLDBREW. (As you might’ve deduced from the name, this is a cold brew offering.) However, there’s no way to actually try it yet.

That’s the first part.

Second is positioning. It’s positioned as a premium coffee shop offering high-quality specialty coffee. That might not sound unique at first, but I think they pull it off. Every Half is very focused on product craftsmanship—their store design conveys a distinct vibe, and their external communication consistently highlights coffee origins and their approach to handling beans.

While not unique in and of itself, this positioning does help the company stand out in a crowded market.

Although the cost of coffee is around 10% of the total cost of a café, it’s largely the reason people go to cafés. So let’s focus on that, especially since coffee sourcing is central to Every Half’s business model.

As of 2023, 70% of the coffee offered at Every Half’s locations was imported. The reason is that imported Arabica tastes are more accepted; locally grown Robusta is more bitter, has an earthy flavor which appeals less to consumers.

Some of local Robusta’s problems have to do with inefficient farming practices. To change that—and Robusta’s perception—Every Half has integrated itself into the coffee growing process. They help with seed selection, post-harvest processing, provide other technical support, and offer purchase guarantees. The company even sends baristas to farms so they can experience the whole coffee-growing journey.

All that help translates into higher farmer income and quality, which in turn should allow for higher output and higher end consumption.

Integrating into the coffee supply chain enables Every Half to do three things:

The company generates revenue through two primary streams: selling prepared coffee at its cafés and selling DIY coffee at its stores and through the website.

The subscription offering is only beginning to roll out, so we’ll see how it looks. And now, with the export plans, Every Half will begin establishing a wholesale business.

When we think of coffee, we usually think of Brazil, which is the largest exporter. However, Vietnam is actually the third-largest exporter globally, holding a 6.8% share and bringing in $2.6 billion in coffee exports. The industry has a massive impact on employment—600,000 households and 2 million workers depend on coffee for their income.

So the industry is massive, which makes it all the more important that, in many ways, it lacks resiliency—largely in two ways.

First is that coffee farming isn’t all that lucrative. In Vietnam, farmers receive just 2.5% of the downstream cup value—that’s $0.07 on a $2.50 cup. This gap between value creation and value capture stems from a classic chicken-and-egg problem: farmers can’t invest in proper cultivation or processing, which results in losses of up to 15% of harvest value, depressing their earnings even more. Without applying better farming techniques and improving coffee quality, it’s hard to command higher prices on global markets.

Second—and this is largely out of farmers’ control—are climate-related challenges. For example, in 2018, coffee production decreased by 2% due to late rains. Some estimates suggest that, in the next 25 years, up to 100,000 farmers could lose viable cultivation land because of climate change.

That massive production has spilled over into consumption, especially among younger people. Vietnam is one of the most coffee-centered nations in Southeast Asia. Local consumption has been steadily increasing, growing from 1.7 kg per capita in 2015 to nearly 3 kg in 2023. Today, the only country ahead in per-capita consumption in the region is the Philippines at 3.6 kg. Projected growth between 2025 and 2030 is about 6%.

About a third of young consumers here consider drinking coffee out a necessity. With half the population expected to enter the middle class—meaning growing disposable income—it’s easy to imagine demand for going out to drink coffee only rising.

I’ve mentioned that most locally grown coffee is Robusta—actually about 95%. Unfortunately for farmers, Robusta is harder to grow because it needs more fertilization and irrigation. Plus, there’s limited access to quality seedlings, which drags down overall coffee quality. That puts producers in a tough spot. As Truc explains:

As a result, prices aren’t that low, and quality and taste aren’t for everybody.

That’s why Every Half is working hard to change this perception—first by helping farmers and then by telling a story about locally produced coffee. It may be blasphemy to compare anything to Red Bull—probably the greatest marketing creation ever—but there’s a similar energy here. Subtle notes, if you will.

Vietnamese coffee is both pricier for the same quality and tastes worse than coffee from other countries. Building a Vietnamese coffee brand is a tall order, but that’s what Every Half will have to do to succeed in their pursuit of global exports. Moreover, increasing the share of locally-grown coffee in their offering presents further risks of consumer rejection.

Unlike Arabica, Robusta tends to ripen unevenly, which forces manual cherry sorting. Every Half’s promise to buy every lot—ripe or not—encourages farmers, but it also means the company ends up absorbing low-quality lots. As we’ve discussed, coffee isn’t a massive cost burden for cafés. However, buying low-quality output or dealing with a failed harvest can depress margins in an already thin-margin business.

The export side and the café side are very different: they require distinct skill sets, cost structures, and incentives. For example, if there’s an oversupply of locally grown beans, the café business will be pushed to sell more of that coffee to stabilize prices—even if customers want more variety. The deeper Every Half goes into exports, the more it’s incentivized to shift its café assortment toward locally grown coffee.

If Every Half’s execution is on point, they should be fine—it’s the classic rising tide that lifts all boats. But if they really manage to change local coffee’s perception both in Vietnam and globally, they’ll get two tides working for them: overall market growth and shifting consumer segments.

I’ve covered Robusta’s disadvantages, but it has its advantages, too. One is that it can grow at lower altitudes, which expands its potential growing regions. Another is that it can grow in hotter climates. With global warming fears mounting, more farmers might have to switch to Robusta in the years ahead.

Every Half has plenty of room to expand its product line. It can add new coffee and drink varieties or move into new cities. And, leveraging its farmer connections and brand positioning, the company could organize tours to local farms so customers see how coffee is grown, partner with local resorts to supply branded coffee, or further vertically integrate with farmers to control the entire supply chain.

The idea of finding something that works in other countries and trying to make it work at home isn’t new. That’s how every food delivery, neobank, and D2C startup was born.

But it’s interesting to see when companies like these pop up in places with unique attributes that let the industry function differently. Like Vietnam and coffee.