How tea chain Phuc Long fared in the year after Masan takeover

Its revenues were VND1.579 trillion ($67.15 million) and earnings before interest, taxes, depreciation, and amortization (EBITDA) were VND195 billion, the highest gross profit margin in the industry, according to Masan’s newly published annual report.

Highland Coffee had revenues of over VND2 trillion a year in 2019 and 2020.

Phuc Long opened 23 large flagship stores and two mini shops in the last quarter of 2022, increasing their total numbers to 111 and 21.

They represented a near doubling of numbers from 2021 when Masan first bought stakes in Phuc Long.

The flagship stores achieved very high profit margins of 31% in 2022 and 26% in 2021. Last year they reported sales of VND1.1 trillion and profits of VND330 billion.

But Phuc Long had to close 150 tea and coffee kiosks located inside WinMart retail stores, also belonging to Masan, in the second half of 2022, the annual report said.

“We are adjusting this model (opening tea and coffee kiosks in WinMart stores) in the first half of 2023 before continuing to expand scale.”

In the event Phuc Long failed to achieve its target of opening 1,000 new kiosks last year.

But Phuc Long’s profit, of VND195 billion, was lower than the profit from its flagship stores alone, which meant the kiosks were losing money, the reason for the rejig of the model, according to experts.

Last year it accounted for 2% of Masan’s revenues and up 1.3% of profits.

It targets revenues of VND2.5-3 trillion this year, up 58-90% from 2022, mainly thanks to the opening of some 90 new stores.

Masan first bought shares of Phuc Long in May 2021, paying $15 million for a 20% stake. Last year it bought 70% in two different transactions for VND6.1 trillion.

Masan hopes to make Phuc Long the top tea and coffee chain in Vietnam over the next few years before going overseas in 2024 or 2025.