Divorce of the decade brewing in Vietnam
Trung Nguyen coffee company's family owners are locked in a messy separation that has riveted the nation and clouded the firm's caffeinated global ambitions
Vietnam’s divorce of the decade has captivated local media for more than a month with revealing tales of rivalry, backstabbing and slander between the husband and wife who control the nation’s top coffee businesses.
Dang Le Nguyen Vu, founder and chairman of Trung Nguyen, one of Vietnam’s largest coffee companies, dismissed his wife as the firm’s deputy director in 2015 on claims she had damaged the family business by publicly disclosing sensitive documents.
His businesswoman spouse, Le Hoang Diep Thao, has rejected the allegations and claimed her husband was wrongfully bringing his personal baggage into the company’s corporate affairs.
With all the hallmarks of a tabloid story, Thao has recently gone on the counteroffensive, claiming her estranged husband is mentally unstable and should be removed as chairman of Trung Nguyen Group, Trung Nguyen’s parent company.
Vu, often portrayed as a recluse, ended his five year refusal to do media interviews earlier this month and presented himself as competent and cerebral at several social gatherings with the press in attendance, observers of the case say.
The increasingly public divorce that began in 2015 has now spiraled into a high-stakes business rivalry with major implications for one of Vietnam’s top global exporters.
The Trung Nguyen Group’s complicated corporate structure and system of control means Vu and Thao control different and sometimes competing subsidiaries of the mother company.
In June, Trung Nguyen Corporation, a Vu-controlled subsidiary of Trung Nguyen Group, asked Vietnam’s General Department of Customs to halt the export and domestic sales of its G7-branded instant coffee.
That request was allegedly made because the brand was produced by another of the Group’s subsidiaries, Trung Nguyen Instant Coffee, which is controlled by Thao.
Thao currently serves as chairwoman and chief executive officer of TNI Corporation, formerly known as Trung Nguyen International, which began as a subsidiary of Trung Nguyen Group until it separated from the parent firm in 2015 – at the same time the couple’s divorce proceedings commenced.
In July this year, Thao’s TNI Corporation opened the first of its King Coffee outlets, which it hopes to expand to 100 by the end of the year. It also has plans to break into the American and Chinese coffee markets by opening cafes.
Its King Coffee-branded instant coffee is already a top seller in China, South Korea and Australia. It started selling in the US in late 2016.
Late last year, China’s LaoJiao Group signed a memorandum of understanding with TNI Corporation to distribute King Coffee-branded products domestically.
A few months later, however, Trung Nguyen Legend, a subsidiary of Trung Nguyen Group controlled by Vu, signed an agreement with Shanghai Qinzhou Trade Company to distribute its G7 instant coffee across eastern China.
Upping the competition with Thao and her firm’s high-quality King Coffee brand, Vu this year launched his own higher-end brand, known as Legend.
“Both Vu and Thao focus on extending business in China and are shaping up to be direct rivals in the 1.4-billion people market…Thao will compete with her husband not only in China, but also in the domestic market,” the Vietnam Investment Review reported.
The situation could become even more convoluted – and contentious – for Trung Nguyen Group when judges finally decide on the long-standing divorce proceedings, with a verdict possible as early as next month.
Vu and Thao each individually hold 20% and 10% stakes respectively in Trung Nguyen Group. The remaining 70% is held by Trung Nguyen Investment Corporation, a holding company that controls all intellectual property of the Trung Nguyen coffee brands.
Shares of the holding company, meanwhile, are split between Vu and Thao 62-31% respectively, according to local media.
While Vu currently controls most shares in the Group, that could change if the couple’s children get involved. Vu reportedly wants to give their four children dividends from Trung Nguyen Group, while Thao wants him to give each of them 5% of his shares.
If he agrees to hand over the 20% stake, then Vu could claim she is the major stakeholder of the firm by taking control of her children’s shares and then potentially boot out Vu, analysts say.
A court this month failed to grant the pair a divorce until their business disputes are settled. Another divorce hearing is expected next month.
The case has highlighted the social importance of prominent businesspeople in modern day Vietnam, where the dominant Communist Party only belatedly adopted free market policies in the late 1980s.
Vu was dubbed Vietnam’s “coffee king” and “an unofficial ambassador of Vietnam’s economic evolution” in a 2012 Forbes article. The report quoted a Vietnamese economist who said Vu’s success was a classic “zero to hero story.”
The rags-to-riches tale started in 1996 when Vu, a medical student at the time, and three friends opened a small coffee processing plant in Dak Lak province, the hub of Vietnam’s world-renowned coffee production.
Vietnam is the world’s second-largest producer of coffee after Brazil and the largest producer of robusta beans. As a cash-strapped student, Vu cycled as a around the area on his bicycle selling produce door-to-door to raise capital for the business.
Originally conceived as a processing and export firm, Trung Nguyen opened its first cafe in order to promote its brand in 1998.
Within a few years, a close triangle of cafes proved so successful in Ho Chi Minh City that the company went national, opening 422 cafes across Vietnam by 2002. By 2013, Trung Nguyen was the largest coffee firm in Vietnam.
In this rags-to-riches telling of the story, Thao’s role is often overlooked, though she says she managed the company’s day-to-day operations from its early days.
Although the 2012 Forbes article brought him international recognition, Vu’s ascendency as a corporate success story in Vietnam was cemented by his appearance on Nguoi Duong Thoi (Contemporaries), a popular state TV talk show broadcast that celebrates successful individuals.
In her 2016 essay, “Personal Wealth, National Pride,” academic Giang Nguyen-Thu wrote that the television show presented Vu as “a nationalist businessman of the post-Reform era.”
Indeed, he came to personify the “commercial nationalism” that gained prominence in Vietnam after doi moi, the free market reforms introduced in 1986, she added.
Thao now also has status as a prominent businesswoman in her own right after the recent success of TNI Corporation. She was likewise profiled by Forbes as a corporate success story last October.
Trung Nguyen’s local dominance has been hit in recent years, chiefly by the arrival of international brands like Nescafe, which out-sells it by a large margin in the instant coffee market.
Media interest in the pair’s divorce proceedings has lately seen some Vietnamese newspapers question just how successful the firm actually is and whether it can hold its ground when faced with foreign competition.
All of this comes amid the ruling Communist Party’s goal of fostering “national champion” firms across different business sectors. With the global ambitions of Vu’s Trung Nguyen and Thao’s TNI Corporation, their success so far has given the government’s drive a certain boost.
While the divorce has played out in the public eye, it took on a new dimension when Thao claimed earlier this month that her husband had tapped two new deputy directors for Trung Nguyen Group to gain a political advantage.
It’s not clear Vu has gained an edge by the move. One appointee was reportedly Lu Ngoc Cu, the former People’s Committee Chairman of Dak Lak province, though he reportedly turned down the position.
He was disciplined by the Party in 2012 over financial violations and mismanagement, including somewhat ironically for not disclosing that his wife was engaged in real estate trading while he served in an official post.