The needs and characteristics of consumption of uk market for coffee beans the united kingdom – vietnam free trade agreement and main opportunities for vietnam’s exporters

GROUPASSIGNMENT

Class: IB1605
Lecturer: Cung Thị Ánh Ngọc
Course: IEI301
Group 2: member
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Nguyễn Lê Trang Linh
Phạm Quỳnh Anh
Nguyễn Phương Anh
Nguyễn Đăng Anh Dũng
Nguyễn Diệu Linh

FPT University
Fall 2022

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Table of contents

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I. Incoterm rules in this contract

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II. Payment method is used in this contract
1. The risk of the company when using this payment method
2. Some solutions to limit such risk

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III. The analysis report on the United Kingdom market
1. The needs and characteristics of consumption of UK market for
coffee beans
2. The United Kingdom – Vietnam Free Trade agreement and main
opportunities for Vietnam’s exporters
3. EU’s specific requirements/regulations should Vietnamese
exporters pay attention to when exporting to this market

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IV. Reference

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I. Incoterm rules in this contract
Incoterms rules used in contracts are CFR

1. The duties of ABC Company and XYZ Company under this
Incoterms rule

● The duties that Company ABC

The seller pays for goods and freight before shipping on board.The
exporter will have to sign the contract and pay the necessary costs and freight to
bring the goods to Hai Phong port in accordance with the regulations and avoid
the risks, damage and loss of goods during the transit, and deliver the goods to
the ship. The buyer is obliged to deliver the goods in accordance with the
specified contract. Must prepare all required invoices when buying and selling
such as commercial invoices, export permits, sea transport documents. Commit
to deliver the goods on board and pay all loading costs. Carry out import and
export customs clearance procedures according to the correct process to ensure
on-time delivery. Inform the delivery process including the time to prepare the
goods, taxes, the time of arrival at the port, the appropriate receiving process for
the buyer. Provide full invoices, shipping documents related to sea such as
conditions loaded on board, freight. Be responsible for risks and losses during the
delivery of goods on ships, loading and unloading.
● The duties of Company XYZ
The buyer is obliged to accept the delivery upon receipt of the invoice and
transport document. Receive goods at the right port of loading specified in the
contract. Pay the costs of unloading, loading and unloading are not included in
the freight to be paid by the exporter. Sign a safety insurance contract to ensure

the interests of both parties. Company XYZ has to bear the risks and losses when
the goods have been delivered to the port vessel at the specified port of loading
and cleared for import. Taxes incurred in the process of importing goods. Must
follow all necessary procedures for transit if any in the 3rd country and prepare
all the required documents when importing and transiting the goods in the 3rd
country during transportation. The point of transferring risk: Goods and freight
are paid by ABC company and delivered on board.

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● The point of transferring risk
The risk of loss or damage to the goods transfers when they are delivered
on board the vessel. The seller must contract and pay the costs and freight
necessary to bring the goods to the port. With this condition, company ABC has
no obligation to company XYZ about signing an insurance contract, so if
necessary, company XYZ should buy insurance for the goods themselves to
avoid risks. This term has two important ports: the port of departure (Hai Phong
port) where the goods are delivered on board the carrier and the port of
destination (Southampton port). The risk passes from the seller to the buyer when
the seller delivers the goods to the buyer by placing the goods on board the
carrier at the port of departure (Hai Phong port). However, the seller will be
responsible for concluding a contract of carriage to bring the goods from the port
of departure (Hai Phong port) to the port of destination (Southampton port).

II. Payment method is used in this contract
The method of payment being used is a Documentary Collection
(Documents against Acceptance). The documents required to take possession of

the goods are released by the clearing bank only after the buyer accepts a time
draft.
1. The risk of the company when using this payment method
There are a few risks associated with this type of payment. If the buyer
does not accept the goods or delays the acceptance then payment can either be
delayed or by rejecting the goods the buyer can escape from the transaction. As
coffee is a perishable item, the loss against a rejection from the buyer will be
dealt by the supplier. The seller in this case does not receive a bank guarantee for
payments which means that if the buyer was to decide to reject the trade, the
seller will have to pay for the shipping to ship the product back to himself. Even
if the buyer does agree to pay and takes the goods he may not pay up on the due
date. As there is no bank guarantee the buyer can make an escape.
2. Some solutions to limit such risk
To avoid such mishaps during trades, the seller can use a Letter of
Credit as it guarantees payment from the buyer to the seller. The bank issues a
guarantee against payment for the goods received. Although a Letter of Credit is
more expensive than a DA, it is still the safer route and guarantees payments. In

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case the buyer rejects the payments, finding another buyer in the same region
could be a way out. However, it can be a difficult route at times, especially for
perishable items so the seller can re-negotiate terms with the buyer in order to
convince the buyer for payment. The seller can also include a clause in the sales
contract that requires the buyer to pay for shipping if the products have to be
returned. To avoid buyers escaping payment, sellers can ask the buyers to inspect
the goods at the loading port and pay upon arrival before transferring ownership.
If other options seem too costly for the seller then the best thing to do would be to
dispose of the goods before a bigger loss is made.

III. The analysis report on the United Kingdom
market
1.
beans

The needs and characteristics of consumption of UK market for coffee

Coffee is the most popular beverage worldwide with more than
400 billion cups consumed each year. The UK is the 5th largest coffee
consuming market in Europe. On average in the UK, they drink about 2 cups of
coffee a day, the total value of coffee consumed in the UK annually is about
£
3.9 billion. About 80% of UK households use coffee at home with an estimated
demand of more than 38,000 tonnes, accounting for 41% of the entire UK coffee
market. 57% of coffee is drunk at breakfast, 34% between meals and 13% at other
meals. Sales of the top 10 beans in the UK in 2020 reached £328 million, accounting
for 73.5% of total sales in this coffee segment.

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The UK coffee market is increasingly important for coffee drinking
in the workplace, and so coffee shop owners try to locate their shops near
business offices. There is a difference in different age groups. People 20 and
younger drank an average of just half a cup of coffee a day, while 20- to 37-yearolds drank 1.3 cups, and 38 to 52-year-olds consumed 2.1 cups of coffee. More
coffee consumption not only means higher revenue but also more jobs.
2.

The United Kingdom – Vietnam Free Trade agreement and main
opportunities for Vietnam’s exporters
a. UKVFTA
FTA is an acronym for the phrase Free Trade Area, also known as
Free Trade Agreement. So UKVFTA is the Vietnam - UK Free Trade
Agreement that officially completed negotiations on December 11, 2020 and
signed on the evening of December 29, 2020.
The Agreement is negotiated on the principle of inheriting the
commitments
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already in the Free Trade Agreement between Vietnam and the European

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Union (EVFTA) with necessary adjustments to ensure conformity with the
trade framework. bilateral relationship between Vietnam and the UK.
The Agreement takes effect temporarily from 23 pm on December
31, 2020 (i.e. 6:00 am on January 1, 2021 in Vietnam time), and officially takes
effect from May 1, 2021.
b.
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The opportunity this agreement brings to Vietnamese exporters
85.6% of tariff lines will be eliminated on January 1, 2021
99.2% of tariff lines will be eliminated on January 1, 2027;

0.8% of tariff lines are partially liberalised through tariff quotas (with a
preferential tax rate for products within the quota of 0%)
In addition to import tax, the UK gives Vietnam a preferential

tariff quota (TRQ) for a number of items with an import tax rate of 0% such as
seafood, fruit, coffee, rice, and textiles. sewing, furniture…
In 2020, Vietnam's exports to the UK will reach about US$5.04
billion, accounting for 0.8% of the UK's total import turnover, while UK
exports to Vietnam are worth nearly US$700 million, accounting for nearly
US$700 million. 0.3% of Vietnam's total imports. In the first 10 months of
2021, two-way trade between Vietnam and the UK reached 5.5 billion USD and
the import and export value both increased by double digits. Accordingly, the
export value of Vietnamese goods to the UK reached $4.7 billion, up 15%.
According to Vietnam Customs, two-way trade turnover between Vietnam and
the UK in 2021 will reach impressively high growth despite the COVID-19
pandemic, reaching $6.6 billion, an increase of 17.2% compared to 2020. In
which, Vietnam's exports reached nearly $5.8 billion, up 16.4%.
In the field of investment, as of May 2022, the UK has a total of
462 FDI projects in Vietnam, with a total valid registered investment capital of
4.15 billion USD, accounting for billion accounts for 0.97% of the total foreign
investment capital registered in Vietnam. Manufacturing and processing
industry with 120 projects, registered investment capital reached nearly 1.6
billion USD, accounting for nearly 40% of total investment capital. Next is the
real estate business with 23 projects, total investment capital of 1.04 billion
USD, accounting for 26% of total investment capital. Mining ranked third with
7 projects, total registered capital of 701.44 million USD,

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accounting for 18% of total investment capital. The remaining projects are in
other fields such as: wholesale and retail, repair of cars, motorbikes and
motorbikes; accommodation and catering services; water supply and waste
treatment; professional, scientific and technological activities; education and

training...
For example, lychee, longan, rambutan, dragon fruit, pineapple,
mango... have an additional advantage in accessing the UK market in the
context of competitive countries such as Brazil, Thailand, and Malaysia.
3.
EU’s specific requirements/regulations should Vietnamese exporters pay
attention to when exporting to this market
The EU is Vietnam's largest coffee consuming market. Germany is
Vietnam's largest coffee import market in the EU.
a.

Customs procedures
When importing goods from outside the EU in general and for coffee in
particular, when importing goods, customs declaration is required. Customs
clearance is the procedure by which goods are released upon completion of the
import declaration accompanied by relevant documents and full payment of
taxes and other customs duties to the customs authority.

b.

Basic documents in the customs dossier
According to EU regulations, when clearing goods, a declaration must be
presented to the Customs office according to the form prescribed by the
Customs. The basic documents for goods imported into the EU Member States
do not depend on the value of the shipment or the type of transport. Normally,
for goods imported into the EU, the following basic documents are required:

●

Commercial Invoice( CI)

Importer and exporter information, invoice date, invoice number,
description of goods, terms of delivery and other details necessary to determine
the correct price and freight should be clearly stated. fees and insurance.

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Single Administrative Document (SAD)
The customs declaration is submitted using the standard administrative
document , which is a common form for all EU Member States under the Union
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Customs Code and the Transition Authorization Act (Regulations). EU
2016/3413 dated December 17, 2015) while the e-customs environment is

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implemented synchronously.
● Bill of Lading
A copy of the bill of lading (or air waybill) is required for customs
clearance. Consignees usually need an original bill of lading for import
clearance.
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Certificate of Origin( C/O)
Coffee products circulated on the market must meet PDO ( ) regulations.
For the export of some products including Coffee to the EU, it is allowed to selfcertify export for shipments valued at less than 6,000 EUR and without having to
make a paper C/O and with the condition that the REX code must be registered.
(Registered Exporter). For goods with a value of more than 6,000 EUR or
requested by the importer, a certificate of “CO from EUR” is required. first" . In
addition, goods eligible for GSP (Good Storage Practices) must have a certificate

of origin form A "C/O form A".

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Packing list
Accompanied by a commercial invoice and transport document,
providing information on the imported item and the packaging details of each
shipment.

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●
c.

Export declaration
Applies to shipments with a value of more than 2500 USD
Import Licence
Under EU regulations, an import licence is required for most shaved
commodities including coffee.
Insurance Certificate
Present if premium information is not shown in the commercial invoice.
Produce traceability
Coffee imported into the EU is required to comply with EU requirements
and regulations for food. Traceability due to growing concerns about food safety
and consumer health, traceability is essentially a requirement that coffee products
must be tracked worldwide. supply chain to ensure food safety, enable
appropriate action in the event of unsafe food, and limit the risk of contamination.
Therefore, having a traceability system is an advantage that creates trust for
customers and stabilises market share. Examples of trackable data:

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d. Regulations on contaminant
The EU regulates that contaminants should be kept as low as possible so
as not to threaten human health or negatively affect food quality. Common
contaminants that can be found in coffee products include: mycotoxins;
salmonella; extraction solvent; polycyclic aromatic hydrocarbons (PAHs);
acrylamide, ochratoxin. (1,4-dimethylnaphthalene, 8-hydroxyquinoline,
pinoxaden and valifenalate) maximum residues MRLs (Maximum Residue
Level) such as: Glyphosate-0.1 mg/kg, Bixafen- 0.05 mg/kg, Fenazaquin- 0.05
mg/kg)
e.

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Labelling Regulations
Exported coffee labels must comply with the EU's general food labelling
requirements in regulation (EU) 1169/201119 of 25 October 2011 on Food
Information for Consumers (FIC). Coffee labels need additional information to
ensure traceability of each batch:
Product name;
ICO International Coffee Organization's format code;
Country of origin (ie Vietnam);
Classification/grade;
Net weight in kg;
For certified coffee: name, code of inspection agency, certificate number.
For extracted, instant or instant coffee (except for instant torrefacto coffee,

which is coffee roasted by a process that includes the addition of a certain
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amount of sugar during roasting) a statement is required. Specific labels apply

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such as "coffee extract", "instant coffee extract", "instant coffee" or "instant
coffee". The term "concentrated" may only appear on the label if the coffee dry
matter content is more than 25% by weight, while the term "decaffeinated" must
appear if the anhydrous caffeine content does not exceed 0.3 % by weight of
coffee dry matter. This information must be in the same item as the sales
description.
Coffee extract in solid or powder form: To be considered "coffee", the dry
matter content must be not less than 95% by weight of dry coffee, and between
70% and 85% by weight if it is coffee. coffee powder. The coffee must contain
no substances other than those derived from the coffee extraction process and
the label must state the coffee dry matter content based on a minimum,
expressed as a percentage by weight of the product. .
Liquid coffee extract: The dry matter content must be between 15% and 55% by
weight of the coffee solution. If containing roasted or unroasted sugars, the
percentage must not exceed 12% by weight and the label must include the terms
“with”, “preserved with”, “with added” or “roasted with” after the name of the
type of road used.

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f.

Packaging regulations
Coffee beans are shipped in woven bags made of natural fibres or jute.
Jute bags must be tough and strong.
Other materials, such as grainpro or other innovative materials such as
videplast lining, are commonly used to pack specialty coffees inside jute bags.
Most of the standard quality coffee beans imported into the EU are packed in
60-70 kg/bag jute bags, then into a 20-ton lined container (a type of large
special packaging used to close liquids before being added to the container).
normal container), with a net weight of 17-19 tons of coffee.
The use of coffee packaging materials should comply with Regulation
(EC) 1935/200420 of 27 October 2004 which sets out basic requirements for all
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materials that come into contact with food. The regulation also sets forth
labelling and traceability requirements and procedures for allowing substances

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to be used through the European Food Safety Authority (EFSA). Annex I to
Regulation (EC) 1935/2004 lists the classes of materials that may be covered by
specific measures. 20 Regulation (EC) 2023/200621 of 22 December 2006
providing good manufacturing practice (GMP) for the groups of materials and
articles intended to come into contact with food listed in the annex I Regulation

(EC) 1935/2004.
g.

Control over genetically modified food
The EU is very cautious about GMOs (Genetically Modified Organism);
Only a few genetically modified varieties have been allowed for soybeans,
rapeseed and maize, which are used mainly in the feed sector. For consumption
purposes, most food businesses choose not to sell genetically modified foods
and coffee is one of them.
EC Regulation No 1829/200322, September 22, 2003 updated 2021
specifies that products containing GMOs may not be placed on the market
unless authorised and in compliance with labelling regulations.

h.

Regulations on organic products
In order to export organic products, the producer must obtain a COIs
certificate from the control agency before reaching the EU border and be subject
to border control before being allowed to import into the EU. Organic coffee
products and coffee beans must be grown with EU-approved substances
(Chitosan hydrochloride, Vinegar, Hydrogen peroxide, Farmyard manure, Liquid
animal excrements, ..)
On July 15, 2021, the EC issued a new Implementation Regulation No.
2021/116524 on the promulgation of a list of products and substances permitted
for use in organic production, replacing Regulation (EC) No. 889/2008 on the
detailed regulation of organic production and labelling of organic products
related to organic production, labelling and control. The new regulation
establishes a detailed list of products and substances that are allowed to be used
in organic production at all stages in the organic production process for crop
production and aquaculture. For cultivation, prescribe a list of substances

allowed to be used in fertilisers, field treatment, nutrition, and plant protection. It
also provides for specific licensing procedures for the use of products and
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substances in certain areas of organic agriculture by third countries. The
regulation will take effect from January 1, 2022, and a partial effect from
January 2024.

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IV. Reference
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