Vietnam COVID Crisis Cripples Coffee, Retail Supply Chains

Vietnam’s ongoing COVID crisis and extended lockdowns are crippling supply chains for coffee and retail brands, sending companies scrambling for alternatives outside of the country.

Fighting its worst virus outbreak since the start of the pandemic, Vietnam’s exporting capital Ho Chi Minh City has been locked down for more than 100 days, and one-third of textile and garment factories remain closed, according to multiple media reports.

As Vietnam is the second-largest producer of coffee behind Brazil, its lockdowns have also delayed the processing and exporting of coffee beans. Poor weather conditions in Brazil have snarled coffee production, which, combined with Vietnam’s woes, could keep coffee prices high through the end of 2022, according to data from Fitch Solutions.

See also: Adidas, Nike Among Brands Hit With Supply Chain Issues Amid Vietnam COVID Rise

Coffee exports in Vietnam dropped 8.7% in August from July and 6.4% between January and August compared to the same period in 2019.

Nike, Adidas, Abercrombie & Fitch, Under Armour and Lululemon are just some of the major brands facing severe production delays due to the country’s extended lockdowns. Some companies are considering a return to China’s factories.

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Footwear producer Designer Brands CEO Roger Rawlins said that “six years of supply chain work was undone in six days,” according to Seeking Alpha.

“When you think about the amount of effort everyone was putting into getting out of China, and now one of the only places where you can get the goods is China. It really is crazy, the roller coaster everyone has been on here,” Rawlins said during a presentation with investors last week.

Fabric delays are averaging one to three weeks, Abercrombie & Fitch CFO Scott Lipesky said on an earnings call last month. “We have and will continue to leverage our strong vendor partnerships in a similar playbook already used in other countries to ensure that we get product as quickly as possible upon reopening,” he noted.