"Local producers are trying to move upstream and higher along the value chain," said a coffee trader based in Ho Chi Minh City. Last year, Vietnam's revenue from coffee exports totaled $1.8 billion, of which instant coffee contributed only 4 percent.

This year, Thai Hoa Coffee will invest $34 million in a coffee processing plant in Lam Ha district with the capacity to produce 65,000 metric tons of fresh coffee, 100,000 tons of dry coffee and 2,000 tons of soluble coffee a year.

Vinacaphe Dak Lak started construction of a $7.5 million high-quality coffee processing plant in Duc Trong district last month. The plant is expected to supply 50,000-60,000 tons of processed coffee for export by August this year.

The company is also in talks with the Brazilian Coffee Association to build a $15 million soluble coffee plant in Vietnam with an annual capacity of 40,000 tons. However, traders said Vietnam's instant coffee market share would be limited by the high import levy imposed by Europe and some Asian countries such as Thailand.

"Right now, the main challenge for producers would be getting enough coffee to roast," said a Hanoi-based trader. Vietnamese coffee growers have been hoarding supply in anticipation of higher prices and raising farmgate prices in tandem with a record run-up on the London futures exchange.