Swiss food giant Nestlé invests US$ 270 million in a new coffee factory in Vietnam to reinforce its global Nescafé Plan and commitment to the country.
|Nestle's coffe in Vietnam (Photo: Yen Nhi)|
The factory, located in the southern province of Dong Nai, will produce products under the Nescafe brand for both local consumption and export when it becomes fully operational in 2013.
The investment aims to support sustainable coffee farming, production and consumption and increase its sourcing of coffee from local farmers.
The factory is expected to help reduce cost of production as it makes the most of raw materials in local farms and create more jobs for residents there.
Paul Bulcke, Chief Executive Officer for Nestlé, explained the significance of the Company’s latest commitment to Vietnam.
He said: “Today’s investment is fully aligned with the global Nescafé Plan, launched just a year ago, which brings our commitment to support responsible coffee farming, production and consumption together. They are a clear demonstration of our commitment to Creating Shared Value, which is Nestlé’s way of doing business."
Under the Plan, over the next five years in Vietnam, Nestlé aims to significantly increase the amount of Nescafé coffee bought directly from farmers and their associations, looking set to purchase 30,000 tons of coffee from around 16,000 farmers every year.
Furthermore, the Company is working together with the Vietnamese Ministry of Agriculture and Rural Development to improve coffee productivity through better farming practices, as well to distribute high-yield, disease-resistant plantlets.
Nestlé said it is working with the Vietnamese Ministry of Agriculture and Rural Development to improve coffee productivity through better farming practices, as well as to distribute high-yield, disease-resistant plantlets.
Over the next five years in Vietnam, Nestlé aims to increase the amount of Nescafe coffee bought directly from farmers and their associations to 30,000 tons of coffee from around 16,000 farmers every year.
Eventually, Nestlé aims to engage with 20,000 Vietnamese coffee farmer households within five years. At present, it operates four factories in Vietnam employing more than 1,500 people nationwide.
The latest investment is part of Nestlé's plan to increase capital expenditure in Asia and Africa by around 40 percent this year, director Frits van Dijk said.
Nestle’s decision to build a new coffee factory in Vietnam is a positive sign proving that investment environment in Vietnam is very attractive to foreign large investors. It also showed Vietnam’s retail appealing market; subsequently, US coffee giant Starbucks last month unveiled its plans to enter Pacific Asia market including Vietnam in 2013
With the come of Nestle and Starbucks in Vietnam, there will be fierce competition in coffee market in Vietnam between giant coffee brand names and Vietnamese companies like Trung Nguyen, Vinacafe and Highlands.