Nestlé to establish sustainable coffee factory in Vietnam

11 August 2011

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11 August 2011 | Adam Leach

Food company Nestlé plans to source 30,000 tonnes of coffee from Vietnamese farmers once it has established a new factory in the country.

It aims to provide business to 16,000 local farmers once it has built a $270 million (£167 million) coffee-production facility in the Dong Nai region. This factory will use coffee supplied by the farmers to produce products for its Nescafé brand, which will be sold both in the local market and for export.

Nestlé CEO Paul Bulcke, said this week: “This 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.”

The investment is part of a wider CHF 500 million (£419 million) programme, which aims to increase sustainability in the Nescafé supply chain by 2020. Two of the plan’s key objectives are to increase the amount of produce the company buys directly from local farmers and improve farming methods.

This week the company also released its half-yearly results. It reported an operating profit of CHF 6.2 billion (£5.7 billion), up 0.2 per cent, despite input costs increasing by 1.2 per cent, compared with the same period in 2010. The company said expansion into Asia was one of the key areas driving growth. Part of this was a push to broaden the distribution chain to enable it to break into rural areas. Soluble coffee was identified as one of the best-performing product categories in the region.

This will be the company's fifth factory in Vietnam but the first to produce coffee. It will start to produce coffee in 2013 when the factory is operational.

In January a report conducted by the Consumer Foods Group, which Nestlé is a member of, said that by 2020, the public will create demand directly from their homes, on mobile devices or in store. It said consumer awareness about sustainability demands a more CO2-friendly supply of products and services.

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