| Vietnam

Nestlé targets Asian at-home market with new capsule plant in Vietnam

New Nescafé Dolce Gusto factory is expected to process 2,500 tonnes of coffee per year, the equivalent of 130 million capsules, for the Asian market
New Nescafé Dolce Gusto factory is expected to process 2,500 tonnes of coffee per year, the equivalent of 130 million capsules, for the Asian market

Nestlé has officially opened its Tri An coffee pod production plant in Đồng Nai Province, north of Ho Chi Minh City. The factory will exclusively process Vietnamese coffee beans to make Nescafé Dolce Gusto pods, a strategy which Nestlé says underscores its efforts to enhance the value of the country’s coffee agriculture.

The global food and beverages firm already has strong presence in the south-east Asian nation, where it manufactures instant coffee from six existing factories. It typically purchases 20-25% of the circa 1.7 million tonnes of coffee produced in Vietnam every year. Nestlé states its total investment in the country to be worth US$527m in 2018.

Vietnam is the second largest producer of coffee in the world after Brazil, supplying around 20% of global demand. Production is, however, heavily skewed in favour of low-grade Robusta, which is far less sought after in international markets than Arabica crops and typically used in processed coffee products.

Managing Director of Nestlé Vietnam, Ganesan Ampalavanar, said the new plant would “help make great coffee widely accessible to Vietnamese consumers and to 13 export markets.”

Although Nescafé’s Dolce Gusto pods have proved popular with Vietnamese consumers since launching in the country in 2015, approximately 90% of the new factory’s output will be exported to other Asian markets, including Thailand, the Philippines, Malaysia, Singapore, Hong Kong, Taiwan and Indonesia.

Allegra research reveals a rising middle class with higher levels of disposable income is driving premiumisation of coffee consumption across south-east Asia. Aspirational western products, including premium pods and third-wave branded coffee shops chains have all surged in popularity across the region in the last decade.

In 2014 Nestlé opened its third and largest Dolce Gusto Coffee Capsule plant in Europe at a cost of €220m. The German factory is reported to process 60 tonnes of raw coffee per day, producing two billion capsules for the European market annually.
 

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