Nestlé opens new US$340M Nescafé coffee factory in Mexico

MEXICO – Swiss multinational food and drink company, Nestlé, has opened a new US$340million Nescafé coffee factory in Veracruz, signaling a sourcing diversification at its companies.

The company said the Veracruz-based plant will make instant coffee for Nestle’s Nescafe brand, with the United States as the potential destination of most of its production.

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According to Nestlé, the plant is installed with state-of-the-art equipment and green energies to reduce water and energy consumption.

The plant which has started operations uses wastewater treatment systems to ensure 100% of water recirculation, zero wastewater discharges, and zero waste to landfills.

Furthermore, it consumes 100% green electricity and is equipped with a biomass boiler that will use the biological waste from the coffee process to generate energy.

The new plant is aimed to process 670,000 bags per year to boost the current capacity of around 1.15 million bags of green coffee from other plants in Mexico.

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It has added the number of the current factories that Nestlé owns in Mexico to 18, that are producing a range of products, including coffee, dairy products, bottled water, cooking aids, and pet care.

Fausto Costa, Executive President of Nestlé Mexico said: “The coffee factory is one of the most technologically advanced in the world and our company’s most modern and sustainable coffee plant.”

According to coffee traders in the country, the investment in such a large instant coffee plant in a location that is far from Vietnam, the world’s largest producer of robusta coffee signals a sourcing diversification at Nestlé.

Nestlé, being one of the world’s largest coffee buyers said it plans to source most of the coffee from Mexican farmers, but the country only produces around 500,000 bags of robusta.

However, USDA projects Mexico’s coffee crop at 3.84 million bags, most of it arabica, Brazil at 64.3 million bags (22.8 million of robusta), and Vietnam, 30.8 million bags, almost all robustas.

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Costa detailed that cheaper shipping to Mexico from Brazil, compared to Vietnam, is another reason for Nestle to turn to Brazilian robustas.

In fact, Mexico has sharply increased Brazilian coffee imports in recent years, from only 62,000 bags in 2017 to a record 920,000 bags in 2021, of which 85% were robusta beans, according to data from exporters group Cecafe.

The inauguration follows a US$700 million upgrade investment to modernize its 17 factories in Mexico by integrating state-of-the-art technology to boost production capacity.

The multinational company also invested an additional CHF2billion (US$2.08B) to lead the shift from virgin plastics to food-grade recycled plastics, in the Mexican facilities.

The funds were also channeled to a project that would accelerate the development of innovative sustainable packaging solutions, in the country.

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