Nestlé Vietnam brews Nescafe growth

Rashid Aleem Qureshi

Nestlé recently announced a $270 million investment to build a new coffee factory in southern Dong Nai province's Amata Industrial Park. The new facility will produce Nescafe for both local consumption and export, and will be operational by 2013. Rashid Aleem Qureshi, managing director of Nestlé Vietnam, tells VIR that the investment underlined Nestlé's commitment to Vietnam and to Nescafe, one of Nestlé's key brands worldwide.

Why did you decide to broaden Nestlé’s investment amid a difficult economic situation in Vietnam? What benefits will the new factory bring Vietnamese?

The new coffee plant is a major investment that demonstrates Nestlé’s optimism in the potential of this market and our unique perspective, which looks beyond the economic difficulties of the day. Vietnam has the great advantage of a young and dynamic population, an ever-expanding consumer market and a favourable business environment. The factory comes along with Nescafe Plan that will also contribute to the sustainable development of coffee agriculture, improvement of the quality, yield and farmers’ income in Vietnam. With the new factory we want to promote and increase the domestic consumption through which it will increase the employment and income for workers.

Nestlé boasted that the new factory will benefit from a state-of-the-art process technology for coffee and emphasises energy and water savings. Could you elaborate on this?

Factory technology and equipment will come from European and Asian countries. We invested millions of dollars to buy the most advanced technology for this new factory, in which we will bring environment-friendly technology from developed countries.

Some examples of our advanced technology are coffee ground that will be used to heat the boiler and this will reduce 70 per cent of carbon dioxide emissions or 54,000 tonnes of carbon dioxide-equivalent. The recycling of more than half of the wastewater will reduce the total amount of water used by approximately 100,000 cubic metres per year.

What is your ambition for Nestlé/Nescafe with this new coffee plant?

Coffee consumption in Vietnam is still limited, a quarter of those in the other countries of the region, and we see the coffee market in Vietnam has huge opportunities. That’s why the soluble coffee market in Vietnam has a double digit growth rate. The factory comes with the Nescafe Plan that will also contribute to the sustainable development of coffee agriculture, improvement of the quality, yield and farmers’ income in Vietnam. Nescafe is a market leader in the soluble coffee market of Vietnam. Yet, our ambition is to become the Vietnam’s largest recognised sustainable coffee brand giving consumers additional reasons to trust and enjoy Nescafe. This new coffee plant will enable us to realise this ambition.

You said that Nestlé’s mission was to make Vietnam’s coffee the recognised reference of Robusta coffee. What is the strategy behind this and how will you deliver this?

The strategy is to sustainably improve the quality and quantity of Vietnamese coffee as well as incomes of coffee growers. To deliver this, Nestlé cannot do it alone but we need to cooperate with other partners, Vietnam’s Ministry of Agriculture and Rural Development (MARD), associations and farmers. That are what we have done under the coffee task force as well as other sustainable coffee projects in the Central Highland provinces. Our projects are in progress and we received a very strong support from the MARD, partners and the World Economic Forum (WEF). The recent WEF in Indonesia also highly evaluated the public-private partnership (PPP) model of Vietnam and encouraged us to scale up in the future.

Nestlé is working in a PPP programme with the MARD to help improve coffee productivity and quality. What criteria are Vietnamese farmers engaged in this programme and will their products be certified and priced better?

The only criteria for coffee farmers to join the PPP programme is their wish to produce coffee sustainably. Joining this PPP programme, they will receive technical assistance from partners, involve in the value chain, and their product will be certified as sustainable coffee and of course, will have a better price, around 3-5 per cent higher. It is the reward for sustainability.