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July 27, 2022

Nestlé opens second coffee plant in Mexico

Mexico has become Nestlé’s “main coffee producer globally” after the Nescafé opened a new factory in the country.

By Dean Best

Nestlé has opened its second coffee factory in Mexico, a site that will supply markets across the Americas and Asia.

The Nescafé owner said the facility, located in Veracruz, will make Mexico the company’s largest coffee producer by volume.

Nestlé’s other coffee factory in Mexico is further west in Toluca, close to Mexico City.

“The new factory in Veracruz will supply the growing demand for coffee in Mexico, North and South America and Asia,” a Nestlé spokesperson said.

Up to 1,200 “direct” jobs have been created through a project that cost US$340m. Half the jobs will be filled by women.

Coffee has been a buoyant part of Nestlé’s portfolio in recent years. The Swiss giant described coffee as “the largest contributor” to its organic sales growth in 2021. On an organic basis, Nestlé’s coffee sales increased 9.7% last year, helped in part by growing at-home consumption amid Covid-19 lockdowns.

The world’s largest food maker is scheduled to report its results for the first half of 2022 tomorrow (28 July).

In the opening three months of the year, Nestlé reported “high-single-digit” growth from its coffee business, which it said was “fuelled by continued demand for Nescafé, Starbucks and Nespresso”.

Year-on-year sales in Europe were flat as the coffee unit lapped “strong double-digit growth” in the first quarter of 2021.

Speaking to analysts after Nestlé posted its first-quarter numbers, the company’s management faced a question about the growth rates for the Nespresso brand and what could drive sales moving forward.

CFO François-Xavier Roger said: “Nespresso, you need to look indeed at the comps. 3.3% of organic growth may look relatively soft in Q1 but it comes on the top of 17.1% last year. So if you look at the two-year stack, we are double-digit, actually, 10.2%. So, we continue having a very strong growth for Nespresso and for coffee in general.”

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