August 27, 2010

Nestle to Invest $487M in Helping Coffee Farmers

Nestle is detailing a plan to invest over $400Million in coffee farmers by helping them plant newer coffee trees with better disease resistance and better yield. The plan would have them working with Mexican farmers first in a pilot program and then rolling the learnings across other coffee growing regions. Part of the plan has farmers who grow Robusta coffee accept newer seedlings that have been developed by Nestle in the Mexico. This clearly helps Nestle with securing the type of coffee it needs to create its instant coffee. They will also help bring better Arabica seedlings to farmers who could eventually help feed their ever growing Nespresso business.

Nestle is not binding the farmers to a contract to see the coffee to Nestle, and the farmers are open to sell elsewhere. Clearly Nestle feels that the goodwill should help them facilitate the relationships to secure coffee supplies into the future. As the largest coffee buyer in the world, Nestle sees themselves as a leader who needs to help secure the coffee crops looking forward. Critics will claim that they are homogenizing the crop to suit their own needs, but I believe that the criticism would be more fair if they only had the instant coffee business. With their attention on quality and diversity of the crop in the Nespresso business, it looks like they are looking to support the high end of the market while recognizing the value of crop diversity and quality.

More info at Nestle and WSJ

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Posted by Scott Martin at August 27, 2010 9:45 AM
Recent Comments

Wow! This is interesting. Thanks for posting it!

Posted by: Tina Daniels at August 27, 2010 10:51 PM
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