Nestlé investing in Russian coffee factory

- Last updated on GMT

Related tags: Coffee, Drink, Nestlé

Nestlé is attempting to cash in on the growing coffee market in
Russia with the construction of a new production facility dedicated
to its Nescafe brand.

Food and drink giant Nestlé is investing $120 million (€120.8m) in the Russian coffee industry. The firm is planning to build a full-cycle factory in the Krasnodar region to produce its Nescafe brand coffee.

The Swiss food giant already operates a coffee repackaging plant and ice cream factory in the region. Construction of the new plant, which will be wholly owned by Nestle subsidiary Nestle Kuban, will take between 12 and 18 months, according to the Moscow Times​.

This is Nestlé's first green field project in the country and the single biggest investment the company has made in the former Soviet Union.

Nestlé​ is confident that the Russian coffee market is buoyant enough for such a development. The firm believes that the ratio of tea drinkers to coffee drinkers, which was five to one in 1999, will be roughly two to one by 2005.

However, Russian coffee consumption remains modest by European standards. On average 160 cups of coffee are drunk per person each year, a figure that pales in comparison to the Scandinavian average of more than 1,000 cups per person per year.

In Russia, Nestlé Foods already owns controlling stakes in nine production facilities and is the top seller of coffee, chocolate, baby food and ice cream. The company has 27 coffee factories worldwide.

"We are pleased that after a comprehensive search, the world's number one food and beverage manufacturer has chosen our region to build its newest state-of-the-art coffee manufacturing facility,"​ said Krasnodar region governor Alexander Tkachev in a statement.

"This not only means more jobs for our people, but it is also a resounding vote of confidence in the investment potential of Krasnodar, as well as Russia."

Related topics: Processing & Packaging

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