Mexico: Green Technology Powers Nescafé's Controversial New Factory

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Some smallholder farm groups oppose the high-tech factory out of concern it will promote more planting of sun-grown, lower value robusta and have an adverse environmental impact.

Mexico will become the world's leading producer of Nescafé coffee with the opening of a $340 million new factory in Veracruz state. Nestlé invested in the newest technology to reduce production of waste and ensure low consumption of water and energy.

Wastewater treatment systems allow 100% of the factory's water to be recirculated, with no discharge of wastewater and zero waste going to landfill. The facility consumes only green electricity. A biomass boiler will use biological waste from the coffee production process to generate energy.

"The coffee factory is one of the most technologically advanced in the world and our company's most modern and sustainable coffee plant," said Fausto Costa, executive president of Nestlé Mexico. "At Nestlé, sustainability is a fundamental pillar of our purpose, and we are committed to taking actions that have a positive impact on our planet."

The government of Mexico worked for years to expand coffee farming, after a period of setbacks due to coffee rust disease.  The new plant creates 1,200 new jobs in Veracruz state, which produces about 25% of Mexico's annual coffee crop. Total production was 3.7 million 60-pound bags in the 2019/2020 marketing year.

"With the inauguration of this plant, Nestlé is supporting close to 100,000 coffee producers in Mexico," said Andrés Manuel López Obrador, Mexico's president, who attended the factory's opening in July. "This demonstrates the importance of the public and private sectors working together to bring investment to our country."

But the plant has long been opposed by dozens of producer groups concerned that it will lead to environmental degradation and an increase in farming of low-cost, sun-grown robusta, used in soluble coffee, at the expense of higher-value, shade-grown arabica, according to the U.S. Department of Agriculture (USDA). About 96% of the coffee produced in Mexico is arabica.

As for the nation's 515,000 coffee producers, 95% are small family owned farms, with areas under three hectares, mostly growing arabica. 310,000 of them work on farms of one hectare or less. Some 85% are from indigenous populations.

Nescafé, for its part, pledged to seek responsible sources for 100% of its coffee by 2025 under its Nescafe Plan, a sustainability project launched in 2010. The program provides technical support and seedlings to farmers, especially smallholders, and promotes social and economic development in coffee growing communities.

According to data by market research broker Statista, Mexico’s consumption of coffee will reach $2.75 billion in value in 2022, in a market forecast to grow by a 6.96% compounded rate during 2022-2025. According to USDA, about 60% of domestic consumption is in the form of instant coffee made from robusta.