Vietnam’s cheap coffee may lose its edge as the EU tightens sustainability rules, Nestlé Vietnam’s chair warns
Vietnam’s cheap coffee is “no longer going to be attractive to export” as the European Union tightens its sustainability rules, Binu Jacob, chairman and managing director of Nestlé Vietnam, warned last week at the Fortune Southeast Asia 500 Summit in Ho Chi Minh City on Nov.
Key points
- Nestlé has applied its global research and development capabilities, partnering with the Western Highlands Agriculture and Forestry Science Institute, a prominent agricultural research institution, to develop a coffee plantlet “best suited for the soil conditions in the Central Highlands,” Jacob said.
- “We have made 100 million plantlets of this disease-resistant coffee plantlet, and then distributed it at subsidized rates to farmers all over central Vietnam,” he said.
- “So if we don’t go up the value chain and create coffee that is sustainable and that meets the very high standards, we will be unable to export.” The EU Deforestation Regulation applies to most companies from Dec.
“As a result, the productivity and the yield of coffee today in Vietnam is three times that of the global average, and this can be replicated anywhere in the world.” Still, Jacob cast the rules as a chance for Vietnam to move up the value chain.
Additional details
- The multiyear, EU-backed SustainCoffee project aims to help the country’s coffee sector meet international environmental, social, and governance standards, and support more than 400 coffee-related businesses while indirectly benefit an estimated 1.4 million farmers and workers in the supply chain.
- “Once you do that, Vietnam has a competitive advantage to export more and ensure that more value stays here.” This story was originally featured on Fortune.com.
- The Southeast Asian nation is the world’s second-largest coffee producer and the largest producer of robusta, the variety largely used in instant coffee.
- “From one leaf of this coffee plant, you can actually make 2,000 trees, and this is what we’ve been doing in the last 15 years,” he explained.
- Europe is the world’s largest coffee market, accounting for about 24% of global consumption, according to the European Coffee Federation.
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