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Nestle to Spend $16 Million on China Coffee Center

April 02, 2013

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A worker packages Nescafe at Nestle SA's production facility in Dongguan, Guangdong Province, China. Photographer: Nelson Ching/Bloomberg

Nestle SA (NESN), the world’s largest food company, said it will spend at least 100 million yuan ($16 million) on a coffee center in China as it seeks to boost consumption of the beverage in the world’s most populous nation.

The coffee industry has room to grow on the mainland because consumption is lower than other parts of the region, Heiko Schipper, managing director of Nestle’s Greater China food and beverage division, said in an interview in Shanghai yesterday.

The Vevey, Switzerland-based foodmaker, which sells products from Nescafe coffee to Maggi food seasonings in China, is expanding its food and beverage business as rising incomes drive consumption in the world’s second-largest economy. The new center in the southwestern Yunnan province will train 5,000 farmers, agronomists and coffee business professionals a year, and will include a coffee testing laboratory as well as a consumer education facility.

“Coffee has huge growth potential, that’s because of its low per capita consumption,” Schipper said. “Total consumption is very low, only four cups per capita in China, and if you look at Hong Kong and Taiwan, it’s between 100 to 150 cups per capita.”

Since 2010, the company has formed a bottled water venture in the country and bought controlling stakes in candy maker Hsu Fu Chi International and Yinlu Foods Group, producer of congee and a peanut-milk beverage. The company last year bought Pfizer Inc.’s infant-nutrition business, an acquisition which will help the Swiss company boost its share of the Chinese baby-food market.

China is now Nestle’s second-largest market, with annual sales of about 6 billion Swiss francs ($6.32 billion), according to the Swiss company’s annual report.

To contact Bloomberg News staff for this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net


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