Nestle’s Nescafe to invest $196 million in Brazil by 2026 to tap surging demand

By Thomson Reuters May 9, 2024 | 7:15 AM

By Roberto Samora

SAO PAULO (Reuters) – Nestle plans to invest 1 billion reais ($196.5 million) in Brazil by 2026 to expand production capacity and out-of-home sales of its Nescafe lines, targeting younger consumers, executives told Reuters.

The company aims to consolidate the brand as a vehicle for higher value-added products that are rapidly growing in the country, according to the firm.

The Nescafe brand, which was first created in Brazil to sell instant coffee, today has a broader range of products. It seeks to capture consumers who are increasingly younger and want new “experiences” with the beverage, and who pay more than they normally would for a traditional cup, the executives said.

“We are at a time of expanding consumption of premium coffee, and that is making coffee consumption more sophisticated in Brazil,” Valeria Pardal, head of Nestle brand Cafe Nestle, said in an interview.

Part of the investments will be directed into expanding out-of-home consumption, mainly through the business-to-business segment, with the company expecting to double its number of out-of-home coffee machines in four years to 44,000.

Nescafe sales in Brazil’s retail market are expected to grow by up to 15% per year over four years, according to Nestle, outpacing the 5% to 6% growth it forecasts for that market in general.

“Brazilians have four to six cups of coffee a day, which is a lot, and our mission is to make sure those cups are of higher quality,” Pardal said, adding that young people are a key segment for the firm.

Consumption growth among people under 24 has been 10 times higher than among the rest of the consumer groups, according to Nestle.

“This is something new for the market. They drink iced coffee, coffee with cream, coffee with caramel,” Pardal said. “We used to say that coffee was a stimulant, today we say that coffee is a cup of pleasure.”

($1 = 5.0904 reais)

(Reporting by Roberto Samora; writing by Gabriel Araujo; editing by Susan Fenton)