Nestlé Develops Genetically Modified High Yield Coffee Beans
According to a recent article by the Wall Street Journal, Nestlé [the Swiss company whose Nescafé instant coffee and upscale Nespresso brewing machines make it the world's largest coffee company] plans to train thousands of farmers over 10 years and provide them with new genetically modified high yield coffee trees, with a a $487 million investment to increase the quantity and quality of its coffee.
These genetically modified high yield coffee trees represent a new breed of plants that Nestlé developed by cross-breeding varieties in its research center in France. The plants have been developed for the region’s climate to generate more beans, resist disease, and reach a height that makes them easier to harvest by hand.
As volatile raw-material prices have wreaked havoc on margins, prices for coffee beans recently reached nearly 13-year highs because of bad weather. The coffee industry also faces long-term problems, as farmers persist with older trees that yield fewer and lower-quality beans.
“We will distribute 220 million high-yielding, disease-resistant coffee plantlets to farmers by 2020, through partnerships with public and private institutions in countries such as Mexico, Thailand, Indonesia and the Philippines, where we have already distributed over 16 million coffee plantlets in the past ten years.”
Nestlé, the company that invented instant coffee in the 1930s to preserve a bumper Brazilian coffee harvest, has predicted a “challenging” time ahead due to rising commodities prices. With emerging markets are driving much of the growth in instant coffee, with half of Nescafé sales deriving from consumers in countries such as China, Thailand and Mexico as they become coffee drinkers via instant brew.
But Nestlé also is catering to high-quality coffee trends in more-affluent countries. Nespresso, a system of espresso machines using capsules of high-quality ground coffee, has propelled Nestlé into the lucrative and fast-growing premium coffee market.
Despite the high cost of this coffee—about 42 cents a shot—Nespresso survived cautious consumer spending during the economic downturn. That’s because coffee drinkers saved money by brewing at home instead of going to a café. Nespresso sales rose 30% last year.
Nestlé’s aim is for the new initiative to boost sales. To prepare for that, Nestlé is building its largest instant-coffee plant, outside Mexico City, which will produce jars of Nescafé for Mexico, Canada and the U.S. The coffee also will be used for Nestlé’s high-end coffee.