“Nestle is here to stay”: Nestle Philippines denies plans to quits coffee production post-TRAIN tax implementation

By Pearly Neo contact

- Last updated on GMT

Nestle Philippines has denied any plans to quit the coffee production business in Philippines. ©Getty Images
Nestle Philippines has denied any plans to quit the coffee production business in Philippines. ©Getty Images

Related tags: Nestlé, Philippines, Coffee, Production

Nestle Philippines has denied any plans to quit the coffee production business in Philippines.

Local media reports had earlier reported that the company had decided to shut down its local coffee production plant in Cagayan de Oro following higher taxes and increasing costs.

This included the first round of implementation of the government’s Tax Reform for Acceleration and Inclusion (TRAIN), enforced in January this year.

Although Nestle Philippines has multiple production centres in the count​ry, this plant is the sole manufacturing hub for the company’s Nescafe coffee products.

In an official statement to FoodNavigator-Asia​, Nestle has denied any facility closures.

“Nestlé Philippines is not planning to close any of its manufacturing facilities in the Philippines. Coffee under our NESCAFÉ brand remains to be a core pillar for us, and we are committed to support the local coffee industry and our coffee farmers to growth,”​ said the company.

“We have been operating in the Philippines for 107 years now, and we look forward to doing business here in the next 100 years. Nestlé is here to stay.”

Earlier report on Nestle Philippines closure of coffee production facility

The ManilaStandard.​net report was published on September 3.

TRAIN execution saw the enforcement and/or raising of taxes on various products, including sugar-sweetened beverages (SSBs) and petroleum.

According to the report, Ernesto Mascenon, Nestle Philippines Vice President for communications, had pushed for the government to show support for local manufacturers.

“We’re requesting [the government], for TRAIN 2, to address the disadvantage of local manufacturers who use local agricultural products against those who are importing finished products, especially from ASEAN,”​ Mascenon said.

“[The government] should include local manufacturers [in the discussion of TRAIN 2] to make us more competitive, not only export-oriented industries.”

“Otherwise, we will close down our manufacturing here and just move on to Indonesia, Malaysia or Vietnam and import finished products,” ​he added.

The country’s inflation rate also hit a five-year high in July​, registering 5.7%. Manufacturing costs, including sugar and electricity also increased as a result.

SSB prices rose by 80% following TRAIN implementation. This affected drinks like Nestle’s fruit juice brand Nesfruta, which was hit with a 30% drop in sales.

Nestle Philippines had announced plans to construct a new coffee processing plant in Iloilo in September last year.

Nestle’s commitment to coffee growing in the Philippines

Coffee is one of Nestle’s core businesses in the Philippines. The company places a great deal of importance on helping coffee growers.

The company’s website lists various programmes in place to aid local coffee growers. These include providing access to research and technology, providing training and promoting sustainability.

Nestle has developed a coffee-based sustainable farming system allowing farmers to plant other (different) crops alongside coffee plants. This opens up an avenue of additional revenue for them.

“We help coffee farmers improve their yields while providing barangays (villages) with livelihood skills and other opportunities,” ​said John Martin Miller, Chairman and CEO, Nestlé Philippines.

Plastic waste controversy

This also comes in the wake of Nestle Philippines’ implication in the country’s ‘plastic waves’ phenomenon​ last month.

Environmental organisation Greenpeace had named Nestle by name as one of the major ‘culprits’ in the country’s plastic waste production.

Nestle Philippines made an official response to the allegations to FoodNavigator-Asia,​ saying: “At Nestle Philippines, we are committed to playing our part. We continuously find ways to reduce our environmental footprint.”

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