Nestlé Vietnam Chair Warns EU Sustainability Rules May Hurt Coffee Exports
Vietnam faces a major export hurdle as the European Union prepares to enforce strict new sustainability regulations on December 30, 2026.
Binu Jacob, chairman and managing director of Nestlé Vietnam, warned on Nov. 3 at the Fortune Southeast Asia 500 Summit in Ho Chi Minh City that the country’s traditional model of low-cost coffee production is nearing its expiration date. Fortune reported the remarks.
Europe stands as the world’s largest coffee market, consuming roughly 24% of global supplies according to the European Coffee Federation data cited in the reports. Vietnam operates as the world’s second-largest coffee producer overall and commands the top spot for robusta beans, the primary raw material for instant coffee.
“Vietnam was always known to produce cheap coffee, but cheap coffee is no longer going to be attractive to export because [the] EU is coming up with very stringent norms,” Jacob said, as reported by Fortune. “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 impending EU Deforestation Regulation targets forest degradation, greenhouse gas emissions, and biodiversity loss linked to key imported commodities. Most commercial entities must achieve compliance by December 30, 2026, though smaller enterprises receive an extension running further into 2027.
Hanoi is actively collaborating with Brussels to ease compliance hurdles. The multiyear, EU-backed SustainCoffee project aims to guide more than 400 domestic coffee businesses toward international environmental, social, and governance standards while indirectly aiding an estimated 1.4 million agricultural workers.
Corporate research initiatives are running parallel to government programs. Nestlé has collaborated with the Western Highlands Agriculture and Forestry Science Institute to engineer disease-resistant coffee plantlets tailored to Central Highlands soil, utilizing tissue culture methods.
“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,” Jacob stated, according to Fortune. The firm has distributed 100 million subsidized plantlets across central Vietnam.
Local agricultural yields now triple the global average as a direct result of these distribution efforts. Jacob argued that the regulatory pivot provides an opening for smallholder farms to transition into regenerative agriculture.
“With small farms, it’s quite easy to move from the old ways of traditional farming to regenerative farming,” Jacob said, as reported by Fortune. “Once you do that, Vietnam has a competitive advantage to export more and ensure that more value stays here.”