Vietnam's Coffee Crossroads: EU Green Rules Threaten “Cheap Coffee” Era – CoffeeTalk

Vietnam’s coffee export market is facing significant challenges due to the European Union’s tightening sustainability regulations, as articulated by Binu Jacob, chairman and managing director of Nestlé Vietnam, during the Fortune Southeast Asia 500 Summit. As the world’s second-largest coffee producer and the foremost producer of robusta, a variety predominantly used in instant coffee, Vietnam has traditionally been known for its low-cost coffee. However, Jacob emphasizes that this strategy will soon become untenable due to the EU’s stringent norms aimed at curbing deforestation and reducing greenhouse gas emissions, effective from December 30, 2026.

The EU Deforestation Regulation will predominantly impact the coffee industry, pressing producers to enhance sustainability efforts. Jacob indicated that without transitioning up the value chain to produce sustainable coffee that meets EU standards, Vietnam risks losing its export market. To address these regulations, the Vietnamese government, in collaboration with the EU, is implementing the SustainCoffee project, designed to assist over 400 coffee-related businesses in meeting international environmental, social, and governance standards. This initiative is also expected to positively impact approximately 1.4 million farmers and workers within the coffee supply chain.

In response to these challenges, Nestlé has been leveraging its research and development capabilities by partnering with the Western Highlands Agriculture and Forestry Science Institute to cultivate coffee plantlets optimized for the Central Highlands’ soil conditions. Through advanced tissue culture techniques, Nestlé has produced around 100 million disease-resistant coffee plantlets over the last 15 years, significantly boosting coffee productivity in Vietnam to three times the global average.

Jacob sees the current regulatory landscape as an opportunity for Vietnam to elevate its coffee industry. He notes that with the prevalence of small farms, transitioning from traditional to regenerative farming practices can be executed relatively easily. This shift not only enhances the sustainability of coffee production but also positions Vietnam to retain more value in its export processes, ensuring a stronger competitive advantage in the global market.

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