Nestle to invest $390 million in Mexico coffee plant

The headquarters of food giant Nestle is pictured in Vevey August 6, 2008.

MEXICO CITY (Reuters) - Nestle, the world's biggest food group, said on Saturday it will invest 5 billion pesos ($390 million) in Mexico over the next three years to increase coffee processing capacity, part of a $1 billion expansion plan.

"The majority of these 5 billion pesos will be invested in the Nescafe instant coffee processing plant," Nestle said in a statement, adding that the investment would increase capacity by 40 percent at the factory in Toluca near Mexico City.

Mexico, a major world coffee producer, has struggled to improve the quality of its beans in recent years but is positioning itself as a processor of coffee to serve U.S. and European markets.

Nestle said it planned to invest $1 billion in Mexico between 2008 and 2012.

(Reporting by Adriana Barrera)