The facility will be located in Dong Nai province and will be fully operational by 2013, said the firm.
It will make products under the Nescafé brand for both local consumption and export.
The investment will support Nestlé’s wider CHF 350m Nescafé Plan, launched in August last year.
Under the plan, over the next five years, Nestlé said it aims to significantly increase the amount of Nescafé coffee bought directly from farmers and their associations in Vietnam.
The firm aims to purchase 30,000 tonnes of coffee from around 16,000 farmers every year.
Nestlé currently operates four factories in Vietnam employing more than 1,500 people nationwide.