The new site will process around 2,500 tonnes of coffee per year (equivalent to 130mn capsules) using coffee beans from Vietnam.
The Swiss firm is currently one of the largest coffee buyers in the country.
Nestlé says that the coffee used for the capsules will be sourced from Vietnamese producers.
The firm says that around 90% of the capsules will be exported to other markets in Asia such as Thailand, the Philippines, Malaysia, Singapore, Hong Kong, Taiwan and Indonesia.
“The new Nescafé Dolce Gusto production line will help make great coffee widely accessible to Vietnamese consumers and to 13 export markets,” said Ganesan Ampalavanar, managing director of Nestlé Vietnam.
“Moreover, the new production line reaffirms Nestlé Vietnam’s commitment to adding value to and developing Vietnam’s coffee industry."
Nestlé says that it could expand the facility further in the future.
The investment reflects the Swiss company’s focus on high-growth, high-margin food and beverage categories, such as the coffee market.