The global food giant said construction of the new facility, located in Romont, Switzerland, would start at the end of the year, with the site scheduled to be operational by 2015.
Nestle said the project would create 400 jobs in the long term.
The factory will be the company’s third coffee capsule plant, and second in three years, and comes on the back of sustained growth for the product over the past five years.
In 2009, it invested a further CHF300m in the production and distribution centre in the Swiss town of Avenches.
As part of the company’s sustainability drive, the new plant will also include the facility to use renewable energy produced by its coffee roasting technology to heat the building.
Last year, Nespresso achieved sales of more than CHF3bn and growth of about 20%, said the firm.
“For Nespresso, today marks a strategic investment in its long-term business development,” said Patrice Bula, company executive vice president.