The $47m factory, which aims to produce and sell products in "more affordable sizes" to reach poorer consumers, was opened by Brazil's president, Luiz Inácio Lula da Silva.
The move is an example of how some the world's biggest food firms are attempting to tackle the conundrum of making more money in low income, emerging markets, and also present themselves as more ethically minded.
Nestle said its Brazilian plant was a milestone in its focus on Popularly Positioned Products, which are specifically aimed at some of the world's poorest consumers.
Nearly half of the world's population, around 2.8bn, earns less than US$10 per day.
In north-east Brazil, Nestle will sell 200g packs of Ideal milk powder, enriched with iron, calcium and vitamins, as well as smaller packs of Bono and Negresco biscuits and Nescafe Dolca, a milder soluble coffee.
Sales will be conducted via local shops or even door-to-door, the firm said.
The irony of Nestle's strategy will not be lost on campaign groups, however, which will this year mark 30 years since the first boycott against the food giant, begun over the firm's infant formula marketing practices in developing countries.
Since then, Nestle has become one of the most boycotted firms in the world, though sales have not been noticeably affected.
Baby Milk Action, a prominent non-profit group in the anti-Nestle movement, recently called for an independent tribunal to assess the Swiss firm's infant formula marketing practices.
"In a world that is rapidly globalising, global governance is not keeping pace," said Mike Brady, campaigns and networking co-ordinator for Baby Milk Action, in a blog for the boycott anniversary.