POP display at a Nespresso boutique Chicago I love coffee, I love tea
I love the java jive and it loves me
Coffee and tea and the jiving and me
A cup, a cup, a cup, a cup, a cup!- Milton Drake "Java Jive "– Ink Spots
Like a horse and carriage, there has been a long partnership between Coffee
and Business. They have 'lived together' if not been actually married for a long
time.
The Coffee houses of England in the eighteenth century were
places to do business. The famous insurance house for example Lloyds of London was based
on a coffee house. The market began in Lloyd's Coffee House, opened by Edward
Lloyd in around 1688 on Tower Street in the City of London.
In 2014 ‘’drink in ‘customers
as opposed to the ‘to go’ customers, are seen networking and doing business in a coffee shop not
so differently from the predecessors of eighteenth century England.
Many coffee drinkers have wanted to bring the coffee shop experience
into their home.
Clearly the full-scale Gaggia
machine coffee shop would be impracticable in most homes but domestic filter machines, percolators , espresso and cappuccino machines are ever more popular in our kitchens.
I have recently returned from facilitating a corporate graduate
session on Marketing with the talented
folk from the Essentra Graduate scheme in Chicago, Illinois. Essentra are the international 'essential enablers' company with operations in production of filter products, porous technologies , component and protection solutions, and Packaging and Securing Solutions.
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| Q:What's new at Nespresso ? A: The 13 pt intensity, limited edition, Cubania "..a moment of pure indulgence, a gourmet dessert with syrupy texture, caramel and roasted notes." |
One of the case studies we worked on was Nestlé Nespresso .
The single delivery coffee pod sector has been dominated by
Nestlé in Europe and the Grads looked into the launch of a new product especially
designed for Canada and the USA markets - VertuoLine .
Time Line :
1976, an employee of
Nestlé , Eric Favre, , invented, patented and introduced the Nespresso system
to the business market in Switzerland with little significant success.
1988, Jean-Paul Gaillard — the founder inventor of
«Le Club» community — the product became a market success.
1990, the firm
signed a contract with Turmix, which started to sell Nespresso machines in
Switzerland. Thereafter, other contracts were signed with Krups, Magimix,
Alessi, Philips, Siemens and De'Longhi.
1996 The first patent application for Nespresso's process of
brewing espresso from capsules containing ground coffee was filed.
In 2000, Nespresso began distributing machines bearing the
"Nespresso" brand.
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| VertuoLine product on a shelf at Macy's, Chicago |
In February 2014, Nespresso launched a new Vertuoline system.The VertuoLine machines and capsules sold in
the United States and Canada are designed to appeal to the demand by North Americans in
these countries for larger cups of coffee.
The system produces
both 230-millilitre (8.1 imp fl oz; 7.8 US fl oz) cups of coffee and smaller
40-millilitre (1.4 imp fl oz; 1.4 US fl oz) espressos, both with the crema that
characterizes espresso coffees and the original line of Nespresso coffees.
Nespresso simultaneously introduced eight coffee blends and four espresso
blends in specially-designed VertuoLine capsules.
The VertuoLine
capsules cannot be used in the original line of Nespresso machines (now called
the "OriginalLine"), which continue to be sold in North America.
The VertuoLine capsules are as follows:
Coffee
Stormio (intensity: 8) Odacio (intensity: 7) Melozio
(intensity: 6) Elvazio (intensity: 4)
Hazelino (intensity: 6) Vanizio (intensity: 6) Decaffeinato
(intensity: 6) Half Caffeinato (intensity: 6) Espresso Diavolitto (intensity:
11)Altissio (intensity: 9) Voltesso (intensity: 4)
Decaffeinato Intenso (intensity: 7)
 |
| Notice the larger sized hemispherical shaped pods on the right hand size for VertuoLine |
The VertuoLine system uses two technologies not found in the
OriginalLine.
1. The system
uses "centrifusion" (a term created by Nespresso, being a portmanteau
of 'centrifugal force' and 'infusion'), whereby it spins the capsule around in
the machine at up to 7,000 rpms to blend the ground coffee and hot water.
2. Each capsule
has a bar code embedded on the rim, and the bar code laser scanning system reads
5 different parameters: cup size (coffee or espresso), temperature, rotational
speed, flow rate and time the water is in contact with the ground coffee.
The VertuoLine system is intended to expand Nespresso's
product line to offer coffee closer to the American style of filtered coffee,
and thus expand Nespresso's market share in North America. In the United
States, Nespresso had only a 3% share of the single-serve coffee market in 2013
(compared with 72% for Green Mountain’s Keurig system), while in Canada
Nespresso had 4 to 5% of the single-serve market in 2013 (compared to
approximately 53% for Keurig and 40% for Tassimo). In comparison.
Through their concession in Stores and malls, Nespresson Boutiques
allow a direct line engagement of Club members with Nespresso. A place to bring
their used capsules for recycling and find out 'what’s new?' in Coffee.
Nearby to
the Loyola University premises the Essentra graduates and I were working ,there was such a Nespresso
boutique in a nearby Shopping Mall. The boutique was within the Sur La Table store - a Mecca for kitchen gadgets and all things kitchen.
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| Nespresso boutique within a Sur la Table store in Chicago |
Visiting the boutique and...
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| Demonstration at the Nespresso Boutique in Sur La Table store in Chicago |
... seeing the demonstrations and tasting the coffee made the case study all the more real.
This VertuoLine system was designed to meet the tastes of the
North American consumers, brewing the highest-quality American-style large-cup
coffee and authentic espresso. Nespresso’s website state.
“ For the first time ever, coffee lovers can experience large-cup coffee with crema. Silky, generous crema is a naturally formed foam of coffee and air. Representing unprecedented quality, it seals aromas in coffee and enhances the tasting pleasure.”
With VertuoLine, Nespresso want to accelerate their growth
and become a leading player in North America’s fast-growing portioned coffee
market. The business potential is strong. The US portioned coffee market is
estimated to be worth USD 4.9 billion with around 40% growth last year.
It is also estimated
to contribute to half of the portioned coffee segment’s growth worldwide.
Coffee is also the fastest growing category in Canada’s hot drinks market.
Nespresso’s Centrifusion™
technology produces large-cup coffee and espresso with the same,
high-quality in-cup result. Centrifusion™ is their word for combining
centrifugal and infusion, indicating that the capsule spins inside the machine,
and water is injected into the capsule and “infused” with the ground coffee
inside the capsule.
This technology provides an extremely high level of
precision with each extraction parameter individually controlled.
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| Notice on the outer rim there are the bars of the bar-code that the VertuoLine machine's laser reads |
One key difference I noticed is the size and shape of the
capsules for VertuoLine are different. The VertuoLine capsules are a
hemisphere of a larger dimension compared to the conventional pod. These are a
specially patented design which includes a barcode which is read by the laser
in the machine.
The Nespresso concept (machine, capsule, service) is subject
to 1,700 patents which protect Nespresso's ownership of the concept until the
patents expire.
Nespresso has been often compared with printer manufacturers
that tried to hinder the sale of generic ink cartridges, to achieve a 'vendor
lock-in effect'.
Nespresso's patents began to expire in 2012 gradually
allowing competitors to offer capsules and machines compatible with the
Nespresso system.
A former CEO at Nespresso has started a rival firm, Ethical
Coffee Company SA (ECC), to make compatible biodegradable capsules for the
Nespresso machine.
Nespresso’s success is driven by their ability to deliver
the highest quality coffees, continuous innovation, exclusive personalized
services and a unique brand experience.
On our course we had used the Chartered Institute of Marketing’s
( CIM-UK ) definition of marketing-
“ The management process for identifying, anticipating and satisfying customer needs profitably”.
Interestingly a
spokesperson for Nespresso used similar language when questioned at the launch
of VertuoLine :
“The privileged
relationships and dialogue that we nurture with our Club Members and consumers
allow us to anticipate their needs and exceed their expectations. Our unique
direct-to-consumer business model, with our extensive retail network, 24/7
phone line and e-commerce platform, and our rigorous quality management from
farmer to consumer are key factors in our continuous success.”
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| One of the Essentra grads' teams debating the similarities and differences between Nespresso and marketing of B2B Porous product type businesses they work in |
The Essentra Grads. enjoyed studying the Nespresso story so
far, using techniques such as the Marketing model , the 7 Ps , TOWS grids , Boston Consulting
matrices ,Ansoff Grids and the like. They came up with some great thoughts on
how things will look in the next years.
Because of Nespresso’s Bellwether notoriety in the media, the case study will be an ongoing reminder of the marketing techniques we learned and thought about in Chicago at the course
"Ah, how sweet coffee
tastes — lovelier than a thousand kisses, sweeter far than muscatel."
— J.S. BACH, COFFEE CANTATA
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