Nestlé plans to build a new Dolce Gusto factory in Germany to capitalise on one of its fastest-growing European businesses, with a growth rate of over 50%, and told BeverageDaily.com it is exploring 'solutions' that will allow UK consumers to recycle pods used by the system.
The €220m factory investment is in Schwerin, and Nestlé said that Germany was the largest market for the brand worldwide – will be operational by the end of 2013: it will have 12 production lines and create 450 jobs.
But asked by BeverageDaily.com what steps the firm was taking to counter perceptions in some quarters that such systems were wasteful, a Nestlé spokesman revealed that, in the UK market, for instance, while 90% of the firm's packaging was recyclable, Dolce Gusto pods were not.
He said: "We are exploring a number of solutions and hope to be able to provide an update on our plans shortly. We are committed to further reducing the environmental impact of the Nescafé Dolce Gusto capsules and the packaging of all our Nescafé Dolce Gusto products, without compromising on safety, quality or enjoyment of our products.
"As part of our overall sustainability plan, we are looking at how our machines can use energy in a smarter way. Our sustainability focus is to make sure that every new machine achieves a ‘best in class’ energy status," he added.
The spokesman said: "For example we have saved 45% of the total energy consumption by introducing our eco-mode 20 function, which allows machines to go into auto-power off after 20 minutes, ensuring that only the energy required is used to make each drink and drastically reducing the power consumption of the machine when not in use."
Discussing the brand's success last week in light of Nestlé's 2011 results, CEO Paul Bulcke said: "Dolce Gusto has been on the market for five years now. We have it now in 58 markets, and only last year we launched it in 17 markets the world over. The brand is close to becoming a CHF 600m business in only five years. That is what we call a really compelling innovation that is breaking through."
During an official ceremony at the Schwerin site, Laurent Freixe, Nestlé’s European Zone Director said that Dolce Gusto was the portioned coffee market leader in 20 countries.
He said: “Our establishment of this new factory reflects more than just an important investment to expand our business. It illustrates deep trust in the country where we have had successful operations for over 100 years.
“This is one of our biggest investments in Europe and highlights our continuous investment in our capacity for innovation,” he added.
Strategic proximity to Hamburg
Schwerin is only around 100km away from Hamburg – the largest European port for coffee imports – and Nestlé said it would produce around 2bn coffee capsules a year (coffee, Nesquik, Nestea varieties) for export to Germany, Eastern Europe and Scandinavia.
The new site will be Nestlé’s third, since the company already possesses sites in Girona, Barcelona and Tutbury in the UK: £110m was invested here last year to triple production from 2013, but the site is currently running at full capacity producing 4m capsules per day.
Furthermore, last March Nestlé also announced that it would spend CHH 64m increasing production at Girona, which is Europe's largest Nescafé factory, to 2.5bn capsules per year from 2012.
Nescafe Dolce Gusto waslaunched in 2006 in the UK, Germany and Switzerland, and Nestlé aims to achieve CHF 1bn in sales for the brand by 2013.
Cost deterring uptake?
Last month, UK research firm Mintel said that 18-44 year-olds in the US were more likely than their older companions to cite convenience as a reason for using pod-style machines systems as Dolce Gusto.
Senior analyst from Mintel, Garima Goel Lal, said: "This is likely a reflection of the fact that for younger adults, coffee is often seen as an on-the-go beverage that can provide a needed energy boost.”
She added: “A key driver of sales growth in the coffee category is innovation. The single-cup segment of the coffee business is driving growth and is likely to continue to contribute to gains for the foreseeable future."
And despite perceptions of better value among those buying pod-style coffee - over coffeehouse offerings - Goel Lal said that price was one of the main deterrents to further single-serve uptake for consumers who still bought and brewed freshly ground coffee.