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Nestle pursues premium plans with Nespresso expansion

By Neil Merrett , 10-Jun-2009
Last updated on 10-Jun-2009 at 14:08 GMT

Nestle continues to spy growth for its Nespresso coffee machine system and brands with the inauguration today of its second production and distribution centre for the operations.

The site, situated in Avenches, Switzerland, represents a €197m investment in premium branded beverages that Nestle says makes up one of four strategic areas for company growth that include nutrition, health and wellness and luxury goods.

Premium demand

Nestle estimates that the market for premium food and beverage goods will grow on average at an annual rate of 13 per cent up to 2020.

On retail level though, some concerns have been risen this year over consumer resilience for purchasing so called ‘premium’ beverages during the economic downturn as groups like Starbucks look to offering cheaper instant alternatives.

Nespresso was designed by the company to offer a range of portion-controlled coffees and machines its claims can provide more café and espresso-quality drinks.

For the best part of a decade, Nestle claims that product innovation across the range has seen strong growth with sales amounting to more than €1.4bn.

In attempts to cater for potential future growth for the brand, Nestle says the new 400,000m3 plant is expected to produce over 4.8 billion drink capsules each year, with the possibility of further expansion over the next 36 months.

Private label

Besides the company’ optimism, in the current economic downturn, private label products are thought to be gaining market share from higher cost brands across a number of consumer goods segments as consumers look to lower their grocery budgets.

Back in February, café chain Starbucks announced the launch of a new-patented form of coffee in some of its stores claimed to mimic its trademark espresso beverages in an instant format.

However, the European Coffee Federation (ECF), a trade body, said at the time that sustainable and premium forms of coffee were still an affordable luxury to global consumers.

“Premium, fair trade and organic coffee each have their dedicated audience, and price is not the determining factor in their purchases,” said a spokesperson for the ECF.

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