Robot boutiques, caramelizio and cafes: How Nestlé believes Nespresso innovation will keep it at the top

By Rachel Arthur contact

- Last updated on GMT

'We are pleased with performance, despite growing competition:' Nestle CFO on Nespresso
'We are pleased with performance, despite growing competition:' Nestle CFO on Nespresso

Related tags: Espresso

Nestlé says Nespresso innovations – such as a further expanded Grand Crus range, additional cafes and boutiques, and even automated outlets – are keeping the coffee business in good shape against increased competition.  

The brand’s premium positioning continues to be the key to success, particularly as it develops the brand into cafes and Nespresso Cube automated outlets.  

20 new boutiques have been opened worldwide and a Nespresso Café launched in Vienna, reported the company as it released its half year results.

nestle cube
Nespresso Cube

It has also continued rolling out Nespresso Cube, an automated cube-shaped boutique that prepares Nespresso Grand Cru coffee with a ‘stunning show’ of robotic arms. The Cube, which is stocked with up to 48,000 capsules, uses a fast robotized order-picking system to meet consumer demands for convenience and choice.

VertuoLine – a high-end brewing system in North America which focuses on 8 oz servings of coffee (as well as the espresso sized coffee favoured in Europe) is another innovation continuing to show promising performance, following its launch in 2014. A new flavour, Caramelizio (caramel), was released this year to celebrate its first anniversary.

Quality, innovation, boutiques

“Nespresso’s growth continued to be accretive to the Group,” ​said François-Xavier Roger, CFO, in the half year 2015 earning’s call. “We are pleased with the performance despite growing competition, especially in Europe.

“Nespresso drives the premium portion coffee segment and continues to differentiate from its competitors via quality, innovation and direct access to the consumer via our boutiques and e-commerce platform.

“This year, we launched several limited edition coffees. Again, the brand's global presence continued to expand, with 20 new boutiques opened worldwide and with the roll-out of the Nespresso Cube.”

The combined businesses of Nespresso, Nestle Professional, Nestle Health Science and Nestle Skin Health, achieved sales of 6.8bn CHF, with organic growth of 8.1%.

The broader coffee portfolio also benefited from premium positioning.  Nescafé Dolce Gusto saw good performance in Europe, Middle East and North Africa (and particularly in Western Europe), and was identified as a growth driver across the Americas (the brand achieved strong double-digit growth in Latin America).

“We are pleased to see we continue growing [with Nespresso and Dolce Gusto],” ​continued Roger. “The growth is a little bit lower than what it was in the past but we continue to enjoy growth and with strong momentum in the Americas and in Asia and in AOA [Asia, Oceania and sub-Sahara Africa], which is very good.”

Vienna café opening

nespresso cafe vienna
The Nespresso Cafe in Vienna

Nespresso launched its Nespresso Café in Vienna in April this year, a joint venture with super premium food caterer DO&CO. As well as Nespresso Grand Cru coffee served by baristas, the cafe also features the Nespresso Cube for a take-away service.

“In Europe, thanks to premiumization, thanks to innovation as well, opening new boutiques and launching some new innovations allows us to continue to keep a strong momentum, even in Europe,”​ said Roger.

Coffee prices

Higher coffee prices, however, have put some pressure on Nespresso and Dolce Gusto margins, he added.

“The margin indeed has been a little bit on the low side and actually the margin in coffee has decreased due to the increase of coffee prices which is a consequence of high coffee prices to start with combined with the hedging position that we have taken as well as foreign exchange.” 

Related topics: Tea and Coffee, Nestlé, Premium Indulgence

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