Single-serving coffee machines gain popularity
Competitors are piling into the market for single-serving coffee after Nespresso sales rose 29 percent last year while ground coffee consumption in U.S. and European homes stagnated.
18/08/2004 Nestlé, whose Nescafe instant coffee makes it the world`s largest coffee seller, began marketing Nespresso 15 years ago to attract customers who were turning to coffee shops like Starbucks.
Now competitors like Kraft Foods and Procter Gamble are piling into the market for single-serving coffee after Nespresso sales rose 29 percent last year while ground coffee consumption in U.S. and European homes stagnated.
At Nestlé, instant coffee sales fell 2.9 percent, to $6.41 billion, in 2003 after dropping 7.3 percent the previous year, but Nespresso sales rose to 450 million Swiss francs, or $363 million, last year from 350 million francs in 2002, according to the Nespresso director Marc-Alain Dubois. Nespresso, which has teamed with appliance makers including Saeco International and Miele to produce the brewing machines, aims to have revenue of 1 billion francs by 2007. Other companies are getting in on the act. Kraft, the largest U.S. food maker, began at the end of June to test-market its Tassimo brand coffee discs and a brewing machine made by Braun in France. Procter Gamble, the biggest U.S. household goods maker, started selling its HomeCafe system in May.
Sara Lee, the world`s third-largest coffee roaster, began selling its Senseo brand in Europe three years ago and introduced Senseo to the U.S. market in February. Senseo sales more than doubled in fiscal 2004, to $234 million from $110 million.
The products come in two types. Nespresso and Tassimo coffee is packed in metal capsules that won`t fit any other machine. The others use filter-paper "pods." The Senseo and HomeCafe machines are designed primarily for their own pods.
Amid the competition, Nespresso has sought to differentiate itself as a gourmet product, selling machines and coffee through a network of 25 boutiques that display gleaming espresso makers and rows of red, blue and gold capsules in cities from Moscow to New York.
The Nespresso machines, the most expensive of which can be custom-fitted to home kitchens, range from $245 to $2,200.
