Nestlé has had a significant presence in the Australian coffee market since the launch of Nescafe in 1947. But, although 39% of coffee drinkers still opt for instant (McCrindle) Aussie coffee drinkers have become more and more discerning in their quest for the perfect cup. The Australian launch of Nespresso in 1996 changed the coffee scene in this country, providing an easy way to make espresso coffee at home. Where previous espresso machines involved a lot of fiddling and tamping, the process was now as simple as popping a sealed pack of ground coffee into the machine and pushing a button.
Then, in 1989, Nestlé began marketing directly to the consumer through what they called the Nespresso Club. As a “member” of this exclusive club, purchasers ordered their coffee capsules – originally by mail. This way, while the machines were available through a wide range of retailers, the company controlled the ongoing sales of its coffee. In 1998, online ordering began and, in 2000, the first Nespresso boutique was opened in Paris.
According to Nespresso: “Our unique route to market with our own distribution channels – encompassing our e-commerce platform, our exclusive boutiques and our dedicated Customer Relationship Centres (call centres), along with our partner model for machine distribution – provides us with a unique competitive advantage versus our competitors.”
In Australia, the first machines were expensive. The widely touted Krug machines started at more than $500 and the more complex models retailed for more than $900. It’s safe to say that the concept didn’t take Australia by storm. However, it gathered momentum and now, according to one source, an estimated 48 per cent of Australians have a pod coffee machine at home. Today, a simple Nespresso machine can be had for less than $150.
Sustainability issues with coffee capsules are making many question their ongoing use. Some companies have introduced compostable coffee pods and Nespresso themselves are trying to increase the percentage of their aluminium capsules that are recycled. However, it is still estimated that up to 95% of their pods end up in landfill.
For the Nespresso story in detail, including the challenges the brand faces, see the story in The Guardian here.