Ethical Coffee Company, the David that challenges Goliath Nespresso is getting 21 help!

by Chee Leng
(Singapore)

Ethical-coffee-company-nespresso-capsules

Just some background for those that are not aware of this battle. Nespresso for the longest time operates a closed system, this means if you buy their machine, you need to buy their capsules.

Along came this Ethical Coffee Company, that make a capsule that is 25% cheaper than Nespresso and is compatible with it. Sales soared.

At the time of this writing, it is being sold in Casino (a French retailer) in over 600 outlets. Sales by the way should be good -ethical coffee company has a base of Nespresso 7 million machines.

Then, some time back, Nespresso decided to take some legal action to stop ECC, it seems that it is going to be lengthy and costly legal battle.

Now, you have 21 partners an equity firm that is pumping money in ECC. While their fanacial status would still not be as strong as Nespresso, at least it is being beef up for the fight.

If ECC would to win the fight, Nespresso would lose a very lucrative business. For a few years, Nespresso has been the growth engine of Nestle, now that might change.

And I guess ECC should know how Nespresso would play the game, the found and CEO of ECC Jean-Paul Gaillard was former ly the head of Nespresso!

Anyway, hope ECC stay the course and all of us would have cheaper capsules for our nespresso machines!!:)

Oh by the way, 21 partners is a company and it is not 21 different parnters. IT is an internatial financial group and a major private equity player.

Comments for Ethical Coffee Company, the David that challenges Goliath Nespresso is getting 21 help!

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Ethical Coffee
by: Anonymous

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Hi Chee
by: jpg

Thanks, I agree, Nestlé does not but they are quite Old Fashion...In fact we do take market share away from them...mybe it is the reason why they are not happy...

In Espresso consumer really care about 3 flavors, strong, mild, light the rest is a bit like Jell-O.

Anyway we do take market away from them. Maybe our coffee is better ?

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Rooting for ECC:)
by: Chee Leng (oncoffeemakers)

Hi JP Gaillard,

Personally, I feel that it is in fact a win-win for Nespresso, now that consumers have more choices for their machine (such as ECC).

Take for example, if I am a consumer considering a keurig or nespresso, the former having wider variety of choice, I would likely choose Keurig.

Now with ECC entrance, providing more variety to Nespresso range, and at a lower cost, Nespresso should see this as a value add and should not be seen as a negative factor.

All the best, and a win for ECC spells good news for many of our readers and consumers:)

Best regards

Ebenezer Heng Chee Leng
Oncoffeemakers.com

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PS
by: JPG/ECC

The legal battle is similar to the one when Microsoft tryed to cling to its exclusivity on Explorer.
You know the end of the story.
So we are very confident.

When Private Equity firms invest they "triple check"

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the way it was and it is
by: JPG/ECC

thks good article, one comment, when I took over Nespresso in 1988 when Nestlé had decided to close the business (did a lot of arm twisting), I never had this kind of money, we grew the business on self cash flow only (club= 15 days A/R 85% margin and 90 days for A/P).

Today Ethical Coffee Co. is in a better financial position than Nespresso when it started. JP Gaillard
Ethical Coffee Co.

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