The damage is done on Nespresso

by chee Leng (on coffee makers)
(Singapore)

Sure, Denner in Swiss was force to take down NExpod in June, but heard that it went back to Sales in August.

Then, there are the ECC and L'OR capsules in France and is now expanding to Germany. All these are making an impact on Nespresso sales.

They forecast that they would grow slower next year, the growth rate might be 18% instead of the current year 22%.

This is a drop of 4%. Might not seems alot until you know that 1% represents a S$20 million dollar lost. That means, they are losing as much S$80 million dollars per annum.

That is quite alot of money considering that their competitors are still in Europe, what if they expand to other markets.

In Australia, you are seeing activity from Nexpod as well as Capsulin, so it wouldn't be long before the sales start to drop from there and the Asia Pacific region.

It is irreversible.

The economic is bad, people just want a cheaper alternative. Sure, The whole George Clooney thing looks good and shopping in Posh outlet is great.

But, when it comes to paying, you just want to have the cheaper alternative. You might not change all your capsules to the lower pricing ones, but perhaps half of it.

Here are the cost differences:

Nespresso (10 capsules): S$10

ECC (10 Capsules): S$5

Sara Lee L'OR: S$7

Then there is the CapsulIn that offers you the ability to use any coffee: S$3.

The alternatives are cheap, and it seems that Nespresso even with their cash and legal action might not be able to reclaim France.

If Casino continues to sell and other places follow suit, they might have toi look at other business model other than suing people.

My S$0.02

I always think that colloboration is best. In any way, the compatible products are using your machines. That should push the sales of your machines, with people knowng that there are cheaper alternatives and different coffee that they are able to buy.

They should follow the footsteps of Keurig and partner with the alternatives to follow a wide array of coffee instead of closing it to just their own.

In the past, Nespresso was the poster boy of sales growth in Nestle, with their patent ending and compatible companies coming out, it might not be the case in a few years time...