Spilling the beans on Nespresso’s cup of success
In 2010, Nespresso maintained its momentum in Britain and Ireland, achieving a sales growth of 32%, making an average of 52% since 2001.
In an extremely competitive sector, the portioned-coffee segment continued to grow, representing 8% of the total coffee market in terms of volume. Similar growth was recorded in the UK, with sales of portioned-filter and espresso machines rising by 16.1% compared to 2009.
As a result of the company’s declared “passion for creating quality,” the Nespresso brand maintained double-digit organic growth in every market. The company continues to grow its leading market share in coffee machines to about 20%, with the UK seeing a 28.6% sales increase compared to 2009 — contributing to the increasing number of Nespresso Club members, which grew by 35% globally, resulting in 10m members worldwide.
Additionally, the number of Nespresso employees increased by 30% to 5,500.
“The need for a daily cup of quality coffee amongst the general public, even in these straitened times, remains unaffected and the results that our business has achieved over the past number of years reflects that,” says Brema Drohan.
“Indeed, coffee is the most traded global commodity, after oil, in the world, and could well be described as the international social lubricator of choice for a huge majority of people across the world.
“Coffee is a ubiquitous product, used in different ways in different countries, but common to all as a daily infusion that is part of life in every corner of the world.”
Having joined the company in 1992, and having held various positions before being appointed sales and marketing manager for the German market in 1998, Drohan was then appointed to spearhead the development of the Irish and UK markets, where the brand has gone from strength to strength and is amongst the fastest growing for Nespresso in the world.
“When I came to the UK, in 1999, the brand was then being promoted through an agent who ran the business and had a tiny foothold in the market. When we bought back the business and set about promoting the brand on a wider scale, there were moments when we wondered if Nespresso was a good fit for the UK and Irish markets,” she say.
“We were very aware that the majority of our Nespresso Club members, at that time, were ex-pats from the European mainland, and the question was whether the English and Irish would appreciate the coffee.”
Drohan set about reinforcing the importance of developing the brand community within the UK and Ireland and the need for a personalised experience to drive deeper consumer engagement.
Today, more than 70% of the teams in the company’s markets are customer-facing, providing tailored shopping experiences in boutiques and direct access to specialists via the Nespresso Club’s customer relationship centres.
“Like Nespresso the world over, we pride ourselves in continuously reinventing the customer experience. From our sponsorship of the 2010 Ryder Cup and golf ambassador José Maria Olazbal, through to our design partnerships, limited edition coffees and successful customer relationship centre, Nespresso continues to demonstrate its commitment to quality, innovation, and customer service,” she says. “Historically, the Irish and English would not have seen themselves as connoisseurs of coffee, not the same way as other Europeans would have been. However, as a result of that, they are both markets that are very open to influences — a factor that allowed us, at Nespresso, to talk to consumers in the beginning. “Nespresso has been around the UK and Irish markets for the last 12 years, but it’s really only in the last five years that we became very visible and successful,” she says. “We won consumers by demonstrating the product to them, and explaining the coffee concept to them in department stores and electrical outlets where the machines were sold.
“There was an openness there that helped us, consumers wanted to know more about the product and what good coffee tasted like.”
In 2010, the number of Nespresso cups consumed worldwide every minute increased from 10,000 in 2009 to 12,300.
Against a backdrop of steadily increasing green coffee volumes overall, the share of coffee sourced from the Nespresso AAA Sustainable Quality Programme continued to grow to 60% in 2010, up from 50% in 2009.
Nespresso also focused on its Ecolaboration programme, continuing its pledge to reach the 2013 commitments of driving sustainability into all areas of its operations — ensuring future growth while safeguarding the environment for future generations.
Taking stock of commercial prospects for 2012 and beyond, Nespresso looks to grow in all their territories, including the UK and Ireland. “Given that our UK and Irish operations are based out of the UK, our Irish employment relates specifically to our retail,” says Drohan.
“We do envisage further expansion of outlets over the next three years as we continue to give people more and more reasons to join the brand. The Nespresso strategy will continue to focus on quality innovation, service excellence and selective expansion.”
The company’s innovation pipeline includes new B2C and B2B machines and new limited edition coffees as its retail network continues to grow beyond the current 250 boutiques in cities from Berlin to Paris and from Johannesburg to St Petersburg.
With the benefit of living in London and making regular business and personal trips to Ireland, Drohan has noted the difficult commercial environment affecting the country, but in which Nespresso has continued to thrive.
“In the area our business is involved in, we haven’t suffered in Ireland,” she says. “The business has continued to grow very strongly, despite the very difficult economic times prevailing at the present.
“I think that is a further reflection of how people continue to hold on to the smaller, daily pleasures like a good cup of coffee, while cutting back on the bigger pleasures of life, like holidays and changing the car.”
