A simple but revolutionary idea, Nespresso pioneered the concept of premium portioned coffee, designed for maximum convenience. The process redefined the way coffee lovers around the world could enjoy their coffee. Key to the vision was a determination for quality, innovation and perfection.
In the Late 1970s Nestle dominated the instant coffee market with its Nescafe brand, this accounted for 30% of worldwide coffee consumption, although Nestle had no significant presence in the larger roast and ground segment. Senior management realised the opportunities for growth in this rapidly developing ‘gourmet’ segment.
To further develop, produce and market the Nespresso system, a separate company was created. The new business involved selling coffee, something Nestle were already the market leader. The company’s top management decided early on that the similarities between the two businesses were more illusory than real. Nestle were selling instant coffee to the mass market but Nespresso specifically targeted wealthy and young urban professionals, positioning itself as an upmarket brand
A separate company provided a more flexible and dynamic entity, with freedom to experiment. Nespresso could position themselves differently than Nestle, this separation allowed them to develop separate commercial, distribution and workforce policies, it seems that this structure was an important success factor.
Nespresso machines were successfully developed thanks to the creation of an innovative culture and environment that allowed and encouraged team members to take intelligentrisks, giving everyone the chance to be an innovator
In the annual satisfaction survey, 95% of the 1 million respondents were ‘Totally Satisfied’, suggesting brand loyalty created a special and unique relationship. The Nespresso club database allowed segmentation according the consumption patterns and length of membership, the database was set up to handle orders for capsules and customer details, including ordering patterns.
Nestle identified over time that the household market was suitable for building long term business, they recognised that demanding consumers would need to receive high levels of attention to retain their loyalty. Investments were made in the training of sales clerks in retail stores to encourage the first connection, promote tastings and reflect the key attributes of the product to emphasise the points which matched the consumer’s lifestyle. The opportunity was there for a home gourmet coffee experience and Nespresso successfully innovated a fantastic product to fulfil this need.