Category winner: Nespresso: What Next?
Who – the protagonist
Richard Girardot, Nespresso’s CEO.
The launch of Nescafé Dolce Gusto by Nestlé, owner of the Nespresso premium single-serve coffee brand.
Many of Nespresso’s patents were set to expire in 2012 and a legal case against one generic coffee capsule maker had already gone against Nestlé. More and more competitors were lining up to launch Nespresso-compatible capsules, and lower-cost alternatives had become well established. In addition, Nespresso was facing high-end competition with the launch of sophisticated coffee machines that included grinders. At the same time, Nestlé is about to launch Nescafé Dolce Gusto, a mid-market single-serve coffee brand.
Nestlé was formed in 1905 when the Anglo-Swiss Milk Company, founded in 1866 by brothers George and Charles Page, merged with Farine Lactée Henri Nestlé, established in 1866 by Henri Nestlé. From its inception, coffee and cocoa drinks were among Nestlé’s core competencies. However, it wasn’t until the 1980s that it introduced the Nespresso system to meet the huge demand for roast and ground coffee.
Nespresso is an autonomous globally managed business of the Nestlé Group.
Headquartered in Switzerland, Nespresso is present in over 60 countries and has over 12,000 employees worldwide.
‘For real coffee connoisseurs, Nespresso is becoming too mainstream. This also happened to former luxury brands like Pierre Cardin and Jaguar, which also went too mass market. Luxury is all about status and exclusivity, so once all of your friends have a Nespresso machine you need to do something different to stand out.’ – Industry insider
Nespresso’s CEO Richard Girardot was faced with the challenge of how to both defend and grow the Nespresso franchise. How should the business model evolve in the coming years and respond to the onslaught of competitive and copycat brands? And how can Nespresso maintain exclusivity among the increasingly discerning coffee consumers in its target market? In what way is Nescafé Dolce Gusto an answer to Nespresso's challenges? How compatible are the two businesses?
|Interested in finding out more?|
Download the case and teaching note
Educators can login to view a free inspection copy of this case and its teaching note.
Jamie Anderson, Nader Tavassoli and Mark Collins
The authors discuss why George Clooney is an added bonus for this case and how to approach writing cases from published sources.
It is wonderful that the case is being used in so many classrooms around the world, and that instructors find it a good medium through which to talk about strategy and marketing with their students.
Sometimes the best cases are those where you highlight competitive dynamics behind everyday phenomena people are familiar with, but nobody has ever considered.
George Clooney adverts
Almost everyone has some experience with Nespresso as a brand and a product and this adds to the ‘flavour’ of the discussion within the classroom.
It is also nice to be able to take a Nespresso machine, capsules and accessories into a teaching setting as this further enhances participants’ experience with the case itself. Not to mention the ability to share so many advertisements featuring George Clooney!
Although Nestlé as a company was unable to prevent ‘copycats’ from entering the market that it created, Nespresso’s management have actually been very effective in sustaining the firm’s competitive advantage – it is one of the dimensions that makes the case so rich.
When writing from published sources it is important to create a compelling narrative – to bring excitement and tension to the case itself. It also helps when the brand is as big as Nespresso, which means there is a wealth of material in the public domain about the company, including interviews with senior executives.
Nespresso’s Jean-Marc Duvoisin shares his insights on talent in the company
Another important dimension was that although the case was written from published sources, we were able to have direct experience with the company through visits to Nespresso boutiques, which also included discussions with company employees.
Inspiration for our Nespresso case came from the bestselling case on Nespresso written by Kamran Kashani and Joyce Miller, published in 2000. That case addressed the trials and tribulations of Nestlé’s creation and expansion of Nespresso but, of course, only covered events until the end of the 1990s. Their prizewinning case provided the springboard to write our own chapter of the Nespresso story.
About the authors