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With around 5,500 cups consumed every second, Nestlé's Nescafé is by far the world's leading coffee brand, and also the fourth most valuable beverage brand globally after Coca-Cola, Pepsi and Budweiser. Interbrand ranks it among the world's top 40 brands, with an estimated brand value of almost $14bn. Nescafé's global profile has been modernised up to a point by a move into iced beverages in several markets, most successfully in Asia, but its more traditional hot soluble business still has one major obstacle to overcome: the dominance of roast and ground coffees in the US and its growing popularity in other developed markets. Nestlé's attempts to compete directly with ground coffee producers proved unsatisfactory, but instead the group established a new benchmark for premium coffees with its extraordinarily successful Nespresso dispensing system. This proved a huge hit in Europe and has in turn led to the introduction of lower-priced Nescafé-branded systems such as Dolce Gusto. Yet in this segment too, Nestlé has failed to break the stranglehold in North America of local manufacturer Keurig. That brand is now owned by JAB Holdings, also Nestlé's main rival in global coffee via its subsdiary Jacobs Douwe Egberts. A major step forward was the deal announced in 2018 in which Nestlé acquired global rights to all Starbucks' packaged retail products, substantially enhancing its profile in the US as well as elsewhere. The Starbucks brand has been repositioned primarily as the group's main supermarket retail brand in the US, and main Nespresso-compatible supermarket brand elsewhere, countering competition from rival companies. Global sales from that product range alone were almost $2.9bn (SFr 2.7bn) in 2020. Niche US brands include subscription coffee service Blue Bottle and cold brew specialist Chameleon. Nestlé also applied its experience with Nespresso to the launch of an equivalent tea-making system, Special.T. However, that has achieved only limited success in a handful of markets. David Rennie is Nestlé's global head of coffee with responsibility for Nescafé and other brands. In 2020, Nestlé reported sales of approx €8.0bn (SFr 8.6bn) from soluble coffee and coffee systems. In 2021, Nestlé reported sales of €6.2bn (SFr 6.4bn) from the Nespresso business alone.
Capsule checked 14th May 2021
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Who are the competitors of Nescafé and Nespresso? Nescafe's main global competitor in instant coffee is Jacobs Douwe Egberts portfolio, which now controls not only the brands previously owned by Mondelez and DE Master Blenders, but also Keurig. Other important rivals include Starbucks, JM Smucker (Folgers), Kraft Heinz (Maxwell House), Lavazza, Tchibo, 3 Coracoes of Brazil and Strauss of Israel, Melitta and DongSuh Foods of Korea (Maxim). See Non Alcoholic Beverages Sector index for other companies and brands
Historical profile information for Nescafe
Adbrands Weekly Update 18th Oct 2018: Ads Of The Week: "The Quest". George Clooney returns to the Nespresso harness for the first time in several years in a new campaign from McCann New York. Though he has been associated with Nespresso in Europe since 2006, Clooney famously refused to appear in American ads for the brand until owner Nestle agreed to support a coffee production programme in South Sudan. That finally came to fruition in 2015, prompting Clooney's first US campaigns with pal Danny DeVito. This latest spot isn't quite as strong as the DeVito ad or its fine effects-driven follow-up with Andy Garcia. It's still pretty good, and (slightly) less cringe-making than the ads he made here in Europe. Nathalie Dormer is guest star this time, channelling a bit of the Game of Thrones role that made her name.
Adbrands Weekly Update 10th May 2018: Nestlé pulled off a significant and entirely unexpected coup, signing a global alliance with Starbucks that gives it exclusive global rights - in perpetuity no less! - to all the coffee chain's packaged retail products for $7.15bn, around 3.5 times annual sales. The deal excludes ready to drink beverages like Frappucino (managed by PepsiCo), and of course anytrhing sold through Starbucks existing retail estate. However, Nestlé takes control of all other retail packaged beans, ground coffee and tea, and also assumes rights to Starbucks-branded single-serve capsules for use in the Dolce Gusto and Nespresso systems. (They will still be available in K-Cup form for rival Keurig). The advantage to Starbucks is access to a massive global supermarket distribution operation that is far beyond anything the chain could achieve on its own. Currently, Starbucks sells its packaged coffee in grocery channels in just 28 countries, rather than the 190 or more in which Nestlé is active. For Nestlé this represents a huge boost in the US, one of the only global coffee markets where it is little more than an also-ran, lifting its market share from around 3% of US packaged coffee to 18%. At the same time, both companies strengthen their position against the real enemy: JAB Holdings, owner of a range of competitive businesses including coffee roaster Jacobs Douwe Egberts, coffee retail chains including Peet's and Krispy Kreme, and the single-serve operator Keurig Green Mountain. "This transaction is a significant step for our coffee business, Nestlé’s largest high-growth category," said Nestlé CEO Mark Schneider. "With Starbucks, Nescafé and Nespresso we bring together three iconic brands in the world of coffee. We are delighted to have Starbucks as our partner. Both companies have true passion for outstanding coffee and are proud to be recognized as global leaders for their responsible and sustainable coffee sourcing. This is a great day for coffee lovers around the world." Starbucks currently manages its packaged retail business inhouse, having bought it back (at great legal expense) from Kraft in 2010. Around 500 staff will transfer to Nestlé.
Adbrands Weekly Update 12th October 2017: Ads of the Week: "Those Few People". Something really quite unusual here from Publicis London for Nescafé. The idea and the build-up is fascinating - how about those signs for audience groups that don't get a spotlight close-up like "Owe You Money" and "Haters"! But unfortunately, like an extravagant cinematic souffle, the whole thing rather collapses in the final 30 seconds. What was looking like something rather out of the ordinary turns into just another coffee ad where we all just sit around and have a nice chat. And what a cheapskate! The special people in his life and all he serves is Nescafé? Couldn't he at least have stretched to Nespresso?
Adbrands Weekly Update 15th Sep 2017: Having missed out on a string of major acquisitions initiated by new rival Jacobs Douwe Egberts and its controlling shareholders, Nestlé finally took steps to protect its key global coffee franchise with a deal for fast-growing US firm Blue Bottle Coffee. The target company retails a wide variety of premium speciality coffee blends direct to consumers via ecommerce subscription or through a small but expanding chain of retail outets. Blue Bottle is hoping to have 55 stores in the US and Japan by the end of this year. Despite its small size, Nestlé is understood to have acquired a 68% shareholding in the business for around $500m. Current management led by CEO Bryan Meehan and founder & chief product officer James Freeman will continue to run the company and control the remaining shares. It will operate as a standalone entity, partnering Nestlé's existing Nescafé and Nespresso brands.
Adbrands Weekly Update 13th Jul 2017: Nestlé is hoping to reinvigorate slowing sales of its Nespresso coffee system by wholesaling refill capsules for the first time to selected third-party retailers in its core market of Western Europe. Traditionally, the company has only sold direct to customers online, by phone or through its own branded stores. However, it has lost significant market share in recent years to lower-priced generic copies of its capsules from smaller competitors, as well as to rival systems from big guns Jacobs Douwe Egberts and Starbucks. Euromonitor estimated Nestlé's share of the coffee capsule market has fallen from more than 50% in 2007 to around a third. After successful preliminary tests in two German retailers, Nestlé will now open around 27 in-store "N-point" concessions in outlets of consumer electronics chains MediaMarkt and Saturn and in department store Galeria Kaufhof. Depending on the response from consumers, further stores will follow in Germany and possibly other markets as well.
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