The coffee capsule market could be named the “enfant terrible” of the coffee industry, it has experienced spectacular growth over the last few years. It is a dynamic, diverse market and in this market Nespresso, the main player, communicates many things: quality, experience and easy usability, appealing to a consumer who is very careful about his or her choices, is informed and passionate. It has been an efficient and successful strategy. With a career spanning over 20 years in the hotel industry, Sonia Nastase was recruited by Nestle as country manager for their Nespresso division at the end of 2014. OZB talked to Sonia Nastase about innovation and revolution, about how a simple habit can be transformed in a luxury moment.
“I consider it a great privilege to have had the opportunity to join this exceptional brand Nespresso and the associated team from its beginnings in Romania. I think this is a huge opportunity for any business professional and particularly for me it’s a great way to grow both professionally and personally. I feel deeply connected with the company’s purpose and values and, just like a parent who knows their child inside out, each joy and challenge, I am the same with Nespresso taking great care to provide vision, passion and motivation. I am in love with my team, and our way together, from zero to infinity, means not only enjoying the successes, but also taking on the difficulties and solving any emerging challenges,” says Nastase. Since she took over Nespresso, the company has grown significantly in the local market. The debut was quickly followed by the opening of Nespresso Boutique in the autumn of the same year. The development included a point of sales in Băneasa Shopping City last year and this October the company is also opening one in AFI Cotroceni Shopping Mall along with launching an e-commerce website and a mobile application. Nespresso products are but a click or even a touch away.
Of course, the first thing we all associate with Nespresso are the smart, funny and classy commercials featuring George Clooney. Clooney, who reputedly drinks four cups of coffee a day, is the perfect personification of the understated elegance and authenticity that make Nespresso what it is today and he has become synonymous with the values that the brand stands for. The partnership with George Clooney is among the longest in the history of luxury brands, lasting more than 10 years. With every commercial campaign, the actor effortlessly espouses brand values and messages with his smooth charm and not a small hint of his trademark humour. Nespresso coffee, according to these much talked about campaigns, urges the central Clooney character to go the extra mile for it, even when this means enduring some considerable discomfort. Clooney has been the brand’s face since 2006, and, according to British media, he received about 34 million euro during the first six years of the contract.
Few of us are aware that Nespresso is actually a young and vibrant brand, that has gone through a spectacular evolution. During the ‘70s a Nestle Research & Development team started developing a project to redefine the art of making espresso, consequently founding Nespresso S.A in 1986 with only five employees. In 2000 there were 300 employees already and the first Nespresso Boutique was opened as a concept store on the Champs Elysees in Paris.
Today there are more than 600 Nespresso Boutiques and more than 12,000 Nespresso employees in 63 countries around the world and the company continues to grow. The genuine enthusiasm with which consumers across the world meet the brand owes much to the brand’s relentless quest to produce the highest quality coffee using the most sustainable sourcing methods. The 21st century consumer is very demanding, and rightly so, expecting honest, purposeful brands with a consistent set of values that resonate with his or her own. Today, Nespresso enjoys revenues of 2.5 billion euro and it has 10 million Nespresso Club members.
“The Nespresso proposal was as simple as it was revolutionary – to enable everyone to create the perfect cup of coffee just like a skilled barista. Coffee lovers worldwide embraced this new concept openly, with genuine and contagious enthusiasm, and they are now able to enjoy, with only one touch of a button, exceptional coffee at their home or in their offices. In a world where we all have to deliver immediate perfection, Nespresso coffee was the perfect solution,” explains Nastase.
The revolution started in 1988, when the company was managed by 33-year-old Swiss businessman Jean-Paul Gaillard, a former top manager with Philip Morris. It was his idea to shift the orientation of their products away from offices and on to the final consumers. With a marketing budget of 1,6 million Swiss francs, the Nespresso brand began to position itself as the most sophisticated and refined coffee that could be made at home. To highlight the flavour and aroma of the coffee capsule, Gaillard named the line of capsules Grand Cru – a term more normally used for fine French wines. In 1989, he founded the Nespresso Club which is open to each and every owner of a Nespresso coffee machine.
The biggest problem was simply getting customers to try the products. Taking the helm in 1997, CEO Henk Kwakman made this his priority. First, he switched from print advertising to TV: when the elegance of the Nespresso machine was demonstrated rather than merely described, demand increased several times. Next, he expanded a pilot programme offering Nespresso to first-class airline passengers. By 2000, some 1,100 planes flown by 20 different airlines were using the machines, and 3.5 million travellers a year had the chance to sample the product.
But sipping espresso prepared by an attendant was not the same as preparing a cup yourself at home. So Nespresso worked diligently with retailers to encourage in-store testing. Retailer surveys revealed that stores providing customer trials of the machines and tasting the coffee generated six times as many sales as those merely demonstrating the machines.
Inspired by the high-end cosmetics manufacturers, Nespresso marketers approached department stores with a proposition: “Give us 20 square meters and we’ll create a Nespresso store-within-a-store, with our own host and hostess.” The famous Galeries Lafayette in Paris was the first department store to accept the offer; sales of Nespresso machines at the store rose from 50 per year to 700. Soon major retail chains all over Europe were asking for Nespresso shops.
Nespresso is now Nestle’s fastest-growing brand, with annual growth of more than 30% per annum from 2005-2010. Nespresso outsells rival Lavazza in Italy, “the cradle of espresso,” and sells more servings of coffee every year than Starbucks. One can only be extremely proud to work in such a company and Nastase certainly is.
Nespresso is involved in every aspect of the coffee value chain from the coffee tree to the coffee cup. This allows the company to guarantee unsurpassed, sustainable quality coffee. Nespresso goes directly to the world’s top coffee-growing regions to buy the world’s finest coffee crops on the spot. They create long-term relationships with farmers so that they are able to select individual crops by quality and aroma profile and bring this home to coffee lovers around the world.
About 70 percent of the world’s 4,500 Nespresso employees are in direct contact with customers and the Nespresso Club has grown organically into a global community of some of the most discerning coffee connoisseurs in the world, playing a significant part in evolving the global coffee culture.
To market and sell the product, Nespresso also went in uncharted directions. Previously food retail distribution was almost the only way to distribute products. Nespresso is based on an entirely new concept: the Internet Sales (Nespresso club), exclusive retail boutiques and flagship stores. This provides them with direct customer contact, direct service, an exclusive brand image and ultimately higher margins.
“Continuous innovation and our passion for perfection have been key drivers in our quest to consistently deliver the highest quality coffee to consumers worldwide for enjoyment at home and away from home. For us, innovation takes many forms, innovation runs through every facet of our business. We already have 24 coffee assortments in our range, practically one for every hour of the day, each with its own character and we are constantly innovating our coffee range, with new Grand Cru coffee introductions and the launch of multiple Limited Edition coffees annually,” says Sonia Nastase.
Nespresso machines are specifically developed to complement and enhance the aroma, crema and flavour of Nespresso Grand Cru coffee capsules. The innovations and cutting-edge designs have continually reinvented the coffee machine and, quite appropriately, all espresso machines have been recognized with successive design awards. Only this year the newly launched connected machines Expert and Expert & Milk have won “If Design Award 2017” and “Red Dot Design Award 2017” while Creatista, the best in class model for latte art lovers, won “Red Dot Design Award, Best of the Best”.
“‘Innovation’ is one of the buzzwords you hear a lot in the business world lately. We are living in times where the rapid turnover of ideas and products in the marketplace has reached a stage where it is no longer enough to be best in class. Instead, the pursuit of excellence is the hallmark of a truly successful and world class company and hence all companies must undertake efforts to drive innovation and change within and without,” says Nastase. Henry Ford’s statement rings as true with coffee as it did with cars: “if I had asked people what they wanted they would have said faster horses,” since we tend to think of an innovation as a new product. But you can innovate with a new process, method, business model, partnership, route to market or marketing method. Every aspect of business operations is a candidate for innovation. If you can discover the fundamental needs of your customers then you can leverage for innovation, you will drive growth and ultimately be successful. Also, Nastase believes that what sets the innovators apart from the dreamers is the willingness to execute and make something happen. Although ideas are an important part of the process, giving substance to those ideas is the really important part. Without the hard work and the documented decisions, ideas remain merely concepts.
Nespresso is not only about selling state-of-the-art coffee machines and flavoured coffee capsules, but also about delivering great service. “We call it the trilogy,” says Nastase, who brought this trilogy to the local market. “Romanians simply love coffee and the consumers here understood immediately the advantages of a coffee capsule. The future looks very bright for us.” The company managed to impress the coffee lovers of Romania right from the start and now it’s time to move to the next level: restaurants are about to be charmed by the revolutionary Nespresso coffee capsules and also by the country-manager.
“I’m the type of person for whom the voyage is more important than the destination. One of the things I like most about my job at Nespresso is that the company doesn’t question my personal values. I am defined by my love for aesthetics and refinement, but also for simplicity, and I believe Nespresso is exactly the same: simple, but at the same time sophisticated, elegant, but not in excess. Passion is a key-word for me, so it is very important that I have the appropriate environment in order to use my passion for creating an exceptional business. I would like people to remember me as a team player. I learnt a business can’t be sustained without some (or many) dedicated employees. I’m very proud of my team and I’m grateful everyday for having them by my side,” concludes Nastase.