Nespresso takes a sip of US coffee market
Nespresso hopes to expand its reach after the single-serve coffee pioneer revealed a new machine that serves larger cups of coffee aimed at tapping the booming U.S. coffee market, the company's CEO told CNBC.
The $299 VertuoLine system that brews both American style large-cup coffee and espressos will produce a crema-topped 8 ounce coffee or a normal espresso, as the subsidiary company of Nestlé aims to double sales in the American market "in the coming years".
In 2013, sales for the Nespresso brand amounted to $300 million.
"We really believe our last year's growth in the U.S. was very good, very solid but we were limited to premium espresso coffees," Jean-Marc Duvoisin, CEO of Nespresso told CNBC in a TV interview.
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"And now we are launching this new technology which will be able to deliver a large cup of very premium coffee, he said. He added the group understood that coffee lovers in U.S. want a large cup and believes the new offering will tap into this.
U.S. consumers bought $3.1 billion worth of coffee pods last year. That figure is set to jump to $5.3 million in 2018, according to market research firm Mintel.
In comparison, Americans last year bought $6 billion worth of traditional roasted coffee, and about $2.5 billion in instant and ready-to-drink coffee, but coffee capsules are expected to continue eroding the market share of these traditional coffee types.
Nespresso is a money maker for Nestlé, but the group is keen to expand its presence in the United States. In 2013, the Swiss company has a 5 percent share of the U.S. coffee pod market. That compares with an 80 percent market share for market leader Green Mountain, which acquired the Keurig brand of brewers in 2006, according to Euromonitor International data.
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Green Mountain has deals with coffee chain giant Starbucks and Twinings among others, selling its trademark "K Cups" coffee pods.
But Duvoisin dismissed the competition, claiming Nespresso has "no direct competitors" and will be "creating a new market".
"We'll be focusing on the premium top quality coffee…we don't feel like we have direct competitors, we will be creating a new market," he said.
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Users will be able to use 12 types of Nespresso coffee capsules with the VertuoLine, including a vanilla and decaffeinated version, further appealing to U.S. consumers. Nespresso capsules are only available in the company's boutiques, online, and can also be ordered over the phone, but Duvoisin said this would not hold back growth.
"Convenience is top priority and we feel how we sell our products…is the most convenient way of buying. We see the general tendency of the market is to go and buy more on a digital mode. We have delivery in 48 hours…in most places we will be and we are already able to deliver the same day…This is the most convenient way," Duvoisin told CNBC.
—By CNBC's Arjun Kharpal: Follow him on Twitter