On the windows of the Nespresso stores was affixed a large circled B, accompanied by the slogan “Happy to be B Corp”. A new communication campaign focused on obtaining, last April, a label which guarantees compliance with the best standards of social and environmental impact (see box). The Nestlé subsidiary displays its pride after three years of efforts to meet the certification requirements. “This demonstrates the seriousness of the approach, it is not greenwashing”, greets Elisabeth Laville, from the Utopies firm, author of La Révolution B Corp (ed. Pearson)… while the accusation was made by environmental NGOs . This advertising orchestrated around a label still little known to the public is above all a marketing strategy: Nespresso intends to highlight its social and environmental commitments to retain and win back its customers. “It’s about beefing up the subject with a label, to stay at the forefront”, deciphers Maxime Briquet, analyst at the Kantar Institute.
Because the Nespresso success story has some failures. Thirty years ago, by inventing capsules and positioning inspired by luxury – premium prices and sales via its own network of chic boutiques – Nestlé revolutionized the coffee market. And made the brand its flagship. Unquenchable growth, insolent margins, image of innovation and good taste: “What else?” George Clooney would say. But after having been in virtual monopoly, the battle has been raging for ten years since its last patents fell into the public domain.
Tough competition
And particularly in France, where pods are all the rage: ahead of soluble or ground coffee, they represent half of the home consumption market, which weighs nearly 3 billion euros, according to Kantar. Senseo, L’Or, Carte Noire, Lavazza… His rivals rushed to copy the concept, launching their machines and cheaper capsules – including compatible with his system – which flooded supermarkets. Nespresso’s market share has eroded. The brand does not reveal any figures for France, but it would now only weigh 8% (in value) of the capsule segment.
On the windows of the Nespresso stores was affixed a large circled B, accompanied by the slogan “Happy to be B Corp”. A new communication campaign focused on obtaining, last April, a label which guarantees compliance with the best standards of social and environmental impact (see box). The Nestlé subsidiary displays its pride after three years of efforts to meet the certification requirements. “This demonstrates the seriousness of the approach, it is not greenwashing”, greets Elisabeth Laville, from the Utopies firm, author of La Révolution B Corp (ed. Pearson)… while the accusation was made by environmental NGOs . This advertising orchestrated around a label still little known to the public is above all a marketing strategy: Nespresso intends to highlight its social and environmental commitments to retain and win back its customers. “It’s about beefing up the subject with a label, to stay at the forefront”, deciphers Maxime Briquet, analyst at the Kantar Institute.
Because the Nespresso success story has some failures. Thirty years ago, by inventing capsules and positioning inspired by luxury – premium prices and sales via its own network of chic boutiques – Nestlé revolutionized the coffee market. And made the brand its flagship. Unquenchable growth, insolent margins, image of innovation and good taste: “What else?” George Clooney would say. But after having been in virtual monopoly, the battle has been raging for ten years since its last patents fell into the public domain.
Strong competition
And particularly in France, where pods are all the rage: ahead of soluble or ground coffee, they represent half of the home consumption market, which weighs nearly 3 billion euros, according to Kantar. Senseo, L’Or, Carte Noire, Lavazza… His rivals rushed to copy the concept, launching their machines and cheaper capsules – including compatible with his system – which flooded supermarkets. Nespresso’s market share has eroded. The brand does not reveal any figures for France, but it would now only weigh 8% (in value) of the capsule segment.
Reviled concept
In a very dynamic market, this “bottom up” attack on prices has certainly slowed its growth, but Nespresso has been able to preserve its profitability, the best of Nestlé’s activities (nearly 23% margin worldwide in 2021). More dangerous is the attack “from above”, on its glamorous image, the pillar of its lucrative high-end positioning. Hence his counter-offensive with the B Corp certification. We had to react because its aluminum pod, so practical and stylish, has become commonplace. Worse, it is reviled as an ecological disaster. Moreover, the latest trend among sores is to buy a machine with a coffee bean grinder, seen as more authentic… and which goes to compost. In supermarkets, the sale of beans, still a very small minority (10% of the market) exploded by 38% in 2021. “When they arrived, the capsules made ground coffee outdated, they must now prevent the same from happening to them. fate, while the ecological argument weighs more and more in the choices of consumers”, warns Maxime Briquet. However, the grain is not more virtuous, according to the analysis of the firm Quantis, which calculates the impact of products throughout their life cycle: a cup of Nespresso coffee of 110 ml would have a carbon footprint of 108 grams in France, equivalent to that of a filter or Italian coffee maker… but less than that of a grain machine, at 142 g. Because what pollutes the most is the production of coffee and the electricity needed for the machine. However, the capsule makes it possible to optimize both.
Extended recycling
There is therefore no question for Nespresso of doing without a pod, or even, like some competitors, of abandoning aluminium. “For the moment, it is the material that best protects the freshness and aroma of the coffee”, defends Nathalie Gonzalez, deputy general manager of Nespresso. The brand has instead relied on the recycling of its capsules – themselves composed of 80% recycled aluminum -, for which it invests 5 million euros per year. In 2019, it created the small aluminum treatment sector with its competitor JDE (L’Or, Sen-seo, etc.), and finances collection in the yellow bin up to 300 euros per tonne of aluminium.
The ace! “When we ask the French about their perception of recycling, it is not seen as a positive impact, but just as a lesser evil”, notes Elisabeth Laville. And if the company is a good student in France, only 32% of Nespresso capsules are recycled worldwide, points out the B Corp report. Finally, the competition is hot on their heels: on September 6, Café Royal launched capsules made of algae membrane which, its designers boast, have the same insulation properties as aluminum but biodegrades naturally in four weeks.
Trained coffee growers
However, the B Corp label rewards real progress. Between 2009 and 2020, Nespresso reduced its coffee cup footprint by 24%, thanks to more efficient machines, recycling and a greener coffee supply. In 2003, he launched a program with the NGO Rainforest Alliance: 400 agronomists are deployed to coffee growers to train them in greener practices such as agro-forestry which, by planting trees around coffee plants, protect crops, improve yields, etc.
Nespresso is also committed to fair trade. In Colombia, 47 million euros were invested between 2010 and 2015 in partnership with the Federation of Coffee Growers to improve their income by around 20%. The company claims to buy 95% of its coffee at “a price equal to or above the threshold set by the NGO Fairtrade” to ensure them a decent wage. Not enough to impress Malongo, leader of fair trade certified coffees, which regrets that its great rival does not disclose its purchase prices. “To say that we pay on average more than required by NGOs without being certified, it is not serious”, judges the boss Jean-Pierre Blanc. The French SME also displays its advance on organic, which represents 66% of its range, where Nespresso has only three references.
Competition is therefore just as fierce in terms of reputation as in distribution in this coveted coffee market. With its precious B Corp stamp, Nespresso has scored points and wants to let it be known… but will have to retake the certification process every three years, to show its progress. And thus hope to permanently restore its image.
WORLD COUNTER
6.4 billion euros in turnover (7.4% of Nestlé sales).
1.5 billion in operating profit (12% of Nestlé’s operating profit).
5 million investment per year in France for the recycling of capsules.
Between 3 and 4% market share in France (in Kantar home consumption value).
B Corp, a demanding and time-limited label
A reference in terms of governance, social and environmental (ESG) criteria, the B Corp label is awarded by the American NGO B Lab by evaluating the positive impact of companies on five subjects: governance, the environment, communities, employees and customers. This involves answering a questionnaire (online, free) of 200 questions and obtaining a minimum of 80 points out of 200. To engage in the labeling process, the company must pay 250 euros and send supporting documents to each of its answers, audited by B Lab experts, remotely or on site – 50% of companies fail this audit. In the event of certification, valid for three years, the company pays annual membership fees, from 1,000 euros to more than 50,000 euros. Throughout the world, while more than 100,000 companies have completed the questionnaire, only 4,000 are certified, including 190 in France (the French brands of Danone, Nature & Découvertes, Veja, etc.).
Highlighting the B Corp label on the windows of its stores, recycling its capsules already made of 80% recycled aluminum, aid program for growers: Nespresso is fighting back to regain ground on the competition.
(Photos: SP)
(Photos: SP)
Agathe Beaujon