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The first time I walked into a Nespresso Boutique to buy espresso capsules with a friend, I felt like I was buying macarons in an exquisite Ladurée Boutique in Paris.

The Grand Crus capsules were on display under a glass counter, and colourful boxes of them were neatly organized on the wall behind the sales clerk. We pointed at the ones we wanted, she packaged them, and then rang up the bill.

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Nepresso Boutique (left); Ladurée Boutique (right)

The Macaron of Coffee Culture

The love of Parisian macarons have become an obsession to many. They are flavourful, aromatic, and taste delicious. From a culinary perspective, achieving the ideal texture is an art form – perfecting the crisp shell exterior paired with a smooth ganache filling. However, the infatuation comes mainly from the presentation of the delicate macarons in a variety of colours.

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Nespresso Grand Crus (left); Ladurée Macarons (right)

Just as the macaron is the jewel of French pasties, Nespresso has marketed their capsules and espresso with a similar flavour – as a high-end delicacy, appealing to all senses. To the palate, Nespresso’s Grand Crus are superior to any other home brewed coffee product that I have tried. Visually, the different coloured capsules used for each roast is highly appealing, and ignites the same emotions as seeing the colourful macarons.

The elite style of Nespresso is carried throughout the entire customer experience. Starting from the boutique experience in which they offer sampling with every purchase, to using the machine in your home cafe, and even extending into your Nespresso Club membership which is required to order capsules. While I love the product, my love for Nespresso really stems from their marketing strategy. Yes, their espresso is amazing, and actually doesn’t pale in comparison to European cafes. However, the Nespresso brand becomes an irresistible obsession because of the complete consumer experience and the emotions that are evoked with every sip.

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Packaging of Nespresso Grand Crus (left); Ladurée Macarons (right)

There are a lot of similarities in Ladurée macarons and Nespresso – both sell a classic European treat, a petite delicacy that is appealing both to the palate and to the eye. More importantly, they both have an aura of sophistication and exquisiteness, and the latest slogan “Nespresso: The Art of Espresso” has been branded suitably.

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Varieties of Nespresso Grand Crus (left); Ladurée Macarons (right)

Market Position

Although Nespresso entered into the Canadian market six years ago, their market penetration is meagre in comparison to their dominance in both Europe and Asia. This is partially due to the exclusivity of where you can purchase the machines and the coffee pods, but also to do with the fact that North Americans just aren’t such big fans of espresso. But with the recent trending of home single-cup machines, Nespresso is becoming more of a household product, and a competitor to Keurig and Tassimo. I think they have positioned themselves wisely to quickly gain market share by competing in a different market segment that is largely untapped in North America.

Here is a quick summary of the Nespresso marketing mix and why I’m completely sold:

Product

Nespresso sells a line of single-serve coffee machines, ranging from the simple home machine with 2-3 brew sizes, to very fancy ones that are beyond my comprehension. They sell 16 Grand Crus varieties, and three new variations every holiday season. The espressos are prepared at the perfect temperature and pressure, and have a rich and generous crema. The freshness of the beans are sealed in the aluminum capsules. Not only does their base espresso taste better than other brands, but the machine’s ability to create specialty drinks is superior as well. You can use fresh milk, rather than powdered milk pods by adding the Aeroccino, a milk steamer/frother, to your machine purchase. The flexibility is an enormous draw for people who want their own personalized drinks with soy milk, non-fat milk, extra foam, different ratios of milk-to-espresso, etc.

Price

The newest and most affordable machine launched in late 2012 is the Nespresso U. It is priced at $200 alone or $250 bundled with the Aeroccino. Coffee capsules are sold at around $0.60 each. Nespresso’s price point is justifiably so, and I wouldn’t consider that their products are being sold at a premium price. Compare this to the razorblade pricing of the Starbucks Verismo, with their base machine priced at $200 (recently dropped to $150 during the holidays), and espresso pods at $1.00, and lattes at $1.60. Nespresso is cheaper, sells higher quality coffee, and better creates the home cafe experience. It’s no wonder that Verismo sales are slow.

Promotion

I knew that Nespresso was sold in Asia and Europe, and honestly only knew about North American sales through word of mouth. While I can’t speak to their George Clooney advertising campaigns because I don’t watch TV, you’ve heard my two cents on their overall marketing, drawing parallels between treasured Parisian macarons and the colourful Nespresso capsules.

Place

The sophistication of Nespresso is enforced by the exclusivity of their products. While their machines are sold in select outlets such as Williams-Sonoma, they are largely only available in Nespresso Boutiques or online. Capsules are also sold only in boutiques or through home delivery from their website. This generates the feeling that customers are part of an exclusive club and in turn, they don’t even mind waiting in line a little longer.

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When it comes to single-serve coffee machines, there is no real competition for consumers who want to drink their espresso from home. Nespresso’s focused differentiation strategy, and overall brand image has secured a strong market position. I can only expect North American sales to grow in the near future.

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One thought on “Love Macarons? Love Nespresso

  1. Pingback: The Single-Serve Coffee Market | CAROL KONG

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