Nespresso chief confident inflation will not roast sales

ZURICH — Despite Europe feeling the pinch from soaring inflation, Nespresso boss Guillaume Le Cunff told AFP he believes their coffee capsules are creature comforts and will therefore stay in demand.

Inflation is running at 10.6 per cent in the eurozone and household budgets are under pressure.

But Le Cunff said that even in periods when customers have to tighten their belts, they tend to stick with their "everyday" small pleasures — such as having a coffee.

"When you have to raise prices to guarantee quality — because the value chain is subject to inflation — the idea is to be reasonable, by only doing it where absolutely necessary," said Le Cunff, chief executive of Swiss food giant Nestle's Nespresso subsidiary since 2000.

"It remains a daily expenditure, a moment of pleasure, a moment for oneself. And I'm not sure people want to abandon having this moment for themselves."

"We'll see what the future holds, but we are very confident."

That said, Nespresso sales volumes dropped by 1.9 per cent in the first nine months of the year, notably in Europe, offset by sales continuing to grow in North America.

Le Cunff said global sales accelerated in 2020 and 2021, as people worked from home during the COVID-19 pandemic.

But this year, people are working from home less and going out more — something the company has tracked via an uptick in its out-of-home sales.

The Frenchman said that while Europe was Nespresso's historic market, it was still in expansion mode in North America.

"The COVID effect is less visible there," he said.

"Consumption at home is readjusting. But today, we are 20 per cent above the pre-COVID situation, that is to say 2019."

Recycling versus composting 

Nespresso was on Monday launching a new alternative to its well-known aluminium coffee capsules: A compostable paper version compatible with the existing Nespresso machines. A thin biopolymer film inside the paper keeps the coffee fresh.

But the firm is not planning on simply ditching its traditional metal capsules, instead leaving it up to consumers.

"Aluminium has its virtues: In terms of freshness protection and a barrier to oxygen, it is the best in terms of shelf life. And aluminium is infinitely recyclable," Le Cunff said.

"These are two different offers, with different benefits. Each has its advantages. We will offer both options and see what customers prefer."

The compostable pods will be launched in Switzerland and France next year before spreading out from there, and Nespresso intends to find out what customers like about recycling and composting, and how they go about using the new product.

"These are discussions that will take place in the shops. We will learn from them," said Le Cunff.