Nestlé Nespresso Business Model | Business Model Navigator

Overview:

Nestlé Nespresso S.A., trading as Nespresso, is an operating unit of the Nestlé Group, based in Lausanne, Switzerland. Nespresso machines brew espresso and coffee from coffee capsules, or pods in machines for home or professional use, a type of pre-apportioned single-use container of ground coffee beans, sometimes with added flavorings. Once inserted into a machine, the capsules are pierced and processed, water is then forced against a heating element at high pressure meaning that only the quantity for a single cup is warmed. Nespresso is a premium price coffee, and by 2011 had annual sales in excess of 3 billion Swiss francs. The word Nespresso is a portmanteau of Nestlé and Espresso, a common mechanic used across other Nestlé brands (Nescafé, BabyNes, Nesquik).

Industries:

Retail

Consumer Goods

Similar firms (based on pattern co-occurrence):

2 shared patterns

3 shared patterns

2 shared patterns

3 shared patterns

2 shared patterns

3 shared patterns

2 shared patterns

3 shared patterns

2 shared patterns

Business Model Patterns:

Customer Loyalty

How they do it: Nespresso’s loyalty club lets customer register their coffee machine online and profit from exclusive offers and discounts. In addition club members get a free Nespresso coffee in every official brand store. The club serves the company as an exclusive brand enhancer.

Direct Selling

How they do it: After seeing the success from opening a first concept store in Paris, Nespresso today has more than 700 boutiques selling Nespresso coffee machines, the coffee capsules as well as accessories. In addition, customers can try new flavours in the store.

E-commerce

How they do it: Nespresso started selling its capsules exclusively online before opening their first brand store. Today, Nespresso customers can choose from a broad range of coffee flavours. In addition, club members have the oppotunity to get special benefits and discounts online.

Experience Selling

How they do it: To protect the Nespresso brand and make it more exclusive, Nespresso gave its stores a unique high-end design, positioning their products and coffee as exclusive and high-end. The focus in the stores lies on giving its customers superior customer service and position the coffee as a luxury product.

Lock-in

How they do it: Nespresso coffee system is protected by more than 100 patents. This allowed the company to keep competitors from selling coffee capsules compatible with the Nespresso system. However in recent years some patents expired leading to multiple brands manufacturing and selling Nespresso compatible coffee capsules.

Razor And Blade

How they do it: Nespresso coffee system is protected by more than 100 patents. This allowed the company to keep competitors from selling coffee capsules compatible with the Nespresso system similar to printer companies. The coffee machines usually come at a low price with a large amount of test capsules from Nespresso. Over the lifetime of the device the customer usually spends much more on the high-margin coffee capsules.

Shop-in-shop

How they do it: Nespresso not only operates brand shops but also as a shop-in-shop, primarily in kitchen appliance shops and premium food stores. This allows Nespresso to give the customers the same customer experience as it gives in their brand stores and maintains the luxury perception of the brand.

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