Innovation and Rennovation: The Nespresso Story
This article exposes the story of Nespresso System, “a high quality coffee packed in aluminum capsules for exclusive use in specially designed machines”. The product was developed by the Swiss company Nestlé, and it became a new segment in the espresso coffee. The customers only needed to push a button in the machine and they got immediately a fresh espresso. The author divide the case into two main parts, the first one is related directly with Nestlé’s growth strategies based on innovation and renovation, and rebuild the Nespresso System story as a kind of a company apart to the main structure of Nestlé. The second part, explains all the challenges that Nestlé faced when they were working on reach Nespresso’s growth up to the SFr (Swiss Franc) one-billion boundary. Nestlé was established in 1867; by 1999 the company was worldwide leader in the food segment. The notorious growth of the company is a consequence of the continuous innovation and renovation in words of its CEO Peter Brabeck. The company is constantly seeking for new opportunities in demographic changes for the business development. As we said before, the Nespresso system consisted in a single-portioned of aluminum capsules which contained 5gr of roast and ground coffee. These capsules are made for exclusively being used in specialized machines, it represents one cup of espresso coffee. Nestlé got the Nespresso patents but they licensed the production to manufactures who sold them to selected appliance retailers. With the idea of Nespresso, the company was trying to combine their deep knowledge in the coffee world with the Nestlé’s experience in research and development, but initially the company faced problems in costs and quality of the product. Based on the strategic problems around the Nespresso System, Nestlé decided to create a separated company in 1986 owned by them, called NCS (Nestlé Coffee Specialties) in order to focus on...
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