Nespresso Porter Analysis

Topics: Coffee, Nespresso, Coffee preparation Pages: 4 (1112 words) Published: April 27, 2013

Nespresso is an operating unit of the Nestlé group based in Switzerland. Since the 90’s Nespresso sell machines, which have a market success. Packaged portions of espresso coffee are one of the fastest growing segments of the coffee market. It has between 20 and 40% of the value of ground coffee sales in the European coffee market, which totals USD 17 billion. Nespresso sales have been growing at an average of 30% per year over the past 10 years and more than 20 billion capsules have been sold since 2000 at a current selling price equivalent to about USD 0.43 to USD 0.62 per capsule. Furthermore, Nespresso reported annual sales of USD 3,22 billion in 2011, growing by 20% during the fiscal year. The aim of Nespresso is to become the icon of the perfect coffee worldwide and to be established at the super premium brand.

a. Rivalry among competiting sellers
Competitive intensity of the market is strong because of the many multinational that manage the market and who have a couple of coffee brands each one. Furthermore, Nespresso did have a patent for his capsules. But now, different companies have the right to manufacture capsules. Nespresso has not the monopoly on the portion capsules market now, and the rivalry is constantly increasing between the giants of the coffee market.

b. Buyers
Buyers have no bargaining power with brands that manufacture and/or distribute this portioned coffee. These are brands that are mostly multinational companies leading dance on the market and impose their choice distributors and consumers. For example, Nespresso choose not to distribute its products in popular point of distribution. When you want to buy some portions you have to go to the nearest concept store, and we know that if you don’t live in a big city it is impossible to find, or you have to order by Internet. But, even if it is not the easy way for consumers to buy, sales continue to increase. By...
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