27 September 2010

Nespresso Opens Stores as North American Sales Rise


Nespresso sales in the U.S. and Canada have increased about 50 percent this year, helped by store openings and a new distribution agreement, said Frederic Levy, the head of Nestle’s Nespresso brand in those markets.

The coffee company is opening its 13th sales location in the region tomorrow with a “boutique” in New York’s Soho neighborhood, said Levy, who is president of Nespresso in North America. A shop within a Sur La Table store in Florida will follow next month.

“The new coffee culture is expanding” in the U.S., Levy said today in a telephone interview. “Word of mouth is very strong.”

Nespresso sales reached 2.77 billion Swiss francs ($2.76 billion) worldwide last year, with about 90 percent of the total from Europe. That’s almost 3 percent of Vevey, Switzerland-based Nestle’s revenue. First-half Nespresso sales increased more than 25 percent, Nestle said Aug. 11. The brand is growing even as U.S. consumers have cut spending, according to analysts.

“It may be super-premium, but any consumer can afford to buy the machines and the capsules,” said James Amoroso, a food industry consultant in Walchwil, Switzerland. “It is also a market that is still at the very beginning of its life cycle. Penetration in the U.S. must still be extremely low.”

Nespresso doesn’t plan price increases in the U.S. in 2010, Levy said, adding that the last boost was in early 2008. Futures contracts for Arabica coffee beans have been trading near the highest in almost 13 years.

Crate & Barrel stores began selling Nespresso machines in March, Levy said. The coffee makers range from $149 to $2,500 and the capsules average 55 cents each.

Single-serve machines are responsible for about 7 percent of the global coffee market, according to Nespresso. The brand plans to eventually have 20 to 30 boutiques in the U.S., Levy said.

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