Get up and make a pot of coffee. For many Belgians it was a fixed ritual for decades. But instead of the crumple of the coffee maker, the hum of a machine that only fills one cup with coffee from a capsule is increasingly heard.
Last year, according to the research agency GfK, Belgians bought 248,000 traditional coffee machines, 15 percent less than in 2014. Sales of Nespresso and Dolce Gusto capsule machines were just half that of 2014, at 260,000.
The changing of the guard can also be seen in the coffee sales themselves. Filter coffee sales fell by 2.6 percent to 197 million euros last year, according to research firm Nielsen. According to Nielsen, Belgians spent 100 million euros on capsules (+ 9.3%). That is an underestimate, because Nielsen only measures sales in supermarkets, where there are no Nespresso products. Nespresso has a turnover of more than 100 million euros annually in Belgium. The market for capsules is now the same size as that for filter coffee.
Coffee multinationals feel that. Until recently, global market leader Nestlé trumps the all-powerful JDE Peet’s (Douwe Egberts) in Belgium. “Since last year, Nestlé has been the largest coffee seller to consumers in Belgium for the first time in its history,” said Oliver Perquy, CEO of Nespresso Belgium.
Douwe Egberts on a takeover hunt
This week JDE Peets announced that it will be listed on the Amsterdam stock exchange. By issuing new shares, Douwe Egberts’ parent company wants to raise 2 billion euros in fresh money. Observers put a $ 20 billion price tag on the entire company.
With the new capital, JDE Peet wants to make acquisitions in countries where it does not yet have a strong position. “The coffee market is still very fragmented,” said CEO Casey Keller. JDE Peet’s also wants to expand its tea branch – with the Pickwick brand. The company is active in more than a hundred countries.
The Swiss Nestlé is not only active with the capsules of Nespresso and Dolce Gusto, but also makes and distributes the capsules of the American coffee chain Starbucks. They have been in Belgian supermarkets since last year and fit in the Nespresso machines. “They got off to a flying start,” says Nestlé Belgium-Luxembourg’s annual report.
JDE Peet’s loses because it is very dependent on filter coffee from brands such as Douwe Egberts, Jacqmotte and Zwarte Kat. It is a double loser, because his Senseo brand – a partnership with Philips – is also on the way. According to Nielsen, the sale of coffee pods decreased by 5.5 percent to 75.5 million euros last year. The company has also been making capsules that fit into a Nespresso machine under the brand names Douwe Egberts, L’Or and Illy for several years, but it is not clear whether they can make up for the decline in filter coffee. JDE Peet’s would not respond.
Belgian coffee culture has changed in the past decade. Like the rest of the world, Belgians have become more demanding. They want better coffee or coffee with an exclusive image. This is also evident from the introduction of expensive chain Starbucks in Belgium and the emergence of independent coffee houses. “Coffee is no longer a trite basic commodity,” Perquy says. “People speak differently about coffee than before. Everyone wants to be a coffee expert. This can also be seen in the coffee people buy. “
Nespresso has been active in Belgium since 1992, but broke through in the past ten years. “As quality has become more important, people are switching to capsules,” Perquy says. “The taste of capsule coffee is much stronger. That was not obvious at first, because Belgians, like other Northern Europeans, were not used to the intensity of the Italian espresso. “
The Swiss managed to cultivate an exclusive image by the way they sell their coffee. The majority is sold online. Orders are delivered at home or can be picked up in the own shops, which were named Nespresso Boutique.
We collect and recycle 30 percent of the capsules. That is far too little.
Nespresso expects even more growth from the newly launched Vertuo. The capsules and machines are different from those of Nespresso. “There are available in espresso format (40 milliliters, ed.), but the largest capsules account for 414 milliliters of coffee, “says Perquy. “Belgians have become accustomed to stronger coffee, but they still prefer larger portions than the southern Europeans. With Vertuo, originally made for the Americans, we are going to convince even more Belgians to switch to capsules. “The Vertuo capsules are also available online or in the Nespresso stores.
Nestlé has a patent on the Vertuo system. Only Nestlé is allowed to make products for it. This also applied to the original Nespresso system for years. When the patent expired, Nespresso had to observe how competitors such as JDE Peet’s and the private brands also made capsules. “We got competition, but it paradoxically led to extra growth. The capsule market grew. ”
“The corona crisis is making people buy even more capsules,” said Perquy. “Our online sales have doubled. But globally we are deteriorating, because our Boutiques have been closed for weeks and our Nespresso installations in the office and in the catering industry – which account for 20 percent of the turnover – also made less coffee due to the lockdown. ”
Turnover (2018): 104 million euros.
Operating profit: 3.7 million euros.
Net profit: 2.2 million euros.
The spirit of the age can also throw a spanner in the works. The capsules are an attack on the environment. The extraction of the aluminum does damage and many capsules end up in the trash. However, customers can return used capsules by courier or return them to Nespresso stores or parcel collection points. “We collect 30 percent of the capsules again. We recycle them ourselves, “says Perquy. “That is far too little.”
To increase the percentage he counts on the blue pmd bag. More plastics and metals may be added to this soon. “Our capsules not yet. They are too small for the recycling infrastructure. However, discussions are ongoing with FostPlus (the organization behind the blue bag, ed.) and we are willing to invest in infrastructure. It takes time. It took 40 years for 75 percent of the glass to be recycled. After ten years, we are at 30 percent and we have the capacity to recycle 100 percent. We continue to invest to make recycling easier for consumers. “