Middle East the ‘future’ for Nespresso, says CEO

Nespresso, the single-portion coffee brand owned by Nestlé, has said the Middle East is “its future” as it looks to grow its business outside Europe, its CEO has told Arabian Business.

The firm said it plans to launch internet sales in the UAE by the beginning of the second quarter and will expand its number of boutiques across the region. 

“[The Middle East]; it’s the future. Nespresso is still a Western European [company] because of the coffee culture in Italy and France, but clearly the brand has the potential to be worldwide. This region is one of the key [markets] for the future; we believe there is huge potential for this region,” Richard Girardot said.

“Our strategy is [to expand in] cities where there are two habits; the habit to appreciate the coffee and the habit of shopping. Clearly this region has a habit of shopping, so here we have to develop,” he added.

Sales of single-portion coffee have increased significantly in the last five years as global companies such as Nestlé, Kraft and Starbucks look to tap the growing demand for convenient coffee. Single-portion coffee makes up an estimated eight percent of total worldwide coffee sales, but is expected to double in the next few years.

Nespresso, the global leader of single-portion coffee with a 35 percent market share globally, said it will launch a regional sales website. “We are very close to launching [internet operations] in the region,” said Jean Marc Dragoli, market director for Nespresso, Middle East, Africa and Caribbean.

“Our consumers will then have a third channel; the possibility to go in the boutique, call the call centre or to go through the internet. The UAE is a very important market for us [so we’ll start there],” he added.

The Switzerland-based firm also said it planned to expand the number of boutiques, but declined to say by how many. “We’ve been discussing how to accelerate the growth here. The boutique is clearly a tool that will help us to accelerate the growth in the region,” said Dragoli.

“Definitely we’re looking at the boutique as an expansion tool. Clearly the Emirates are part of the key priorities; clearly Saudi is a very important market,” he added.

Parent company Nestlé, the world’s biggest food company, posted a net profit of $10.26bn on February 15, beating analysts’ expectations as consumers bought more Nespresso machines and coffee. Sales of Nespresso increased by more than 20 percent in 2011, making it Nestlé’s fastest-growing major brand.