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LEAD Innovation Blog

Read our latest articles on innovation management and innovation in a wide range of industries.

Date: 20-Sep-2019
Posted by: Angela HENGSBERGER

What has not been taken into account in the Nespresso business model

 

Nespresso is a success story that should not be missing from any top list of product and business model innovations. With excellent taste, exclusive style and experience, the Swiss company has managed to sell its coffee many times over, far from any price war. About 200 providers have already tried to copy it. After many, even lost patent disputes, Nespresso is now relaxed and convinced of the unique customer benefit: the customers try and come back. But the perfect business model is not quite perfect - why? You can find out here.

 

Customer need for "sustainability

Nestlé has not taken into account a customer request. The customer's need for sustainability. The coffee capsules are packed in aluminium. The production of the light metal consumes an enormous amount of energy and resources and the disposal of the used capsules was also questionable.

With around 8 billion capsules sold worldwide, Nespresso produces 80,000 tonnes of aluminium. By comparison, Red Bull sells 6 billion cans, or 600,000 tonnes of aluminium waste.

But the Nespresso customer is more environmentally conscious. This almost became Nestlé's PR fate if the company hadn't responded so quickly and bravely with a series of environmental innovations.

The capsules are the transport and pressure container for the coffee. Aluminium was chosen because the flavouring substances are retained, it is tasteless and withstands the high brewing pressure.

Trend Collection Packaging

What is less pleasing to the customer is that it is produced from bauxite, which is extracted under questionable social conditions and environmental standards, with very high energy consumption.

 

High potential for packaging and environmental innovations

As innovative as the system itself is, Nespresso also wants to be innovative in environmental innovations. The primary aim is to collect and recycle the capsules.

The challenges lie in the complexity of the recycling process and in the logistics of collecting the capsules. In addition, there are different country-specific laws and the dependence on the commitment and will of customers.

Nespresso has come up with a number of ideas to make it easy for customers to return:

  • Installation of collection points in Nespresso boutiques
  • Recycling Bag for Club Members
  • Cooperation with public collection points in the communities
  • Easily find the nearest collection point such as an electrical retailer or waste disposal company on the Nespresso homepage
  • In Switzerland you can even give them back to the postman
  • Increasing the customer's awareness through videos & Co.

Once collected, the capsules can be recycled. The advantage of aluminium here is that it can be recycled an infinite number of times.

c-NespressoRecycling-leicht-gemacht.jpg

picture source: nespresso.

But not only the packaging is recycled, but also the remaining coffee. These residues are processed into biogas.

As part of its "The Positive Cup" sustainability strategy, Nespresso has set itself, among many other social and environmental objectives, the ambitious goal of maximising its take-back capacity from its current level of around 75% to 100% by 2020. This requires cooperation with partners and above all the motivation and willingness of customers.

 

Packaging innovation thought ahead

Instead of treating the symptom of how to recollect and recycle the capsules, innovation could also be at the root. Nespresso is strongly committed to sustainable aluminium production and innovative recycling processes. However, the even more environmentally friendly alternatives would be reusable capsules or the production from compostable materials such as cellulose.

 

Three key findings for innovation management

The most important learnings for innovation management are:

  1. Think the innovation through. When developing new products, the entire product life cycle must be considered: Raw materials, production, packaging & transport, use and the final phase after use. In every phase there are demands and wishes to be fulfilled for a perfect product, not only on the part of the customers, but also internally and from the environment.
  1. Fast reaction to market requirements. Nespresso quickly recognized and responded to the need for an environmentally friendly solution. The first solutions to customer requirements were quickly implemented and the PR attack area was removed.
  1. The example around Nespresso capsules demonstrates the great potential for packaging and environmental innovations to differentiate and increase customer satisfaction.

 

Conclusion:

Today, 30 years after its foundation in 1986, Nespresso is still one of the most successful companies in its sector thanks to George Clooney and many continuous innovations.

Innovation potentials are everywhere and diverse, be it in the product itself, the business model, the packaging or in the context of environmental protection. The most important success factor here is to always have eyes and ears on the market unconditionally in order to recognize potentials and wishes at an early stage and to seize the opportunity with perfection through innovations.

Trend Collection Packaging

Title picture source: nespresso.

Angela HENGSBERGER

Born and raised in Vienna. Since 2012 she has been in charge of Business Development at LEAD Innovation with the functions marketing, sales and communication.

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