Analyst Insight by Lorenza Della Santa - Senior Consumer Appliances Analyst
Nespresso’s business model (one brand, one drink) will continue to have a tough time in the US. Consumers there are very loyal to their favourite hot drinks brands and will pay a premium for a Keurig coffee machine because it brews all their favourite branded drinks at the touch of a button and at a price that is still perceived as reasonable. To succeed, it will not be enough for Nespresso to focus on coffee size. The right pricing and brand awareness are even more important.
North American Consumers are Loyal to Just a Few Coffee Brands…
The North American fresh coffee market is very concentrated, with the top two companies, Green Mountain and JM Smucker, jointly commanding almost 40% of fresh coffee volumes. Despite volume sales just one fifth of JM Smucker, Green Mountain is North America’s most valuable coffee company as almost all of its sales derive from its Keurig pods.
In 2013, Keurig accounted for over 74% of fresh coffee pod sales in the region. This was no surprise considering the fact that Green Mountain is the owner of North America’s biggest pod coffee machine manufacturer, Keurig. In 2013 alone, Green Mountain sold 10.4 million Keurig brewers, accounting for a 40% volume share of the world’s single-serve coffee machine market.