Hoping to take a bigger bite out of Europe’s $8 billion single-serve coffee market, Mondelez, the No. 2 coffee maker, will start producing coffee pods compatible with its rival Nestle’s Nespresso machine.
This isn’t the first time that rival brands have tried to collect some profit off of Nespresso’s single-serve brewer, which requires special, premium-priced pods. Nestle has filed patent-infringement suits against several companies for producing the copycat pods, but hasn’t had much success in stopping distribution. In fact, in some markets, Nespresso-branded pods have lost 10 to 20 percent of market share due to more competitively priced alternatives, Bloomberg reports.
The issue lies within Nespresso’s distribution model, which still relies on a direct-to-consumer format, leaving grocery store shelves vacant for competitors’ offerings. While the system has seen sustained success in Europe, Nespresso is looking to expand further into the US, where single-serve competition is even more intense.[more]
“We want to take our brands and offer all the routes to cup,” Roland Weening, vice president of strategy, marketing and innovation at Mondelez told Bloomberg. “We have been evaluating this for quite some time and felt the time was right.” Later this year, the pods, which will be sold under the Jacobs and Care Noire brands, will be available in Germany, France, Austria and Switzerland.
As Bloomberg points out, Mondelez has its own single-serve beverage machine, Tassimo, which has sales close to $1 billion. According to Reuters, Tassimo is “the fastest-growing single-serve system in Europe” and its sales were up 30 percent in the first quarter. Mondelez’s situation isn’t unique, though, as Starbucks recently expanded its line of branded K-Cups for Green Mountain’s Keurig brewer, although it also has its own single-serve brewing system, Verismo.