- Vancouver Sun -
Nestle SA, the world\'s largest food company, is betting the demand for high-end espresso machines is just starting to take off. That\'s why it plans to open as many as 40 boutiques across North America - including one in Canada\'s latte capital, Vancouver - selling its Swiss-made Nespresso coffee machines within four years.
GENEVA -- Nestle SA, the world's largest food company, is betting the demand for high-end espresso machines is just starting to take off.
That's why it plans to open as many as 40 boutiques across North America -- including one in Canada's latte capital, Vancouver -- selling its Swiss-made Nespresso coffee machines within four years.
Nestle is out to capture growth in a market that managers expect may triple in that span.
The second U.S. Nespresso shop will open Oct. 24 in New York's SoHo neighborhood. The first opened in Manhattan last year.
The Switzerland-based Nestle unit plans to open at least 30 U.S. stores within three to four years, Roberto Eggs, director of international expansion, said in an interview. Two more are planned for Canada, including the Vancouver outlet and another in Montreal.
While espresso machines account for just one per cent of the 26 million coffee machines sold each year in the U.S., Nespresso's local sales are rising more than 40 per cent as owners of steam coffee makers opt for higher-pressure models, Eggs said.
Nespresso also sells its gear through U.S.-based gourmet-cookware chain Williams-Sonoma Inc., which announced earlier this year it is opening its first store in Vancouver this fall at 2903 Granville St.
But anyone needing a Nespresso fix right away could contact Swiss native Marco Herrmann, whose Burnaby-based Swica Importers ( www.-swica.ca [http://www.-swica.ca]) offers Nespressos in a price range from $249 all the way up to $2,900.
Herrmann pointed out in an interview that the Nespressos are already in some major Vancouver hotels, including the Four Seasons and the Hyatt Regency, as well as several local restaurants, if anyone wants to see for themselves what the caffeine buzz is about. Or you can check out his showroom at 1122 Boundary for a free sample.
The Nespresso is billed as an idiot-proof machine where all you have to do is fill a chamber with water, then insert a prefabricated capsule containing ground beans. The capsule gets punctured by the machine, then discarded. The brewing takes about 20 seconds, delivering what Herrmann describes as "consistently high-quality authentic espresso each time."
Nestle now gets most of its sales from France, Switzerland and the Benelux nations of Belgium, the Netherlands and Luxembourg. U.S. shoppers buy about 350,000 high-pressure espresso machines annually, compared to 650,000 lower-pressure steam machines, according to Eggs, who said the high-pressure market expanded by 12 percent in the past year.
Nespresso may boost total sales by 30 per cent a year to $2.1 billion in 2009, about 20 per cent above its goal, said Patrik Schwendimann, an analyst at Zuercher Kantonalbank. He has an "outperform" recommendation on Vevey, Switzerland-based Nestle, the maker of KitKat chocolate bars.
"If they succeed in new markets like the U.S., the potential would be much, much higher," Schwendimann said. "The fact that U.S. consumers are now used to paying a premium for a quality coffee will also help Nespresso."
Americans were slow to pick up on competitor Kraft Foods Inc.'s $169 Tassimo machine, leading the company to take a $245-million charge last year as sales lagged behind its forecasts. Nespresso is targeting wealthier customers.