Case Name :      Nespresso and the U.S. Market

Authors :           Edward Boon, Colin Campbell, Leyland Pitt

Source :             Ivey Publishing

Case ID :            W14362

Discipline :        General Management

Case Length :    12 pages

Solution Sample availability : YES

Plagiarism : NO (100% Original work)

At the beginning of 2012, Nespresso, a manufacturer and distributor of home-brewed, single-serve coffee machines and capsules, is considering how best to increase its share of the U.S. market. It had always relied on organic growth through its own retail stores and a few premium department store chains. However, between 2005 and 2011, the demand for capsule coffee boomed, and this attracted a number of new competitors, including Starbucks, while existing competitors increased their marketing expenditures. At the same time, Nespresso’s patents were expiring, and some supermarkets started selling generic capsules for Nespresso machines. How should Nespresso change its strategy to ensure future growth? Should it relinquish its tightly controlled distribution system in order to offer increased convenience to consumers? Should it alter its product to better match the U.S. taste for milk-based coffee? Or might an increase in advertising spur demand?