Interview: How Nespresso blends sustainability with success

The issue of sustainability has shot to the top of the business agenda over the past few years.

Aided, in no small part, by Sir David Attenborough’s BBC series Blue Planet, concerns around plastic pollution, in particular, have been thrust firmly into the consumer consciousness since its broadcast in 2017.

In a world populated by an increasingly ethical consumer, retailers and brands have battled to adapt their stores, supply chains and packaging to keep up with demands to ‘do the right thing’, and beef up their sustainability credentials.

For some, however, that has been a central part of their business models long before the ‘Blue Planet effect’.

Nespresso, the coffee giant created by Swiss food and drink conglomerate Nestlé, has had sustainability at the heart of its strategy for its 33 years of existence. 

“It’s the right thing to do,” Nespresso’s UK and Ireland boss Guillaume Chesneau tells Retail Week. “We belong to a large business and this large business has existed for good reasons. Nespresso is no exception to that.

“We have to think about how we make a business that A, performs, and B, in a sustainable way. Those things aren’t incompatible.”

Chesneau delves into his leather shoulder bag, pulls out a glossy A4 book – made from recycled paper – and places it on the table.

“This is the bible,” he says. It is a 100-page document, emblazoned with the title: ‘The Positive Cup’ – the name of Nespresso’s strategic drive, started back in 2003, to ensure its coffee has a positive impact on the planet.

Chesneau reels off a series of statistics to provide a snapshot of what’s inside.

Nespresso has committed to investing CHF500m (£413.8m) into its sustainability efforts between 2014 and 2020.

It planted 1.4 million trees in coffee-producing regions between 2014 and 2016, and aims to have planted five million by the end of 2020.

Nespresso will remove all single-use plastics from its ranges by the end of 2020.

Every single one of the aluminium coffee capsules it produces can be recycled. The business runs a recycling scheme for its pods, allowing customers to drop off bags of used pods at 7,000 CollectPlus convenience stores, 300 Doddle stores and any Nespresso store. It spent CHF24.6m (£20.4m) on collecting and recycling old capsules in 2016 alone.

Chesneau goes back to his bag and pulls out an aluminium green pen made, he explains, from recycled capsules.

Sustainable sourcing

Nespresso’s efforts reach far beyond recycling, though. In June, Chesneau spent time in Zimbabwe, one of the 12 countries in which the brand’s 70,000 farmer partners are based.

Chesnaeu explains that partnering with coffee farmers in the African nation is part of a wider Nespresso pledge “to work with countries that have been hit by hardship, be that political, warfare, or natural disasters”. He adds Puerto Rico – hit by a cyclone in 2017 – and Colombia, which has been gripped by civil war, to that list.

Prior to the economic and political turmoil that has ravaged it since the turn of the millennium, Zimbabwe exported 15,000 tonnes of coffee to other countries. It now exports just 400 tonnes, but Nespresso is responsible for half of that business.

“On paper, that 200 tonnes has a small impact, but we are paying a lot more money for the coffee and we are also training the farmers to do a better job and grow better coffee,” Chesneau says.

“All the farmers are really excited about it because we are there for the long term trying to create a sustainable coffee-sourcing model that creates shared value for our customers, suppliers and also our business. If we don’t do this globally, we risk not sourcing a sufficient quality of coffee to please our customers. So it’s a win-win.

“We get a clear benefit because we are able to go to our customers selling a very unique coffee. Our customers love it – it’s a very good value proposition for them because we give them what other coffee brands maybe don’t – and in addition to this we are supporting the community.

“This is a clear approach that the business has had for many years and it helps us perform to [financial] expectations.”

The bean-counters at its parent company would struggle to disagree. In its latest full-year results, Nestlé said Nespresso delivered “mid single-digit organic growth” in 2018. Although it does not break out profit figures for Nespresso specifically, Nestlé hailed the impact the coffee brand had in boosting the operating profit margin of its ‘other businesses’ sector – of which Nespresso is a part – by some 60 basis points.

Stores for the senses

The “brand equity” it has created among consumers through its sustainable credentials has certainly played a part in that success. Nespresso has built a loyal customer base – it has thousands of members in the UK, although Chesneau will not be drawn on a number – who regularly order its capsules online.

But Nespresso has blended that with a multichannel model, combining its lucrative ecommerce channel with a bricks-and-mortar estate that offers a genuine point of difference.

In the UK, Nespresso operates 55 boutiques, many of which are in major cities such as London, Manchester, Birmingham, Liverpool and Leeds. And despite the turbulent conditions on the high street, Chesneau insists the business is committed to stores – and wants to open more in the UK.

Chesneau, the former boss of Nespresso’s Sweden and New Zealand businesses, says: “There is a clear trend towards omnichannel. People want to have the flexibility of where they purchase, when they want, how they want, with a fluidity of service that is taken for granted, especially in this market. The UK and Ireland is probably one of the most advanced markets in the world. I’m stunned by the levels of service you get here.

“In a Nespresso boutique, you experience the brand with all your senses. You can look at the machines, you can look at the accessories range, you can smell the coffee, taste the coffee – you are immersed in the brand. This is something no other channels can deliver. This is why the retail network we have is critical to the success of our brand.”

Chesneau says Nespresso has “plans to develop” that further, particularly with its “micro boutiques”, a smaller format that will allow it to increase its presence in smaller cities.

A competitive coffee market

Despite its success to date in the UK and growth plans, Chesneau is taking nothing for granted in a fiercely contested market – one in which businesses from Costa Coffee to the Co-op are seen as competitors.

“We are in the coffee category, which is immense. That starts from anything and everything that tastes like coffee. Directly or indirectly, that’s competition,” Chesneau says. “Our portion coffee is a tiny, tiny piece of the cake. We are a very small part of the overall coffee market.

“Are we under pressure from the competition? Yes, like every business. But do we have the opportunity to grow and expand? Of course. The only way is up.

“Complacency is a killer for any type of business. Provided that you challenge yourself, even when things are good, you will make step-changes that have a significant impact”

Guillaume Chesneau, Nespresso

“Competition is very healthy and with success comes competition. Nespresso was created more than 30 years ago and no-one had the idea that you could drink coffee out of a capsule. Now there are more than 400 brands globally that are doing the same. We pioneered this, we have been doing a very good job at it, but competition makes sure we keep up to speed with everything.”

He adds: “Complacency is a killer for any type of business. Provided that you challenge yourself, even when things are good, and you are always trying to improve yourself, you will make step-changes that have a significant impact.”

As he sips the final mouthful of his flat white – a surprisingly mundane choice for a Parisian who has spent 11 years with Nespresso – Chesneau has one final thought when asked what trends we should expect to see Nespresso latch onto next.

“If I had a crystal ball I could tell you. I don’t know,” he admits with a wry smile. “But our focus is very much to control what we do, and only do what we can control.”

It’s a recipe that has served Nespresso well to date – and one that should help it brew up a sustainable future, both for its business and the planet.