x Abu Dhabi, UAEWednesday 26 July 2017

Coffee world in a stir with rivalry hotting up

What's Down: The Ethical Coffee Company plans to introduce its first coffee machine as the chief executive Jean-Paul Gaillard steps up competition against Nespresso.

Ethical Coffee Company, a Swiss maker of Nespresso-compatible coffee capsules, plans to introduce its first coffee machine as the chief executive Jean-Paul Gaillard steps up competition against Nespresso.

The machine will work with any single-serve capsules that fit into Nestlé's Nespresso system and will go on sale in France in February, said Mr Gaillard.

Ethical Coffee expects to ship 150,000 to 250,000 units next year, he added.

"It's an open system," said Mr Gaillard, adding it would work with capsules from Ethical Coffee, DEMaster Blenders 1753, or any other Nespresso-compatible coffee. Ethical Coffee will sell the machine under licence with retailers, and the response had been "extremely positive".

He aims to carve out more revenue for the Fribourg, Switzerland-based Ethical Coffee as he competes with Nespresso, a brand he ran between 1988 and 1997. Nespresso, which generated 3.5 billion Swiss francs in revenue last year, or about 4 per cent of Nestlé's sales, has been one of the company's fastest-growing major brands over the past decade.

Ethical Coffee has fought a legal battle with Nestlé since it began selling Nespresso-compatible capsules in 2010. Retailers such as Casino Guichard-Perrachon sell the coffee under their own brands.

The Ethical Coffee machine will be capable of making both espresso and milk-based coffee drinks, said Mr Gaillard. The price probably would not exceed €150 on average, he added.

Nespresso currently offers rebates of as much as €60 on its line of U machines, which cost €139 in France. Ethical Coffee's capsules are sold in more than 10 countries, including Germany and Austria. The company plans to produce about 500 million capsules next year, up from 280 million this year, said Mr Gaillard.

Nestlé sold more than 6.5 billion Nespresso capsules in 2010. The company does not regularly publish its annual production.