SIT AT A NESPRESSO BAR, and an employee in a sleek black uniform will eventually ask, “First time here?” This sort of question always feels loaded to me, as if I walked into a swinger’s club and my experience was immediately being gauged.
In this case, the question is part of the show, a cue for the staff’s well-rehearsed spiel. It’s a gentle reminder that there is something different here, something that needs explaining and guidance.
For the uninitiated, Nespresso is a system based on pre-sealed coffee ground capsules. Instead of beans and grinders, Nespresso users place an aluminum "pod" in a specialized machine, which punctures the capsule and forces hot water through it. The result is an espresso noteworthy almost solely because of the automated process that made it.
So far, Nespresso is a massive hit, with $1.7 billion in worldwide sales in 2008. This is especially impressive when you consider the global economic state, and the fact that 90% of its sales come from Europe alone. Nespresso’s continental success has been helped by spokesperson George Clooney, but they won’t have the actor’s presence in the Americas and Asia. Nevertheless, Nestle is banking on these big markets. "Where there is an urban lifestyle, that is where we could do business," Richard Girardot, Nespresso's CEO, said recently.
Companies like Tassimo and Keurig offer similar pod products. The major difference, apart from the celebrity endorsement, is that these competitors focus on a populist approach (Tassimo machines are sold at Wal-Mart, Keurig at Best Buy) while Nespresso forces people to buy their generally more expensive products directly through the company. If people are willing to do that, it's because Nespresso has managed to brand itself as a luxury product, an easy-to-use espresso maker for the privileged few. I first saw this in action at a dinner party, when a Nespresso sampler, resembling a box of chocolate from an expensive European confectioner, turned the night into a “coffee tasting.” Everyone leaned in to the read the menu, which described the various pods with words like “citrus”, “clover” and “nutmeg”, and mentioned “hints”, “harmonies” and “notes”.
This—taking over dinner parties—is part of Nestle’s plan. About half of Nespresso’s sales come through their loyalty program, a club people can join to purchase capsules online, learn about new products and reinforce the idea that they belong to a select crowd.
Currently this club has 7 million members in over 50 countries, and Nespresso counts on them to spread the word. “Every minute of every day, coffee aficionados around the world enjoy more than 8,000 cups of Nespresso,” Says Greg Eppich, a company spokesman. “And more than 50 percent of all new customers first experience the brand through existing Club Members.”
This word of mouth is helped by the fact that the brand has done well with reviewers, including Jaw Brewer of SingleServeCoffee.com, a site dedicated to “portioned” coffee. “It’s top of the line. The coffees are exceptional, along with killer designs and excellent customer service,” he says.
Not everyone would agree with Brewer, but the bars help strengthen that perception. After all, capsules are nothing new. Restaurants have used premeasured coffee pods for more than a decade. What is relatively new is the idea of a coffee bar built entirely around the concept.
So far, Nestle has opened 163 barista-free outlets across the globe, with 9 in North America in the last three years. Like Apple stores, Nespresso bars are stylized, modern and expensive (espressos can cost $4). In fact, they look more like car dealerships than coffee houses, with tiled floors, empty spaces and stiff leather couches. Symmetrical and color-coded, like a space-themed Kubrick set, everything has a futuristic and efficient air about it, as if the parts simply snapped together. In fact, when I first went to one, a couple beside me looked around and exclaimed, “It’s like we’re in the future.”
Statements like this put Scott Rao, author of the Professional Barista’s Handbook, on guard. “I think it’s a nice, professional place, but it’s really a front for selling machines,” he says.
Rao hopes coffee can become the new wine, with baristas and beans garnering as much respect as vintners and grapes. “The problem is that people are used to paying the same for coffee at the best place in the city and at Dunkin Donuts,” he says. “So getting consumers to accept that the better cup really should cost quite a bit more, the way it does with wine, is tough,”
This, in a sense, is what Nespresso is trying to do, playing up the faux luxury and charging double. Problem is, the quality may not match that premium. “It’s not that the coffee is necessarily bad, but they’ve made a lot of compromises along the way,” Rao says, explaining that grind, dose, pressure, and distribution of grounds all have a big effect on how evenly extracted, and how flavorful, coffee is.
“When they put the pod in, it’ll extract ok, but it’ll never extract perfectly. They’re just trying to ballpark a methodology that’ll produce consistency, and consistency may be 6s on a scale of 10, but they can’t go for a 10, because that involves competence in the person making the coffee,” he says. “They’re giving all that up to create consistent mediocrity.”
IF NESPRESSO IS THE FUTURE, does it mean that everything else is part of the past? Has the traditional coffee house become the vinyl record to Nespresso’s iPod revolution? I hope not. Walking into a bar in Italy, for example, is to walk into a serenade of orders, tastes and quirks.
“Un corretto grappa!”
“Caffè con nuvoletta!”
“Con la barba per favore!”
At the heart of this atmosphere is what Italians call “the five Ms”, the key elements of a great cup of coffee. These are: la Miscela (the blend), il Macinazione (the grind), la Macchina (the espresso machine), il Mantenimento (the machine maintenance) and il Mano (the hand, or skill, of the barista). This last point is said to be critical. So much so that if a barista is having a bad day his coffee will suffer, no matter the beans, grind or machine.
All of this started in 1901, at a time when Marconi was testing trans-Atlantic radio signals and the world seemed obsessed with speed and innovation. Luigi Bezzera, the owner of a manufacturing company in Milan, was desperate to increase productivity. Rather than cut his employees’ coffee breaks, he decided to make their breaks shorter. He invented a steam-powered behemoth that produced java faster than anything else before. Called the Tipo Gigante, it made coffee in 25 seconds. The “espresso” (Italian for “express” — or “fast”) was born.
The only downside was that the combination of steam and hot water produced a bitter brew. Desiderio Pavoni, who bought Bezzera’s patent, eventually figured out that the bitterness could be removed, in part, by brewing at 195 degrees. The modern espresso was almost there. The only thing missing was the “crema,” or froth. Enter Achilles Gaggia.
Working as a barman in Milan, Gaggia devised a hand operated piston-based system that forced water through coffee at high pressure, and created the reddish-brown foam out of emulsified coffee oils. The result swept through Europe and caused Englishman Max Bygraves to sing, “Once our beer was frothy, but now it’s frothy coffee, Fings aint’t wot they used t’be.”
Gaggia’s innovation also gave rise to the barista, the expert needed to finesse the machine. This development sparked a social revolution. “Crema” espresso, after all, could not be made at home. It was only available at the bar, a space that became community focal points all over the peninsula, much the same way that pubs became “locals” for the English.
The community feeling at traditional espresso bars is what inspired Starbucks’ CEO Howard Shultz to move into the business. Shultz, it’s recounted in the “Story of Starbucks,” visited several bars in Milan, “where hot, strong coffee drinks – espressos, lattes and cappuccinos – were being served by graceful baristas. The coffee was incredible, but the atmosphere was even better.”
This was the atmosphere my grandfather grew up in, and it’s peppered his entire worldview. Basically, he’s mistrustful of anything that removes human intelligence, work and experience. When we bought an automatic espresso machine, for example, he treated the purchase as a personal affront. “You just push a button? Aren’t you embarrassed?” He asked, nevertheless trying it whenever he could, as if hoping to spot all the corners cut by the manufacturer. “Bah! This coffee is the wrong temperature!”
My father, on the other hand, lives by the notion that we are constantly improving and innovating. He doesn’t see the coffee house as the end of the line, but merely a stop along the continual innovation of a human invention he loves: coffee.
Nespresso is banking on people like him, people who see this automation of life as a natural process, as progress. Unlike Starbucks though, they’re not harking back to anything; they’re claiming to look forward, replacing local gathering places with the notion of a global tribe, united only by capsule flavors and consumer habits; habits controlled by Nestle. Buy a Nespresso machine, and you can only use Nespresso coffee pods with it.
This strategy is not new in the industry, nor does it have a good track record. A machine designed by Krups to work specifically for Illycaffe’s paper pods failed in the early 90’s. Talking to the New York Times, Mr. Illy explained the failure by saying, ''Americans don't want to become prisoners of one particular brand.''
Illy took the experience to heart, creating the Easy Serving Espresso system in 1998. Effectively, this is an open-source espresso making system that encourages adaptation and design, and supports pods, grounds, and any brand that wishes to make coffee for it.
This industry-wide progression to “open-sources” and design sharing reflects a similar move in the computer world, from “closed” proprietary models to web-based applications and the idea that software should be open to everyone. It also helps explain why Nestle’s approach has worked for them when it failed for Illy. After all, Mr. Illy may have been right in his assessment of the American marketplace, but that was before Apple’s second act.
Apple is the one computer company that still controls all of its hardware and software, effectively flying in the face of the industry. Instead of being shunned, however, they’re uber-cool. This wasn’t always the case. Much like the Nespresso being an affront to “proper” espresso machines, Macs were once seen as a type of anti-computer, with the joke being:
“Why aren't more Mac owners computer literate?”
“They would be, if they had a computer.”
Apple changed this perception by playing up their supposed uniqueness, and emphasizing the idea of a "MAC person" and a "PC person". They did this by following marketing principles that sell the idea of improving something that’s already good, and focusing on people doing something.
At the heart of this, according to Steve M. Chazin, of the MarketingApple.com blog, is a memorable spokesperson or message, (a la “The Computer for the rest of us”), and a focus on packaging and style; details that catch the eye and make first-timers remember the experience. The hope is that these “early adapters” spread the word for you.
Rao sees the similarities, but also thinks there’s a difference. “Both companies are sophisticated with their marketing and the influence over consumers, but I think Apple actually gives you more value for your money than their competitors. Whereas Nespresso isn’t.”
Part of what’s fueling this perception is the major strike against Nespresso: its environmental impact. “Given the times – disposable anything is not in vogue,” admits Brewer, adding that the disposable capsules are still better than leaving a pot of coffee on a burner all morning.
So far, the company only has a recycling program in Switzerland, but they are reacting to the criticism.
“Nespresso has started a pilot recycling program in New York City. Consumers can also take their used capsules to Boutiques and Nespresso will do the rest,” Eppich said.
Ultimately, success in North America depends on the company’s ability to copy the Apple template, and convince consumers they’re “pod people”: drinkers who will pay more for a product that may or may not be high-end, but which nevertheless looks good.
Essentially, they need to convince people like me, people who aren’t tied to any particular worldview, and who can see the value in both an iPod and a record player. I don't know if they will.
Like my father, I accept the inevitability of something like Nespresso, and have been back to their bars — even if I have a hard time paying their premium. Of course, this might just be my grandfather’s influence, his point of view peering through me at the disgrace unfolding, like someone watching a magician, and hoping to catch the fraud.