ZURICH Nov 21 Nestle SA has named a
new head at its Nespresso unit which faces rising competition
from cheaper upstarts seeking to muscle in on the $8 billion
single-serve coffee market.
The Swiss-based foods group said on Wednesday Jean-Marc
Duvoisin will from March lead Nestle's fastest-growing big
brand, replacing Richard Girardot who becomes head of the
group's French activities from April.
Duvoisin is a 26-year veteran of Nestle who currently serves
in a human resources role, having previously been market head of
Colombia, Venezuela, Ecuador and Mexico.
The change was set into motion by the retirement next April
of Marc Caira as head of Nestle's professional unit, which sells
food to restaurants and canteens. Nestle France head Martial
Rolland will succeed Caira at the professional unit.
One-cup coffee makers and the coffee-filled cups, discs or
pods they use to make barista-worthy individual drinks account
for just 8 percent of total worldwide coffee sales, but that
share is quickly rising.
Nespresso's George Clooney-marketed system has proved a hit
with espresso coffee lovers across Europe with underlying sales
growth of between 20 and 40 percent a year and sales of 3.5
billion Swiss francs in 2011.
The group is building a third factory in Switzerland to meet
But Nestle is coming under threat from a raft of competitors
including Starbucks Corp, which recently announced
competitive prices for its Verismo coffee and espresso makers.
"One year ago I would've said Nespresso can run itself, but
in the meantime it's grown very competitive with the whole
capsule wars," Kepler Capital Markets analyst Jon Cox said.
Green Mountain's Keurig one-cup coffee brewers
control more than three-quarters of the U.S. market. Nespresso
espresso makers hold a 35 percent share globally a n d has been
trying to make a U.S. push.
Douwe Egberts (part of D.E. Master Blenders )
manufactures L'Or espresso capsules which can be used in
Nespresso machines, although it faces legal challenges from
Incoming Nespresso head Duvoisin's experience in Latin
America markets may be a sign Nestle will seek new markets for
Nespresso, Cox said.
"Westen Europe is seen as tough, so they may be saying 'we
need to expand Nespresso in developing markets in the sort of
cities where the standard of living is much higher than in
emerging markets,'" said Cox, who rates the stock at "hold" with
a 60 franc target price.