Migros declares war on Nespresso. She is launching a “coffee capsule system without capsules” that is designed to produce no waste. The media hype of the past few days may have been greater than the innovation behind the loudly announced product.
The “biggest product innovation in the history of Migros” is a small ball.
The fact that a cooperative appears modest is not an iron law. Migros proves the opposite. On Tuesday she made a daring announcement to a media conference. The “biggest product innovation in the history of Migros” was announced. And because this story is 97 years old and the domestic consumer world has seen many innovations come and go during this time, one could be curious.
“Make the world better”
However, the dramaturgy didn’t quite work out. The tension collapsed even before the lavish presentation, which didn’t skimp on pathos. Some media had learned before the official date that the supposedly groundbreaking innovation was a product that did not have to be explained to households at length. It’s about coffee, namely portioned coffee, as it has been drunk around the world since the Nespresso capsules were invented 36 years ago.
What is innovative about now? Migros speaks of a “capsule system without a capsule”. Because instead of the capsules, which are usually made of aluminum or plastic, the new Migros product uses a small ball of pressed coffee. The not immodest claim of Migros is that “every coffee ball makes the world a little bit better”. This is because this coffee, which is encased in a patented protective layer and protected from oxygen, can be completely composted.
The coffee balls are surrounded by a protective layer that is fully compostable.
Doesn’t that already exist? Yet. Compostable coffee capsules have long been available on the market. At Migros, however, it is said that such capsules cannot usually be disposed of easily in your own garden or in the organic waste bin. And with the compostable pads, which have also been available for a long time and in which the coffee is surrounded by filter paper, the loss of aroma is a big problem, says Frank Wilde, who is responsible for the product at Migros – and used to work at Nespresso.
Same price as Nespresso
The new system is called Coffee-B. First of all, it consists of the coffee balls. They are produced in Birsfelden and cost 51 centimes a piece – a premium price that is similar to that of Nespresso capsules. Second, you need a suitable machine for 169 francs, which comes from China but should at least be repairable. The whole thing is initially available in Switzerland and France. The system is also scheduled to be launched in Germany in spring 2023; other markets are in the planning stage, they say.
For five years they worked in secret on this project, said Fabrice Zumbrunnen, President of the General Directorate of the Federation of Migros Cooperatives. And he is convinced that the product has the potential to change the coffee market. Today, around 63 million capsules are sold every year worldwide in this market, resulting in an annual waste volume of 100,000 tons. Despite the partial possibility of recycling, a large proportion of the capsules still end up in the garbage.
Zumbrunnen can do with positive headlines. Migros continues to enjoy a solid market position, which is also due to the fact that competition in the local food trade is less intense than in neighboring countries such as Germany or Austria. However, the expensive structure with many independent regional cooperatives that can afford separate administrative units is putting increasing pressure on efficiency. In terms of organization, the competitor Coop is much leaner.
The danger of superlatives
Whether the “biggest product innovation” will deliver the hoped-for growth spurt remains to be seen. Zumbrunnen dares not make any predictions. At least in terms of marketing, Coffee-B has achieved success. For example, one has not seen a similarly high number of journalists at a media event held by a Swiss company for years. But this interest probably says more about the state of the media industry than about Migros. And such hype is difficult to repeat. Because superlatives wear out quickly.
Jean-Philippe Bertschy, analyst at Vontobel, also points out that the market penetration of capsule systems in Switzerland is already very high. It remains to be seen how many coffee drinkers will now be willing to switch. Nestlé continues to achieve growing sales with Nespresso, especially in the USA, but also in Europe in the long term. And with a research budget of 2 billion francs, Nestlé is well endowed for innovations towards more sustainability, also in the area of packaging. The saturated market is therefore highly competitive.