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Precise SWOT Analysis of Nespresso – A Global Manufacturer of Coffee Machine

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Previously we did the extensive SWOT analysis of a global food and beverage firm Nestle, this time we will look at the SWOT analysis of Nespresso. 

Nespresso is one of the best coffee machine manufacturers in the World. The story of Nespresso began more than 30 years ago with a simple idea: let anyone create an excellent espresso coffee cup – like a worthy barista. Since its inception in 1986, Nespresso has redefined and changed the way millions of people enjoy their espresso coffee and create a global coffee community. 

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Before we begin with the SWOT analysis of Nespresso, here’s a deep dive into the company’s history, founding, products, financial status, competitors.

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About Nespresso

SWOT Analysis of Nespresso - Nespresso 1986

           (Nespresso 1986, Source: Google Images)

Creating the work of Luiggi Bezzera, who began developing the espresso machine in the early 1900s, a new system was developed that would allow anyone to prepare, and enjoy, the perfect Italian espresso: the world’s first separate coffee system.

In 1986, they had great success, and Nespresso was born – with their first coffee machine (C-100) and four separate coffee combinations: Capriccio, Cosi, Bolero (now Voluto), and Decaffeinato.

For more than 30 years, their creations have redefined the way millions of people enjoy their coffee, growing from a strange sight in Switzerland to a world-class form in 82 countries. Yes, they continue to grow and continue to focus on delivering the best quality in all categories of their core series while at the same time maintaining a straightforward relationship with our customers.

 

Quick Stats on Nespresso
Founder Eric Favre
Year Founded 1986
Origin Switzerland
No. of Employees 13,500+
Company Type Société Anonyme
Market Cap $ 359.14 Billion (2021)
Annual Revenue $ 92.36 Billion (2021)
Net Income/ Profit $ 12.2 Billion (2021)

 

Products of Nespresso

SWOT Analysis of Nespresso - A 109 Nespresso

                      (A 109 Nespresso, Source: iStock)

  • Coffee Capsule/Pods
  • Coffee Machine


Competitors of Nespresso

  • Bunn
  • Keurig Dr Pepper
  • West Bend

After understanding the core of the company, let us now proceed to the SWOT analysis of Nespresso. 


SWOT Analysis of Nespresso

SWOT Analysis stands for – Strengths, Weaknesses, Opportunities, and Threats Nespresso Capsules face both internally and in the main work environment. Strength and Weaknesses are often restricted within the company – resources, skills, and regulations.

Opportunities and threats are factors that are considered when considering market trends and other factors such as legal and environmental, financial, political, social, health and safety, and technology.

To better understand the SWOT analysis of Nespresso, refer to the infographic below:

SWOT Analysis of Nespresso - SWOT Infographics of Nespresso

So let us first start by looking at the strengths of Nespresso from the SWOT analysis of Nespresso.

Strengths of Nespresso

  • Demand in Nation: Nespresso manufactures a very high-quality coffee machine as the coffee market is very high in the UK and this brand has a good product experience out there.
  • Global Presence: Nespresso is not only present in Switzerland but it is also a global brand with a presence in 82 countries because of its redefined variety and innovation.
  • After-Sale Services: Manufacturing and selling the product is not the way to achieve success, retaining customers through providing the best after-sale services is the way to success. Nespresso has very strong customer service and a high number of loyal customers.
  • Strong Distribution Channel: Nespresso has a large distribution network consisting of 190 stores in more than 50 countries making Nespresso a tough competitor in the coffee machine manufacturing industry.
  • Complete B2B Solution: Nespresso machines are mostly purchased by corporates, hotels & restaurants and Nespresso is profound in providing after-sales solutions to these buyers.
  • Social Media Presence: Nespresso has a strong social media presence with more than 73 thousand followers on Instagram. They have a very attractive page to indulge coffee as an art and connect it with the luxury lifestyle.
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Weaknesses of Nespresso

  • Organizational Culture: It seems that the organizational culture of Nespresso is still dominated by turf wars within various categories, resulting in managers keeping information close to their chests.
  • Weak External Communication: Project Management is more focused on internal delivery than taking into account all the interests of external stakeholders. This approach can lead to weak relationships with the community and customer retreat.
  • Lack of Variety of Job Capacity: Nespresso is not different enough as most of its growth so far lies in its domestic market. This could reduce the potential for the success of Nespresso in the international market.


Opportunities for Nespresso

  • Nearby Market Opportunities: Nespresso can explore nearby industries strategic plans to further market growth especially by enhancing current product and service features.
  • Increase in Disposable Income: Nespresso can use a growing revenue stream to create a new business model as customers begin to pay more for their products.
  • Market Size Growth and Popular Consumer Development: Over the past decade and a half the size of the market has grown exponentially.
  • Profitable Opportunities in International Markets: Globalization has led to opportunities in global markets. Nespresso is in a good position to take advantage of these opportunities and increase market share.


Threats to Nespresso

  • Cultures of Sticky Prices in the Industry: Nespresso operate in an industry where there is a culture of sticky values.
  • Growth Prevention: Nespresso should protect against the growing risk from – storing data in the international market to risk sharing by operating countries in a different economic cycle.
  • Credit Binge Post-2008 Recession: Easy access to credit can be more than ever, so Nespresso Capsules should focus on reducing its dependence on debt to increase it.

This ends our precise SWOT analysis of Nespresso. Let us conclude our learning below.

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To Conclude

The coffee market has shifted from traditional coffee to speciality/quality coffee. These trends showcase their favourite coffee flavours, which are in line with the Nespresso business model. 

Nespresso has cut the niche as a fashionable, ultra-premium beverage by innovating and a strong brand stand. It is recommended that Nespresso should use an in-depth communication strategy using its Club, product agents, and sponsors to expand it to other international markets.

Digital technology is also emerging, thus, the need for digital marketing is elevated throughout the years. If you are interested in grasping a skill or investing in upgrading your skills in marketing, feel free to check out IIDE’s 3 Month Advanced Online Digital Marketing Course to know more.

We hope this blog on the SWOT analysis of Nespresso has given you a good insight into the company’s strengths, weaknesses, opportunities and threats.

If you enjoy in-depth company research just like the SWOT analysis of Nespresso, check out our IIDE Knowledge portal for more fascinating case studies.

Thank you for taking the time to read this, and do share your thoughts on this case study of the SWOT analysis of Nespresso in the comments section below.

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Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]

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