Page last updated at 23:38 GMT, Thursday, 5 March 2009

George Clooney's favourite coffee

By Will Smale
Business reporter, BBC News

George Clooney advertising Nespresso
Nespresso describes George Clooney as its 'global ambassador'

Hollywood heartthrob George Clooney stands nonchalantly in front of an espresso machine, when suddenly an attractive woman walks up, flirts a bit, and steals his coffee.

Perplexed, but undeterred, he starts to make another. Only for another apparent supermodel to immediately come across and accost him.

While it may generally be a tough life for Mr Clooney, the above scene is from a current TV advertisement.

Welcome to the exclusive world of Nespresso, the upmarket coffee capsule system made by Swiss food giant Nestle that has developed a cult-like following.

Helped by the advertising prowess of Mr Clooney, the brand's 'Global Ambassador', Nestle recently reported that worldwide sales of Nespresso hit 2bn Swiss francs ($1.7bn; 1.2bn) last year, a recession-beating 30% rise on 2007.

And it was the eighth consecutive year that Nespresso's annual sales have risen by 30% or more, making it the fastest growing of all of Nestle's many products.

At a time when other discretionary goods are seeing a fall in sales as the global recession knocks demand, what could be the reasons behind Nespresso's continuing success?

'Ease of use'

First launched in 1986, the Nespresso system is based around individual, sealed pods of premeasured ground coffee.

Once you have the machine, you can't buy any alternative to the firm's own capsules - the repeat custom is built in
Ian Hart, editor of The Public Ledger

You simply pop the aluminium capsule or pod into the futuristic-looking coffee maker, automatically puncturing it in the process, and press a button that forces through the hot water.

Seconds later you have a perfectly acceptable cup of espresso, and the used pod is ejected into the bottom of the coffee maker.

There are no spillages or coffee grounds scattered around your kitchen to clean up, and there are a host of different blends to keep you interested, each getting its own differently coloured pod.

For some coffee industry analysts, it is Nespresso's ease of use that explains a large part of the brand's popularity, but that is only half the story.

"It is certainly a very refined product, very elegant and easy to use," says Jeffrey Young, managing director of retail coffee experts Allegra Strategies.

"Traditional coffee machines at home never quite work out for many people, as they can be messy and complicated. By contrast, Nespresso's convenience can be very appealing, and the coffee is good quality.

"But what is behind it? The world's largest coffee company, and a huge, huge marketing spend centred on George Clooney."

Exclusive club?

Advertising analyst Jim Boulton, a partner at agency Story Worldwide, says that while he personally thinks Nespresso "exemplifies consumerism gone mad", he admits its marketing has been "quite simply first class".

Nespresso capsules
There are a host of different Nespresso blends

"The marketing material at every touch point is polished and has data capture at its heart," he says.

"Consumers are automatically enrolled in a loyalty programme, and receive a regular glossy magazine that re-enforces the notion that consumers are members of an exclusive club."

At the core of Nespresso's aim for exclusivity is the fact that while the machines are widely available, you can only buy the coffee pods direct from the company.

This can be done either via its website, over the phone, or from a very limited number of its own shops - which it prefers to call "boutiques". Of which it has just five in the UK.

The basic pods cost 25 pence each, but when postage and packing is added, the cost of each rises to 30p.

This is obviously much cheaper than going to your local Starbucks or Costa, but at 30 for a minimum order of 100 capsules, the price certainly adds up, and it is considerably more expensive than buying bags of loose coffee.

Special offers

Ian Hart, editor of commodities magazine The Public Ledger, points to another factor behind Nespresso's success - its machines will only work with Nespresso capsules.

Nespresso machine
The machines can often be found on special offer

"Nespresso is very good at working with the manufacturers to keep the cost of the machines down, and you can get them for less than 100, with special offers on top [such as cash back deals]," he says.

"And once you have the machine, you can't buy any alternative to the firm's own capsules - the repeat custom is built in."

While the quality of Nespresso coffee is considered good enough for it to be served by a number of Michelin-stared restaurants, such as Heston Blumenthal famed Fat Duck in Berkshire, its critics argue that like all big coffee firms, parent company Nestle doesn't pay coffee farmers enough for their crop.

"Nespresso's advertisements are so glossy and seductive that the consumer can forget there was ever a coffee farmer in the first place," says film-maker Nick Francis, who co-directed Black Gold, a recent documentary on the global coffee industry.

"While Nespresso is undoubtedly fantastically convenient, if a consumer was to buy an ordinary coffee machine, then he or she is free to buy any coffee they like, such as from a small company more directly linked to the actual farmers, rather than being limited to just the one brand."

Nespresso counters that 35% of its coffee is now bought under a scheme called AAA Sustainable Quality, which in return for farmers producing higher quality beans, Nestle pays them 10% more than premium market prices. It says it expects 50% of its coffee to reach this standard by next year.

Wasteful packaging?

Other Nespresso critics say the aluminium pods are very environmentally unfriendly, as most customers will simply throw them in the bin.

The company says it has a recycling system in place in Switzerland, and that it hopes to extend this to other countries.

In the meantime, it is possible - if a little fiddly - for customers in other countries to open up and rinse out the used pods themselves, before putting them out with their other recycling.

This must be what Mr Clooney does.

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