Nespresso creates a buzz in china with its capsule machines

Mark Leenders prefers to start his morning with a strong shot of espresso before leaving for work, and he regularly drinks 10 cups of coffee a day.

As the Asian marketing director for Nespresso, a specialized home-use coffee machine brand made by the Nestle Group, Leenders knows it may be unlikely for his Chinese customers to drink as much coffee as he does, but he says it is only a matter of time before the coffee machine becomes a common sight in Chinese kitchens.

"You see online and offline markets growing with all kinds of home appliances that were not available 10 to 15 years ago, that's mainly due to the fact that Chinese consumers have more income at their disposal to purchase high quality products, pursuing a Westernized way of life," says Leenders, who has been working with Nespresso for nearly 20 years.

"This will be the case for coffee machines as well, as those coffee lovers who drink in a coffee house or in the office canteen will eventually want the same luxury at home."

Swiss food giant Nestle has made significant inroads in China over the past two decades with Nescafe, its brand of instant coffee. The company hopes to piggyback on its popularity in China's instant coffee market with Nespresso, a more high-end brand of home-use machines that brew a variety of espresso-based drinks from single-use coffee capsules or pods.

Nespresso, one of Nestle's best-performing brands, recorded a 30 percent increase in profits last year despite the difficult economic climate, but demand for it is relatively small in China compared with the developed markets in Europe and America.

"That's because you start at a small base, but it is growing very fast and there is no sign of slowing down," says Leenders, who is in charge of accelerating profitable growth in Asia and exploring new markets for Nespresso in the region. "Trends are very favorable. Ground coffee is getting more popular every day."

Though he knows it will be no easy task to sell pricey coffee machines in a country with a deep-rooted tea culture, it is not an impossible mission as people in China are now drinking more coffee than before.

"I don't expect to change Chinese habits from drinking tea to coffee but there are more coffee shops than there were 10 years ago. So it will take some time, maybe 10 years or 20 years, I don't know, for the coffee machines to take over at home too," he says.

Stacy Wan, a research analyst on China with Euromonitor International, a London-based market research firm, says it is a sign of the times that there is a huge market for these pricey, sleekly designed coffee machines.

"When they first became available for households, coffee machines were more likely to be found in the kitchens of high earners rather than average people, but as coffee is becoming a big part of Chinese daily life, this is no longer the case," she says.

"Nothing will stop coffee lovers from enjoying the luxury outside of working hours."

Nespresso is considered a luxury product in China's coffee-machine market, in which Dutch company Royal Philips Electronics and Sweden's Electrolux Group have the lion's share with lower-cost filter-coffee machines. Leenders, however, thinks this gives Nespresso an edge over its rivals.

"There are many different coffees you can make with the machine. No matter if it is cappuccino or latte macchiato, you need espresso at the base," he says. "So in order to brew the best espresso, water needs to be boiled to the right temperature and pressed through the coffee in the capsule, but you don't have that pressure in the filter machine at all."

Leenders says Nespresso is a premium brand with a price tag ranging from 1,788 yuan ($283, 217 euros) to 3,988 yuan, targeting top-tier consumers who are frequent travelers and are better educated.

"Yes, it is higher than the average price, but if you want the best coffee in town, you have to pay a little bit more," says Leenders, an espresso drinker who likes his coffee plain and strong with no sugar or milk - the best way to appreciate the aroma of coffee, whether it is fruity, bitter or woody.

He was originally transferred to Asia as regional commercial director of Nestle Nespresso SA in 2006, and a year later he helped open the brand's first boutique store in China.

Unlike many electronic groups that use Suning and Gome - two major home appliance retailers in China - as distribution channels for their coffee machines, Leenders explains that Nespresso reaches out to consumers and extends its brand image through these boutiques.

The brand's flagship in Beijing's exclusive Shin Kong Place serves up tailored coffee drinks and more than 15 types of espresso shots ranked by strength, taste and origin.

lvchang@chinadaily.com.cn

(China Daily 10/12/2012 page11)