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Nestle to bring technology to teatime

Nestle to bring technology to teatime
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First Published: Tue, Jun 01 2010. 07 25 PM IST

New capsule: A file photo of an employee using a Nespresso coffee machine in Switzerland. Nestle’s new product, Special T, will be introduced soon in France and, if successful, then in large European
New capsule: A file photo of an employee using a Nespresso coffee machine in Switzerland. Nestle’s new product, Special T, will be introduced soon in France and, if successful, then in large European
Updated: Tue, Jun 01 2010. 07 25 PM IST
Paris: Are European tea drinking habits, refined over 400 years or so, ripe for change?
Nestle SA, the Swiss food and beverage giant, thinks so. The company plans to follow up on the success of its Nespresso coffee pod system in Europe with a similar product for the tea market. Code name: Special T.
It will be introduced soon in France and, if successful, then in large European countries. After that, potential markets include Russia, Turkey, the US and even the largest cities in China.
New capsule: A file photo of an employee using a Nespresso coffee machine in Switzerland. Nestle’s new product, Special T, will be introduced soon in France and, if successful, then in large European countries. Antoine Antoniol/Bloomberg
“People love their tea moment,” said Henk Kwakman, the Nestle executive who will head Special T, having previously led Nespresso. “You interrupt what you do. It’s a special moment in a day, and people have strong emotions associated with it.”
Nestle did not invent the coffee pod—that honour is claimed by Illy of Italy—but the Swiss company has parlayed it into a global marketing success.
The Special T process is much like that used by pod coffee machines. Sealed aluminium capsules containing tea leaves are inserted into the machine, which then recognizes which of the 25 blends—including black tea, green tea, white tea, blue tea and infusions—has been selected. Brew time and water temperature are then regulated to match the blend.
After an introductory offer, the machine will sell in France for €129 (around Rs7,400), with pods costing €3.5 for 10. A new filter will be offered with bulk purchases of 150 pods. The cost is similar to that of Nespresso, which prices its coffee between that in the supermarket and the cafe.
Can the same model work on tea lovers?
“It will take a while,” acknowledged Kwakman, a wiry Dutchman with an ebullient manner. “There’s still a job to explain why the machine is there and how it will offer benefits.” In his view, these include bringing quality tea, brewed as intended, to a broader public.
In some respects, Nestle’s timing appears favourable.
Tea’s perceived health benefits—it has a lower caffeine content than coffee and studies point to anti-aging properties—have helped the market expand in recent years.
And food and beverage sales traditionally hold up during economic downturns.
The West European retail market for tea has been growing annually by around 3.5% over the past decade, and rose to €4 billion in 2009—20% of global sales—from €2.8 billion a decade earlier, according to the market research firm Euromonitor International. By comparison, the European coffee market is worth €12.8 billion.
But there will be no shortage of sceptics ready to knock Nestle’s tea ambitions.
A leader in coffee, the company is something of a novice in tea; until now, it only offered iced-tea products. Then there is the established convenience of the tea bag and pot.
In addition, the Internet, the sole sales channel for Special T, accounts for just 1.2% of European tea sales. Supermarkets control 62%, with brands such as Hindustan Unilever Ltd’s Lipton and Twinings from Associated British Foods dominating.
“Is the market ready for this? It’s possible, but there’s lots of competition,” said Fabien Maiolino, director of Maison des Trois Thes, a tea buyer, distributor and consultancy based in Paris.
Maiolino said the market has been evolving recently and it would be hard for Nestle to win over “practical” drinkers, who will stick with bags and pots.
At the other end, it may take time to persuade the higher-end consumers of leaf and aromatized tea, he said, noting that Chinese companies are also considering entering Europe, having expanded in Asia.
There is also a natural consumer scepticism to new products.
“I don’t want another machine in my kitchen,” Caroline Lefebvre, a senior Air France cabin attendant, said as she sipped espresso with friends recently in a cafe in Neuilly-sur-Seine, an upscale Paris suburb.
Lefebvre, 46, drinks tea daily at home. She said she would stick with tea bags and loose-leaf Earl Gray from the supermarket or, occasionally, a swanky boutique such as Mariage Freres in Paris.
“It’s too expensive and I don’t want to be tied into one product,” she said. Her two female companions concurred.
Tea machines have been introduced before by companies such as Tefal, with varying degrees of success. There are also combination hot-drink machines, for example the Tassimo range from Kraft, with Bosch machines.
Still, Nestle should not be ruled out yet. Reservations were initially expressed with Nespresso. That product was started in 1988, but only really took off in recent years, helped by an advertising blitz fronted by George Clooney. Last year, Nespresso posted sales of 2.8 billion Swiss francs, an annual gain of 22%.
No similar celebrity endorsement is planned for Special T—yet. The tea idea stemmed from Nespresso consumer feedback, Kwakman said, adding that the development process was trickier for tea than coffee.
“It was fun but extremely difficult because of the varieties,” he said. “The variety in leaf and size is enormous.”
He paused when the question of the British market was raised. Tea consumption per capita there is higher than in any other developed Western market.
“In Britain there’s a different tea culture,” Kwakman said. “People drink big mugs of tea with sugar and milk. Our concept is developed to fully enjoy the subtle flavour of tea.”
Nespresso has in the past faced criticism for not offering enough recycling points for its used aluminium pods and for not pushing its sustainability further and faster.
Special T will “comply with all the Nestle practices in terms of sustainability and creating shared value,” Kwakman said.
Kwakman would not provide specific financial goals, but said penetration in 1% or 2% of households in each market would be judged a success.
All machines will be made under licence and sold by Nestle.
Nestle’s top executives recently signed off on the product—with tea.
“The board drank tea all day,” Kwakman said. “We had the first tea break—instead of a coffee break—at a board meeting in over 140 years.”
©2010/THE NEW YORK TIMES
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First Published: Tue, Jun 01 2010. 07 25 PM IST