Nespresso using promotions and new coffee flavours — not discounting — to encourage sales

Nespresso Oceania has reaffirmed its commitment to offering incentives rather than discounting to attract consumers, despite the intense competition being provided by mass channel, private label capsule coffee systems.

Speaking with Appliance Retailer, commercial manager John Ciaglia said Nespresso remains a luxury lifestyle coffee brand that will continue to use promotions but will do its best to keep the conversation off prices.

“We remain confident that our innovative and attractive machines and accessories, our highest quality coffee and personalised services will continue to attract new customers to the brand,” he said. “However, promotions remain important sales and marketing tools for us as we compete in Australia’s dynamic and fast-paced domestic appliance industry.

“While we continue to see strong price-based competition amongst retailers, our focus is on incentives that reinforce our total consumer offering.”

After many years of near-unchecked dominance in this booming coffee machine sub-category, Nespresso found itself confronted with some serious competition. In addition to Electrolux’s partnership with Lavazza, which is quite similar to Nespresso’s partnerships with De’Longhi and Breville — both combine famous coffee heritage with strong and respected appliance brands — there has been a flood of new capsule coffee machines systems introduced from the major supermarket brands, such as Woolworths’ Caffitaly brand and Aldi’s Expressi device.

Nespresso traditionally conducts cashbacks on its machine range in the lead-up to peak selling periods like Mother’s Day and Christmas. In order to keep the momentum going during ‘regular’ times of the year, the Swiss company is offering a cup and saucer gift-with-purchase during September and October. Ciaglia is confident that the appeal of these accessories will keep potential customers’ from being swayed by cheaper rivals.

“As Australia’s appreciation and understanding of high quality Grand Cru coffees grows, so too has the demand for our premium coffee accessories. Today, coffee is celebrated in much the same as wine.

“It has long been recognised that a well-designed glass enhances the wine tasting experience and we’re seeing coffee connoisseurs begin to understand that this experience also extends to coffee tastings.”

On the subject of upcoming release activity, Ciaglia said that after introducing the new Inissia and Lattissima Pro ranges to the market during the first half, there are no plans to introduce a third machine range in 2014. That doesn’t mean the team is taking a coffee break, however, with the focus now firmly on coffee blends and flavours. Ciaglia confirmed that there will be several new releases to keep existing customers happy and encourage new ones to make their first purchase.

“Coffee is at the heart of what we do and for the second half of the year our focus will be just that. Last week, we introduced a new limited edition coffee, Cubanía, inspired by Cuba’s iconic coffee traditions and Club Members throughout the country have been visiting our Boutiques to sample it.

“Next month we will release a very precious, rare and short-run Special Reserve coffee. Then, just before Christmas, we will launch the highly anticipated Variations that our Club Members voted for in June of this year.”

Variations is the name given to Nespresso flavours that incorporate a particular aroma or non-coffee flavour infusion. In the past, there have been raspberry, chocolate and caramel Variations.

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