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It’s Automatic v Manual v Capsule and the competition has never been so intense!

Matt Damon loves a good cup of coffee!
Matt Damon loves a good cup of coffee!
  • The format war is heating up! Will capsule continue to command top billing or will the convenience of fully automatics win out? There’s also talk of manual machines making a big comeback!
  • The move to apartment living is affecting the appliance industry as a whole — how will consumers’ coffee machine buying habits change as a result of this?
  • Longstanding consumer confidence issues and political instability often leads to people tightening their belts. Be sure to point out that all types of coffee machines save the customer money in the long-run.

Check out The 10 Best Freestanding Coffee Machines for Mother’s Day 2015

Capsule coffee has grown into a phenomenon in Australia, meaning the fully automatic and manual players have had to sharpen their focus to stay in the race. At the same time, the entrance of supermarket brands into the category has put pressure on all suppliers to hold up average sales prices and retain market share.

It’s easy to forget, when you see all the George Clooney ads and elegant boutiques, that the Nespresso system wasn’t an immediate success when it was first conceptualised in 1976. It wasn’t until the late 1980s that Nestle, Nespresso’s Swiss parent company, married the capsule coffee system with a Club to retail coffee and communicate ideas. Much like Apple’s success in marketing the iPod within the iTunes ecosystem, Nespresso’s strength has been its worldview approach to marketing machines, capsules and accessories: providing a total solution to the ‘problem’ of loving coffee.

Nespresso’s success in Australia can be measured both in the sheer number of machines and capsules they sell — some reports suggest the company has 90 per cent share in its category — and by the explosion in competitors, from well-known appliance brands to the supermarket chains, all hoping to replicate its success.  The path has not been clear of all obstructions since Woolworths, Coles and Aldi began selling their own machines or since third party brands started selling ‘Nespresso-compatible’ coffee pods. As a snapshot of this threat, Aldi currently markets a private label capsule machine for $99 and pods for 37 per capsule. These prices are roughly half the cost of Nespresso’s cheapest machine and capsules. Maintaining market leadership, therefore, requires constant attentiveness to the whims of the buying public, something Nespresso Australia commercial manager John Ciaglia takes seriously. He has identified two significant trends that will guide Nespresso’s strategy through the all-important Easter, Mother’s Day and early winter selling periods.

“A trend we are continuing to see in Australia is the nation’s growing appreciation for high-quality coffee, and as this trend strengthens, so too does the market for at-home portioned coffee machines,” Ciaglia said. “The popularity of the coffee machine as a must-have home appliance continues to grow as more consumers recognise they don’t need to leave the house to enjoy a high quality coffee at their convenience.

“Another trend we’re also continuing to see, both here and abroad, is the contemporary change in living environments. With increasing house prices and a reduction in living space, we’ve seen a growth in inner-city apartment living. This trend has influenced the shift towards a more transient lifestyle, meaning people are looking for appliances that are more compact and versatile.”

Nespresso’s answer to the first trend is the expansion of its Lattissima range, which is exclusively distributed by machine partner De’Longhi. This range of Nespresso machines includes an in-built patented milk system, which is especially important in Australia, where we ruin our coffees by adding lots of milk (that’s what the snobs over in Italy would say!). Perfect for cappuccino lovers, the new Lattissima Touch model is available in three colours — Glam Black, Glam White and Glam Red — to suit personal preferences and to match existing home décor.

To assist apartment dwellers, renters and the otherwise itinerant, Nespresso is introducing two new limited edition colours in the Inissia range: Fuchsia Velvet, distributed by Nespresso’s other machine partner Breville; and Pacific Blue, distributed by De’Longhi.

Astute retailers will know that you can set you watch by when Nespresso has its cashback promotions and, sure as day follows night, these very enticing offers will return for Mother’s Day. Shoppers will receive $50 cashback on the Essenza, U, Inissia, Pixie and CitiZ ranges and $100 cashback on the Lattissima and Maestria ranges until 17 May 2015. Ciaglia confirmed that this promotion and the ranges in general will be supported with an extensive marketing campaign comprising TV, print, outdoor, digital, social medial, point-of-sale and in-store demonstrations.

Ciaglia concluded by stressing that Nespresso is a Club with Members, not just a machine with customers. “Our ranges of smartly designed and easy-to-use machines are specifically developed to complement and enhance the aroma, crema and flavour of Nespresso Grand Cru coffees — we offer 23 exceptional coffees to suit the every consumer taste preference. As we look ahead, our areas of focus will be looking at the increased demand for personalisation, variety, and the importance of building long-term relationships with our new and existing Club Members.”

Hot expert sales tips to sell more Coffee Machines this Mother’s Day

We joked earlier about Australia’s somewhat atypical love of milk-based coffee and the stats back that up. Helen Finlayson, De’Longhi category manager, said internal research reveals that 91 per cent of consumers drink milk-based coffee, with Flat White and Cappuccino being the most popular.  Therefore, milk production is the key: it has to be the correct texture, the correct density and the correct temperature, lest the customer not be satisfied with their purchase.

“Replicating café quality coffee in the home is the main objective, without the mess and fuss,” Finlayson said. “The convenience of a fully automatic delivers that.” De’Longhi’s latest fully automatic release is the Autentica (ETAM29660SB, RRP $1,599), which features the Latte Crema Instant Frothing Device for creamier and denser milk froth at a higher temperature.

While the fully automatic is the height of one-touch convenience, De’Longhi is also pro-capsule and manual coffee preparation, being the most prominent marketer of all three technologies. Finlayson said the retail sales professional has an important role to play in categories like coffee, with its multiple competing formats, so that the customer is best paired with the right product for their needs.

“Identifying where the customer is positioned on their coffee journey is key to matching them with the correct coffee machine to suit their needs,” Finlayson said. “As consumers develop their taste for coffee, we can see the progression from the convenience of capsules and pods, to manual espresso machines offering a little more of a hands-on experiences, to supreme customisation with fully automatic machines. De’Longhi has a product solution for consumers at any step of their journey.”

The aforementioned Autentica, along with another new fully automatic called the Compact White and the new Distinta breakfast set (see our Mother’s Day Feature), will be officially launched at a gala press function this month, which, based on previous launches in years past, will no doubt generate significant coverage in the mainstream lifestyle magazines. This will be complemented with a consumer promotion entitling fully automatic customers to an EFTPOS card worth up to $250 with their purchase. There are also five major prizes — a $1,000 Pamper Pack — to be won.

These promotions should drive people into stores and Finlayson stressed that when serving these coffee machine customers, the opportunity always exists to fatten up the sale with accessories. “De’Longhi has a wide range of accessories that should always be included as part of the sale. Our wood-fired coffee beans are freshly roasted to order and produce an excellent coffee and they are only available for purchase through electrical retail.”

Super Six! The Best Built-In Coffee Machines for 2015

Tom Douch, category manager for beverage and toast at Breville Australia, concurs with Finlayson that milk solutions are essential to having a popular machine but he disagrees when it comes to which technology consumers will gravitate to. He thinks that as Australians become more serious about making coffee at home, they will migrate from capsules and fully automatics to manual machines.

“We anticipate that the mix shift in coffee machines from automatic and capsule to manual will continue,” Douch said. “The premium $500-plus manual espresso segment will continue to grow at the expense of automatic, as consumers aspire to more authentic tasting coffee and machines that make latte art at home possible.

“This segment grew over 20 per cent in value in the last year — with average sales prices also up more than 15 per cent — so coffee specialists are well-positioned to benefit from this trend.

Harking back to the earlier reporting of Nespresso’s competition with the low-cost supermarket machines, Douch said Breville expects “last year’s double digit declines in the capsule market to level off in the electrical retail channel, as the grocery channel saturates and consumers look to upgrade to a more premium solution”.

Breville markets the world’s first fully automatic manual machine, the Oracle (BES980, RRP $2,499), as well as the original runaway smash the Dual Boiler (BES920), which is now bundled with a free Smart Grinder Pro for RRP $1,699). For those still making their way in manual espresso, there’s the Barista Express (BES870, RRP $799), which is available in brushed stainless steel, Cranberry Red and Sesame Black, and has in-built conical burr grinder and low pressure pre-infusion for fuller-flavoured extraction.

“The resurgence of manual coffee is a great opportunity to sell coffee accessories with machines,” Douch emphasised. “Knock boxes, cleaning kits and even latte glasses are great additions for customers whether they are beginners in coffee or seasoned experts. The right accessories can improve the out-of-the-box experience and help to convert them to a loyal customer.”

Douch also encourages sales staff to become familiar with common customer coffee queries, like what the difference is between a boiler and a thermoblock (in this instance, a boiler heats water and stores it at a consistent temperature so it is on demand while a thermoblock heats water ‘on the fly’ as it passes through a heated tube). Douch said any retailer or sales staff wanting to brush up on their technical knowledge should contact Breville and they will happily send out a rep to train the team. (For those wanting instant gratification, there are some very good YouTube videos that explain different technical aspect of coffee making, and these are searchable by keywords.)

In the lead-up to Mother’s Day, Breville is offering $250 cashback on the Oracle and $150 cashback on the Dual Boiler. Of course, any company can run a cashback promotion but, as Douch explains, only one appliance brand can entice customers with Blumenthal…

“Shoppers who purchase any Breville appliance between before 31 May 2015 will be eligible to go into the draw to win a money-can’t-buy Golden Gourmet Experience with Heston, including one of three Gold Double Passes consisting of return flights for two to Melbourne, an intimate session with Heston Blumenthal, an elite dining experience and 5-star accommodation at Crown Casino.”

George Liakatos, the urbane head of sales at Jura Australia, predicts 2015 will be the year confidence returns to the market and consumer spending in luxury lifestyle products like automatic coffee machines rebounds after a several challenging years.

“The decline rates for the hot beverage market have slowed with the highest decline coming from single-serve systems,” he said. “The fully automatic segment showed signs of growth towards the end of 2014 and our share has been steadily increasing, particularly with the introduction of our new products. “This year shows no sign of slowing with Jura releasing four new targeting the mid-to-premium segments.”

Unlike other brands in coffee, Jura is completely focused on one type of coffee machine: the fully automatic. Recently in Australia to meet with local staff and key retail partners, Jura general manager and co-owner Emanuel Probst said this singular sense of purpose gives Jura an edge because it knows exactly what its stands for; a point Liakatos is eager to reinforce.

“More than 3.5 million Jura automatic coffee machines have been produced over the past two decades. Our engineers and designers tap into the resulting wealth of knowledge on a daily basis, as can be seen in the new products we will unveil this year.”

When in Australia, Probst forecasted that an hourglass effect occurring in coffee machines, with capsules and fully automatics squeezing out the manual market. This is why Jura employs Roger Federer to specifically say ‘No capsules’ in marketing material (a campaign, incidentally, that has had phenomenal traction, according to reports) and why Liakatos is committed to “combatting” the format.

“Our central message communicated through print media continues to focus on combatting trends in capsulated coffee, with a direct message to consumers that our coffee machines promote the use of freshly ground beans,” he said. “With a Jura automatic coffee machine consumers can choose from the virtually unlimited selection of fresh coffee beans available, according to individual taste. Our machines are built to get the best out of each blend and roast.”

To celebrate 20 years of Impressa coffee machines, Jura has unveiled the J500 Celebration Edition (RRP $3,150), an elegant appliance finished with a silver-carbon fascia.

Still fighting the good fight in manual coffee, despite rival brands’ dire predictions, is Sunbeam. 2015 promises to be quite exciting for the famous Australian brand, which is focused on reinvigorating its fortunes through product innovation, incisive marketing and a new joint venture with Jarden, owner of the Sunbeam brand in the United States.

Tim Anderson, Sunbeam product marketing manager, said manuals still had a significant role to play in the market, primarily because of our well-publicised love of good coffee.

“The Australian coffee market is speaking to some of the most discerning palates in the world,” he said. “As a nation, we are passionate about our coffee and will seek out the style of coffee we want at cafés, as well as in the comfort of our own home.

“Manual machines are vital in enabling consumers to attain the style of coffee they like in the comfort and convenience of the home and they allow coffee drinkers the opportunity to experiment with different quality Australian roasts, ensuring that the freshest ingredients are used to make the best espresso.”

Anderson put an interesting spin on the popularity of capsule machines, saying they tend to be purchased by customers who previously were drinking instant coffee. “As they continue on this coffee discovery journey, the manual machine becomes the next step as their need for café quality coffee and being able to control the coffee making experience becomes more important.”

Anderson also pointed out that, compared to capsules, “A manual espresso machines is still cheaper to run on a comparative per cup basis, so consumers can create a true espresso at a lower cost”.

Electrolux is continuing to market capsule coffee machines in partnership with Lavazza.

“The Lavazza A Modo Mio Premium Milk coffee machine by Electrolux features thermoblock technology, which ensures that the right coffee temperature can be reached from the very first cup, while the adjustable coffee spout and cup illumination all help to enhance the experience,” a spokesperson said.

“Designed to ensure you get the perfect cup of coffee each and every single time, the Lavazza A Modo Mio Premium Milk coffee machine by Electrolux allows you to be your own barista and create a coffee shop experience in your very own home.”

This machine is RRP $299. There are currently 12 Lavazza pod flavours for customers to choose from.