Nespresso Settles With French Regulator on Knockoff Capsules
Sept. 4 (Bloomberg) — Nestle SA, the owner of Europe’s largest single-serve coffee brand, reached a final agreement with France’s competition regulator to lift obstacles to makers of knockoff capsules for Nespresso coffee machines.
Nespresso will give competitors at least four months’ notice of any technical changes to its machines that may interfere with compatible capsules, the French Competition Authority said in a statement today. In a preliminary agreement in April, Nestle had proposed three months.
Rivals including Mondelez International Inc. and Ethical Coffee Co. have encroached on Nespresso’s growth prospects by introducing compatible capsules as some of the coffeemaker’s patents expired. Four times between 2007 and 2013, Nespresso made changes to its machines that made knockoff capsules incompatible, steering clients back toward the Nestle brand, the regulator said.
The Swiss company also agreed to inform competitors of upcoming changes to machines and provide them with prototypes to ensure their capsules work in Nespresso coffee makers.
Nespresso makes 85 percent of the capsules that work in its machines, the regulator said, citing 2012 data. The first knockoffs entered France in 2010. Nespresso has been adding espresso varieties and expanding into markets including the U.S. to bolster sales.
The brand’s share of single-serve coffee machines purchased across Western Europe declined to 27.8 percent last year from 33.8 percent in 2008, according to data tracker Euromonitor.
Nespresso also promised it won’t discourage consumers against copycats nor automatically revoke warranties on its machines if compatible capsules are used.
To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net To contact the editors responsible for this story: James Boxell at jboxell@bloomberg.net Marthe Fourcade, Paul Jarvis
