Issue link: https://read.dmtmag.com/i/491356
STiR tea & coffee industry international 51 intent on delivering a superior latte without hiring a barista and investing $15,000 in an espresso machine. Nestle's shift is both defensive – to address a decline in market share – and strategic as North American households abandon drip brewers en masse in favor of single-serve machines. Global single cup sales were $8 billion in 2012. Since 2009, the North American market has grown to 30%, according to a Nov. 27 report by Sanford Bernstein. The market has expanded so quickly that Nespresso's share has declined from 5% to 3%, ac- cording to Euromonitor International. Nespresso delivered 3.5 million single-serve ma- chines in 2012 but after 10 years of 30% growth the pace has slowed to less than 20% per year. U.S. sales were $300 million in 2013, according to Anna Lundström, brand pr communication manager Nestlé Nespresso. In Canada Euromonitor estimates Keurig's pods make up 50% to 53% value share of the single-serve market. Nestlé's single serve share is estimated at 4% to 5%. In North America Keurig, Starbucks and Mondelez International (formerly Kraft Foods) are formidable competitors. All three sell brewers but Keurig makes the top four single-serve brewers by dollar volume, selling 10.6 million units in fiscal 2013. Euromonitor conservatively predicts volume sales of U.S. single-serve brewers will continue to increase by an additional 6 million machines per year through 2017. In context, this is six times bigger than the absolute growth expected in Western Europe, according to Euromonitor senior analyst Lorenza Della-Santa. Jean-Marc Duvoisin, the newly named c.e.o. of Nestlé Nespresso SA, told the Wall Street Journal last May that Europe is far from saturated but "if you look at other coun- tries in Asia, Latin America, and the U.S., it's an enormous market for us to develop. That's where the growth is going to come." Single Serve Accelerates StudyLogic estimates that 14.6 billion single-serve capsules and pods were sold through July 2013. Europe and North America combined account for 90% of global pod sales. Nespresso held 25.8% of global pod value share in 2012, according to Euromonitor and its Nescafé Dolce Gusto single-serve brewers held an additional 8% value share worth $1 billion. Globally American-based Green Mountain Coffee Roasters (since renamed Keurig Green Mountain) is second at 14.7% value with plans to launch in Europe (U.K., Po- land and Sweden) this year. Keurig earned $4.4 billion last fiscal year. Portion packs ac- count for $3.2 billion or 72% of its annual revenue which grew 21% from 2012 largely due to a 26% increase in unit sales. KGM sold 8.4 billion K-Cups last year. Revenue from brewers and accessories was $827 million, up 11% for the year. Euromonitor estimates 2013 U.S. single-serve sales at $3.4 billion, according to its most recent earn- ings report. Eighty percent of Nespresso's sales are in Europe where growth slowed to 12% in 2012 and remained sluggish in 2013. Growth of single-serve coffee in the U.S. topped 100% in 2012 but last quarter the number of units sold slowed to 44% compared to 2012 with dollar sales up 35.8% in fourth quarter 2013, according to Nielsen ScanT- rak which reports on sales in food, drug and mass merchandise outlets. Unit prices continue to decline by 5.7% during the period as lower-priced non-licensed brands and non-licensed private label manufacturers including Safeway and Supervalu grew to 14% of the market. Nespresso experienced a similar threat when it lost patent protection in 2010. Private-label brands such as Switzerland's Migros have since taken a combined 20% share of capsule sales. The competition Brewer manufacturers Keurig Green Mountain and Mondelez International (Tassimo) and Joh. A Benckiser (Senseo) are also intent on seizing a larger share of North Amer- ica's single-serve market. Keurig, which was acquired by KGM, is the dominant player with a 70% share with brewing machines in 16 million American homes and several million workplaces. Sales lag however for its more expensive Vue and Rivo, the company's single-serve home espresso machines. In February the company demonstrated its new Keurig 2.0