Battle of coffee capsules: “Migros revolution” Coffee B is actually doing well

Frank Wilde, former marketing manager of Nespresso Switzerland and currently Coffee B Manager of Migros’ industrial subsidiary Delica, knows this paradox. It will especially come into play when consumers are replacing an old coffee maker. Wilde says it’s been working so far: “In the last twelve months Coffee B had a market share of eleven percent of all coffee machines sold in Switzerland. More than a tenth of all new coffee machines sold in Switzerland were Coffee B machines. This exceeds our expectations.”

The coffee machine – Wilde still does not want or is not allowed to name the exact manufacturing location in China – is under constant development: “We are currently working with the fourth generation of the Coffee-B machine.”

Since its launch in September 2022, 200,000 Coffee-B machines have been sold in Switzerland and abroad.

We hope for Black Friday and Christmas

Wilde expects sales figures to increase in the fourth quarter of 2023: “May to August is usually the hardest period. Most coffee machines sell out in the fourth quarter, around Black Friday and Christmas. We’re hoping for a lot.”

The biggest question at Coffee B is, of course, how much time Migros devotes to its revolutionary system. Wilde makes a comparison with his former employer. “It took Nespresso over a decade from its launch to land. Unfortunately, no one has that much time these days. “We will have to succeed faster than Nespresso.”

But Wilde says it has an advantage over Nestlé’s globally distributed capsule: “Migros, with its more than 650 supermarkets, has a completely different sales force than Nespresso had at the time.”

But two key internal factors have changed since Coffee-B’s launch in September. With the departure of Migros CEO Fabrice Zumbrunnen, one of the leading advocates of the coffee ball has left the company. Migros’ previous industrial boss will also leave his post in the spring of 2024. Do the current and future management team, currently busy reorganizing the supermarket division, have the long breath Coffee B needs? Wilde believes Migros bosses “absolutely understand the strategic importance of Coffee B”. But just: “It takes time.” How much time exactly? Wilde doesn’t want to say this.

Foreign licensing is a problem in Asia

Coffee-B machines and capsules are currently available in Switzerland, Germany and France. These countries remain in focus; Success here needs to be concrete. Later, other countries in Europe will follow.

As Migros has emphasized from the beginning, in addition to selling coffee machines and coffee balls, there is a second way to monetize the long-standing investment in Coffee B: licensing the technology. In this case, the technology will be sold to other manufacturers through licensing.

Wilde says it’s a more interesting business model for long-distance markets. Coffee-B’s boss mentions the Far East as a possibility. “Migros does not exist in Asia. “If we want to gain a foothold in the market there, we will have to license the Coffee-B technology there.”

Don’t be afraid of the Nespresso paper capsule

The fact that rival Nespresso recently introduced a paper-based capsule that is supposedly completely degradable doesn’t scare Coffee B. “Biodegradable paper capsules are a step in the right direction,” but they are not the ultimate solution. Waste problem of capsule systems. Wilde believes: “Our Coffee Balls are currently the only ‘pods’ that can be thrown both into the garbage disposal and directly into the garden.”

The fact that Wilde himself was convinced is one thing. Another thing: It needs to convince customers to buy a Coffee-B machine.