Nestlé suffers setback in coffee capsule war

A German court rejected on Thursday an application by Swiss food giant Nestlé to ban the sale of unlicensed coffee capsules for its Nespresso coffee machines in Germany.

Nestlé suffers setback in coffee capsule war
Photo: Nick Harris

The regional court in Düsseldorf rejected Nestle's application for an injunction against two rival Swiss companies from selling cheaper coffee capsules that carried a label saying they were "suitable for Nespresso machines".

While Nestlé subsidiary Nestec held the patent on the Nespresso machines and both it and its license holders produced the original Nespresso capsules, a consumer was not infringing Nestle's patent if they used coffee capsules made by other manufacturers in the machines, the court argued.

While the capsules were essential for making coffee with the machines, they were not the machines' "functional core", it ruled.

Already in early July, Nestlé failed to win an injunction against the sale of biodegradable coffee capsules by compatriot Ethical Coffee Company (ECC) which are compatible with Nespresso machines.

The capsules generated revenues of 3.0 billion Swiss francs ($3.0 billion) for Nestlé last year and the overall market for such capsules is expected to reach $8.1 billion by 2014.

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‘Unlimited resources’: Switzerland’s Nestle goes vegan

Swiss food giant Nestle, which has made billions with dairy products, said Monday it will host start-ups that want to develop vegetarian alternatives.

'Unlimited resources': Switzerland's Nestle goes vegan

Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.

It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.

In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.

Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”

The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.

Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.

And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.

Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.

Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.

The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.

On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.

“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.