Growth and Market Validation of Compostable Coffee Capsules Fabio Osculati, Innovation & Management Consultant
SUMMARY Introduction Market of coffee capsules, Proprietary vs Compatible offer Compostable capsule European market, evolution and successful factors Nespresso system, testing work and methods Capsule production process, supply chain control and system approach Data analysis, findings and highlights Nespresso baseline vs compostable caps brewing performances Conclusions
Fabio Osculati Owner at Step by Step Innovation Design Strategy About me I have a University Master and a PhD in Physics. Passionate about mountains, sports, technology. I am a curious scientist who moved into the industrial world and spent 25 years with major brands, working in industries such as home appliances, air conditioning systems, food and beverage. Recently, I was 5 years at Lavazza as CTO and Innovation Director. Specialties: innovation, consumer products, product strategy, design, engineering and manufacturing. Current, I collaborate with management-consultants companies and I works as independent consultant in technical and general management projects.
Market Background Retail Volume Sales of Fresh Ground Coffee Capsules 2011-2021 Source: Euromonitor
Application split: Proprietary vs Compatible The global market is estimated in 58,000 MM capsules in 2016, 83% is represented by proprietary solution (it was 100% in 2012). Without considering Aluminum (Nespresso), the TM of plastic capsules is 36,000 MM/capsules/year. Proprietary vs Compatible Proprietary Cps/Year (in MM)
Compostable capsules opportunity areas Short term, will mainly focus on caps recyclability Might consider compostability Compostability is/will be a real opportunity Proprietary Cps/Year (in MM)
In 2015, Lavazza launched the first Compostable Coffee Capsule. What happened, since then? Lavazza did not push on this innovation Regulatory framework not always clear and friendly Major players were reluctant to follow this way Several minor players tried this way Most of offers are proposed on-line Slide presented in ITR 2016 conference Why?
Economical factors More than 30% of the production-cost of caps is related to packaging. Most of it is represented by the capsule-body. Compostable caps have higher costs than traditional ones For major players, the traditional production process is known, already optimized, assets are fully depreciated. Compostable materials mean new processes, new investments, technology uncertains/risks
Other factors One of the reasons for Lavazza compostable caps slow development was the single-package, due to non-self-protected caps Disadvantages of single-wrap-solution: On-shelf space usage (costs, efficiency) Higher logistic costs Extra costs in primary package Higher costs in secondary package Higher Environmental impact, lower sustainability Lower consumer convenience Outcome: Caps/packages higher costs lead producers to distribute mainly on-line The self-protected pack will be a must, for future developments
Nespresso compatible caps development, from the unique, exclusive, original Nespresso boutiques to an aggressive growth of Nespresso clones and compatible capsules in EU, distributed through multi-channels Supermarket shelfs Dedicated coffee-caps shops On-line, e-commerce Nespresso Compatible Caps tipical offer in an Italian large-size Supermarket: 14 Brands, 73 SKUs, 6.5 sm facing
Offer of compostable Nespresso compatible caps in EU* IRL UK SWE ITA FRA NL SPA GER ON SHELF E-COMMERCE Management and development of compostable endof-life in the Country * 17 Brands and 24 blends were analized in this work. Many other were out-of-stock or not-available for ordering
Testing methods Measured parameters and variables Parameters mainly related to coffee and roaster process Factors related to capsule-machine interaction Factors depending mainly on machine
Key factors to brew Espresso capsule, and owners Machine System design Temp Control Pump Heater Hydraulics Brewing chamber Brewing Capsule Coffee Resins Green beans selection Lidding material Sheet Caps production production Filling Amount of coffee Blend Roasting Grinding Degasing Sealing Secondary packaging Critical aspects to brewing, and owners Given Caps producer Other factors Water Environmental condition Cup Machine maintenance.. Roaster
Nespresso brewing and measurements description 1. Caps insertion 2. Caps puncturing 3. Pump starts, water income, caps expands, bottom piercing 4. Extraction pressure curve depends on capsule structure, design, material and coffee grinding parameters
Machine-to-machine differences Machine 1, Nespresso Inissia 60 Machine 2, Nespresso Pixie 112 We measured a significant model-to-model brewing pressure diffence (the two hydraulics circuits being different) This will end up in differences in coffee extraction In our analysis we only used M2, in order to have the higher available pressure
Nespresso capsule vs Compostable extraction pressure variability, overview Example of Nespresso capsules consistency in brewing Examples of variability o compostable caps brewing performances s=0.65 s=2.18 s=3.48 s=3.20
Time to brew 30 cc coffee [sec] Extraction Pressure and Espresso quality 30 cc in 9.1 Sec Avg Press 6.9 bar UNDER Extracted 30 cc in 9.4 Sec Avg Press 6.8 bar UNDER Extracted 30 cc in 17 Sec Avg Press 14.8 bar Good Extraction 30 cc in 24.1 Sec Avg Press 18.2 bar OVER Extracted 30 cc in 26.2 Sec Avg Press 18.7 bar OVER Extracted 35 30 25 Relation btw Brewing Time and Avg Pressure OVER Design A B C D E F Nespresso 20 15 UNDER 10 5 5.0 7.5 10.0 12.5 15.0 17.5 20.0 Press Avg [bar] 0 10 20 30 40
Pressure, caps variability, statistical elements Extraction Pressure for Design D Caps B&B CapMundoBiloba CarrefourHonduras Different Coffees, Blends, Roasters CarrefourMex ico NovellDek NovellIntenso TerraMokaAdele 5.0 7.5 10.0 Press Avg 12.5 15.0 17.5 20.0 Boxplot of Press Avg Design = D Removing product-toproduct and roaster-toroaster variation we look for the CAPSULE variance/performance s overall s within s overall describes the «actual» capability, related to single blends and specific roasters s within describes the «potential» capsule capability, related to materials and design
Press Avg Press Avg Press Avg Data analysis, variability by capsules-material Variability of Aluminum Variability of PLA-based Multilayer Variability of BioCompounds 20.0 Boxplot of Press Avg Material = Alu 20.0 Boxplot of Press Avg Material = Multilayer 20.0 Boxplot of Press Avg Material = BioCompound 17.5 17.5 17.5 15.0 15.0 15.0 12.5 12.5 12.5 10.0 10.0 10.0 7.5 7.5 7.5 5.0 P avg NespressoArpeggio NespressoRistretto B&B = 14.85 bar 5.0 BewleysAmericano LoftbergNero_Intenso LoftbergOscuro_segreto P avg LoftbergPassionata PeezeEthiopia B&B = 15.35 bar PercolEthiopia PercolSuprema 5.0 CapMundoBiloba CapsuloNicaragua Bio CarrefourHonduras CarrefourMexico CovimBio Pres sò P avg LaunayItalien Must Armonia NovellDek NovellIntenso B&B = 11.86 bar San MarcoN6 SjostrandEspresso TerraMokaAdele VergnanoArabica VergnanoIntenso s overall = 1.69 bar 2 s overall = 2.15 bar 2 s overall = 4.28 bar 2 s within = 0.65 bar 2 s within = 1.68 bar 2 s within = 2.13 bar 2 + Outlayers
The «perfect espresso»*, the «Nespresso» the others Tested Compostable caps Parameter Value Nespresso Findings min Findings MAX Portion of ground coffee 7 ± 0.5 g (0.25 ± 0.02 oz) 5.5 g 5.2 g 5.7 g Exit temperature of water from unit 88 ± 2 C (190 ± 4 F) NA NA NA Temperature in cup 67 ± 3 C (153 ± 5 F) 68.6 64.5 69.7 Entry water pressure 9 ± 1 bar (131 ± 15 psi) 15.6 5.3 18.6 Percolation time 25 ± 5 seconds 16.8 5.4 30.8 Volume in cup (including crema) 25 ± 2.5 ml (0.85 ± 0.08 US fl oz) 36.5 31.8 42.9 Cream thickness 3-4 mm 9 4 10 Cream persistence Lasting in the cup for 3-4 minutes 10 1 5 Colour Hazelnut with reddish tones and dark brown streaks * From the Italian Espresso National Institute
Conclusions Compostable coffee-capsules is fast growing in the EU market, technology is mature, and consumers are asking for. This is expected to develop fast in US, as well. Nespresso is setting the quality level, compostable offer must be competitive in cost, quality and performances Some capsule-design and compostable-materials are giving promising results A good brewing depends on both, capsule producer and roasters Market will move fast to self-protected caps, too many disadvantages otherwise Brewing performances must be carfully studied, and variability reduced Compounds uneven behavior and large variability must be addressed
Picture from a from Spanish Supermarket Already today, consumers are recognizing +10% price for compostable offer. This gap will reduce and the market will grow
Grazie!