markets feature | Single-serve capsules
Figure 1: Major capsule system launches, 1989-2016
Source: AMI Consulting
Figure 2: Single-serve beverage capsules – market segmentation 2016
Proprietary 78%
Source: AMI Consulting
example, did not deliver the desired returns and was discontinued in earlier this year. No longer a niche, the capsule industry has, over the
years, developed into a complex value chain. Back in mid to late 1990s, the segment was a classic oligopoly dominated by Nestlé with Nespresso and Keurig Green Mountain with K-Cups. At that time, there were also a couple of Italian-focused systems for traditional espresso brewing, such as Lavazza’s Espresso Point. Moving into this century, the capsules format became more popularised and brands such as Dolce Gusto (Nestlé), Tassimo (Kraft, now Jacobs Douwe Egberts) and A Modo Mio (Lavazza) found successful, high margin niches.
The rise of compatibles However, the expiry of the Nespresso and Keurig design patents in 2012 brought about disruptive changes in the supply chain and created new opportunities for both end-users and converters to tap into this growing market segment. Albeit with some legal battles, this triggered the development of Nespresso-compatible brands and own label products that could rely on the installed base of Nespresso machines but offer more
26 FILM & SHEET EXTRUSION | October 2016
Compatibles 22%
competitive retail pricing. Barriers to entry to the capsules segment became lower, both from a filling and moulding perspective. As a consequence, the capsule supply chain is fast
losing its oligopolistic nature and the former dominance of major suppliers is being challenged as the market expands. A more fragmented supply chain affects the overall profit pool and the way consumers make choices. Inevitably, that transformation has had an adverse effect on the premium image of the segment: the average price has fallen and the level of quality of some capsules on the market has declined (based on OTR and performance in brewing machines). The potential machine malfunction (or misuse) in correla- tion with compatibles also introduced some operational challenges for Nestlé and its machine partners, which increased service costs. Today, AMI Consulting estimates that plastic
compatible capsules (across all systems) account for 22% of the global single-serve beverage capsule market by units.
The Nespresso system is the biggest selling system
globally, with a volume of around 17bn units (including both aluminium capsules and plastic Nespresso compatibles). Interestingly, the North American market has not experienced an influx of Keurig imitations post-2012 comparable to Nespresso’s experience in Europe. The development of new compatible offerings is now
in favour of the Nescafé Dolce Gusto system (another brand of Nestlé). While market penetration of Dolce Gusto compatibles is low at the moment, it is expected to grow strongly in the coming years.
Production technologies Thermoformed single-serve beverage capsules account for nearly three-quarters of global market demand for plastic capsules. This bias towards thermoformed formats has been
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