The environment is a high priority for you. Tell us about sustainability at Nespresso?
Duvoisin: Sustainability is built into our business model and embedded within our brand.
We work with more than 70,000 farmers around the world through our AAA Sustainable Quality programme. We have more than 300 agronomists in the coffee-growing countries who help those farmers one-on-one to achieve the highest quality, environmental and social standards. Because the coffee these farmers grow is such high quality, we pay them 30-40% more than they would be paid in the commodity coffee market.
With this focus on quality, we're able to ‘decommoditise’ coffee for the benefit of consumers and farmers. This allows consumers to know exactly where the coffee comes from and, by making a direct link from the coffee to the farmer that grew it, customers better understand our approach to creating shared value and they start to care more about the coffee-growing communities and their conditions. We believe this makes a difference to the choices consumers will make.
We are also reducing the carbon footprint of our supply chain, and are working on developing more circular solutions for the aluminium capsules. The question of ‘why aluminium?’ comes up often. The fact is: it's the best material we've found to preserve the freshness and aromas of our coffee and it's infinitely recyclable. We encourage and enable recycling around the world, and are working on some new approaches to the capsules’ lifecycle that we will scale up in the coming years.
When you look at the entire lifecycle of portioned coffee, it's about resource efficiency: when you brew a cup of Nespresso coffee, you use exactly the right amount of coffee and water, and our machines are energy-efficient: they are not wasting energy by heating too much water and remaining on longer than they need to be. So with portion coffee, there is less waste than with, for instance, drip coffee.
What are your views about the much-discussed contradiction between competitiveness on one hand, and environment on the other? Can companies afford to proactively ‘go green’ or will they just lose market share to others that don’t?
Duvoisin: There is certainly tension between the two that can be difficult to manage when companies have a short-term vision, looking for quicker gains. But this tension disappears when you have a long-term approach. Then sustainability and competitiveness become complementary and reinforce each other. Sustainable corporate behaviour is now a must for companies that want to be competitive and consumers, regulators and financial markets will ask more from us in the future.
Another important aspect of the competitiveness discussion that I often feel is neglected is talent. Before becoming the CEO of Nespresso, I was head of HR for the Nestlé Group, and I spent a lot of time making sure Nestlé was attractive to young talent. If you want to recruit the best talent and engage and inspire your employees, you must be a responsible company with values that employees share. Sound values are a major competitive advantage in the talent market.
Nespresso is a clear ‘disruptor’ of the coffee value chain. How do you think about industry disruption in relation to creating a planet-compatible economy?
Duvoisin: I don’t think it's a coincidence that so many of the disrupting companies we see today are also leaders in sustainability. They’ve often found a way to improve efficiency dramatically and reinvent their value chains, and at the same time, they're creating environmental benefits.
For us, having a business model that inherently supports sustainability is non-negotiable. The more we grow and consolidate our business, the more we will differentiate ourselves from the commodity coffee market, and the more sustainable we will get. So it's a positive reinforcement cycle.
This is an extract from A Good Disruption written by Martin Stuchtey, Per-Anders Enkvist and Klaus Zumwinkel, published this month by Bloomsbury Business. Price: £25. MT readers can get a launch discount of 30% by ordering from www.bloomsbury.com and quoting DISRUPTION at the checkout.