Luxury coffee purveyor sets its sights on the Southeast Asia market with the opening of its new boutique.

There was a time when coffee was just a morning beverage to wake up the senses. These days, it's a lifestyle product - if the launch of Nestlé Nespresso's regional HQ in Singapore is anything to go by. Indeed, one of the world's most premium coffee brands is riding on Asian consumers' growing demand and taste for fine coffee with the recent opening of its first boutique at Takashimaya Shopping Centre.

Alexander Schoenegger, Market Director, Asian Region, Nestlé Nespresso, says, "This is the first-of-its-kind premium coffee boutique concept in Singapore. Visitors will enjoy having all their five senses tantalised at one place. They will learn that the coffee experience is not just about taste but also about experiencing coffee by seeing, smelling, touching and listening to the extraction of the best portioned coffee."

A division within the Nestlé Group, Nestlé Nespresso was set up in 1986 after 10 years of research into its own patented system to create the perfect espresso. A decade later, it launched the Nespresso Professional System to provide convenient machine solutions and premium-portioned coffee to small enterprises, premium hotels, restaurants and airlines. Today, Nestlé Nespresso offers not just sleek coffee machines and capsules, but also the "Ultimate Coffee Experience" built around its boutique.

Clearly Nestlé Nespresso's concept, positioning and products resonated with consumers. Between 2000 and 2006, Nespresso capsule volume sales grew from 457,000 to 2.3 billion. And in 2007, the company increased its global revenues by 40 per cent from the previous year, sealing its status as a key part of Nestlé's revered "billionaire brands". Nestlé Nespresso was also the fastest-growing operating business of the Nestlé Group for the second consecutive year.

Selling the coffee lifestyle to Asia

Europe currently contributes to 90 per cent of the company's sales while Asia only three per cent, but the region is registering a three-digit growth, with the increase in demand for luxurious lifestyle products. With the growth of the coffee market in key Asian cities rising to well over 25 per cent in the last five years, Nestlé Nespresso is keen to capture an even larger segment of the market in the region. Currently, it has 120 stores worldwide, with 28 in Asia, and it hopes to have 250 stores globally by 2010.

Commenting on the potential of premium coffee in the region, Stanley Samuel, Country Manager for South East Asia and Commercial Manager for the region, Nestlé Nespresso, says, "There is an unprecedented growth rate in the demand for premium coffee with increasingly discerning consumers in the region. Nestlé Nespresso's expansion plan into Asia is a well timed response to this demand in both business-to-consumer and business-to-business segments."

In Singapore, there is not only a strong following of coffee drinkers, recent trends show that there is a growing taste for fine coffee. According to a recent market report, within the burgeoning coffee sector, fresh roast and ground coffee is expected to see more dynamic growth, with an increasing number of consumers seeking higher quality coffee.

Nestlé and Singapore

Nestlé has had a long history in Singapore since the early 1900s. When the company decided to set up a regional HQ for Nestlé Nespresso in Asia, Singapore was a natural choice. With many of the company's various businesses and affiliates like Mövenpick Ice Creams, Nestlé Nutrition, Nestlé Purina Pet Care and Nestlé Waters based here, it made sense to locate its Asian regional operations in the Republic to tap onto the synergies with these other Nestlé operations.

Samuel says, "Singapore is ideally located and provides the necessary efficiencies in running our business operations, convenience and ease of access to the different markets, availability of resources and know-how, and scalability of our operations to keep up with our growth objectives."

Riding on the back of highly encouraging sales in the region, the company has expanded the original four-man team to 25, made up of both locals and expatriates. By the end of this year, it hopes to have 30 employees.

The Singapore HQ currently serves the Greater China, South Korea and Southeast Asia markets. Additionally, it has a dedicated Regional Customer Relationship Centre (for Hong Kong, Singapore and Malaysia) with plans to add mainland China and South Korea to its portfolio.

"It is clear that Asian consumers are ready to embrace the Nespresso brand, as well as the quality of our products and services. The launch in Singapore is a milestone for us because this is our first in the Southeast Asian market. We are definitely poised for further expansion into other Southeast Asian cities in Malaysia, Thailand, Indonesia, Philippines, and India to share the Nespresso brand with coffee lovers in these markets," says Samuel.

As one of Nestlé's most premium and profitable product groups, Nestlé Nespresso's entry into Singapore and the Asian market is a reflection of the island’s vibrant food and beverage industry. Nestlé's decision to manage its Asian business from Singapore is testament to the Republic's strength in HQ management, and represents a prominent addition to the country's growing base of leading consumer HQ operations. As it is, Nestlé already has a significant number of its brands' HQs here. Nestlé Nespresso's new regional HQ is the perfect icing on the cake, and is seen as the deepening of a long relationship, and Nestlé's continued confidence in Singapore.