Nespresso eyes store expansion in India, keen on B2B tie-ups with hotels

Nespresso, a wholly owned subsidiary of Nestlé, is looking to add more retail stores in India following the launch of its first boutique-experience store in the country at Select Citywalk, Delhi.

 

In an interaction, Philipp Navratil, chief executive officer of Nespresso, said the company is looking to tap into India's thriving coffee culture, where a younger generation of consumers is taking a growing interest in the drink.

 

“This is the perfect time to start accompanying consumers on this upward trend of coffee consumption and the huge market it is becoming in India,” Navratil said.

 

Nespresso makes coffee machines and coffee pods that are sold directly to consumers and businesses.

 

India's out-of-home coffee market is estimated to reach $2.6-$3.2 billion by 2028, with a compound annual growth rate (CAGR) of 15-20 per cent, according to a December 2024 report by Redseer Strategy Consultants.

 

This makes it an attractive opportunity for Nespresso’s direct retail sales to consumers, as well as a ready market for its business-to-business (B2B) sales.

 

Nestlé India recently noted that a sustained premiumisation trend provides it with a Rs 7,500 crore opportunity, adding that its premium portfolio has registered a CAGR of 16 per cent since 2015.

 

“In all our large markets, we tap into the big metropolitan cities. So, there is opportunity beyond New Delhi in India. It will also depend on how much of the business is online versus offline.

 

We have markets where people love to shop, and other markets where we have a strong online business, which we have here too,” he said, highlighting the market potential for expanding into more cities.

 

Nespresso will create an omnichannel strategy, with a presence across online and physical stores, the top executive said.

 

The strategy would lead to more experiential boutiques and an app, enabling the company to reach a wider consumer base directly.

 

The company is also keen on establishing enterprise tie-ups with hotel chains.

 

Thakral Innovations has been enlisted as the distributor for all Nespresso range products in the country.

 

The company does not plan to manufacture locally due to limited scale, as it caters to the premium segment of the market.

 

However, Nespresso sources Indian coffee from 1,900 farmers in Karnataka.

 

This Indian-origin coffee is used in one in every five blends sold globally.

 

Addressing tariffs on imports of coffee machines, which currently lead to prices upwards of Rs 16,000 apiece, the top executive said the company will reassess pricing once tariffs are lowered under the free trade agreement signed between Switzerland and India last year.

 

India signed the Trade and Economic Partnership Agreement (TEPA) with EFTA states of Switzerland, Norway, Iceland, and the Principality of Liechtenstein, which will come into effect this year.

 

As per the agreement, India will not charge customs duties on most industrial products originating in an EFTA state that enter the country.