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An “Ethical Coffee” Challenge To Nespresso Heats Up

Swiss-based Ethical Coffee Company, run by former top Nespresso executive, ready to crank up its production of biodegradable single-use coffee pods.

By Gabrielle Serraz

LES ECHOS/Worldcrunch


ANNEMASSE - The challenge to Nespresso starts brewing here. The Ethical Coffee Company (ECC) has leased a 4,000 square meter factory in the French town of Annemasse, just across the Swiss border. Having laid out nearly 20 million euros for the necessary industrial equipment, production is slated to start in the first quarter of 2011, with a crew of 150 workers.


A direct competitor to Nespresso, with whom it is engaged in an ongoing legal battle, ECC is headquartered in Fribourg, Switzerland, with the mission to produce biodegradable coffee pods made of corn starch rather than aluminum. The company also lists a 25% lower price-tag.

Nespresso, the Nestle SA-owned unit, that has dominated the single-serving home espresso market, will see some of its patents expire in 2012. It has used legal injunctions to target both ECC and the Sara Lee company, which has also begun producing a competitive brand of coffee servings that is compatible with its machines.

Founded in 2008 by Jean-Paul Gaillard, who was director of Nespresso from 1988 to 1997 and largely credited with its early success, ECC sells its pods in France – Nespresso's fastest-growing market -- through an exclusive contract with Casino supermarkets. Until now, ECC has produced in local factories in the French towns of Chambéry and Tarbes, selling in 600 test markets across France.


To date, Gaillard says ECC has generated sales of 100 million units in France and 300 million in Switzerland and Germany. He said he has been approached by other French retailers such as Carrefour and Leclerc, but for now prefers to "ensure the continuity of sales' rather than be spread too thin.

To meet a demand growing by 20% to 30% annually, and meet his target of having 30% market share, Gaillard says he wants to create "a cluster of coffee" within a 30-kilometer radius around the city of Geneva, beginning with Annemasse. It will include a production site scheduled to open in Geneva in 2011, with an initial staff of 50 to 75 people, set to quickly expand to 300 to 500. A second production site across the French border is also foreseen, along with a roasting unit.


ECC has the means to match its ambitions. In total, fundraising rounds have put 75 million euros at Gaillard's disposal. "We have great investors," he boasts, citing 21 Centrale Partners, the Italian Benetton family, Belgium's Albert Frère, a Swedish fund, a Rothschild company and even the French TV and radio host Jacques Essebag, aka "Arthur."

Ethical Coffee Company has also indicated the target of going public within three years, both on the Paris and Zurich stock exchanges. But for now, the company's ambitions are a boon for Annemasse, population 30,000. Says Frederic Di Sario, a local economic development official: "This is the first foreign industry to arrive in the Haute-Savoie region in the last 15 years."

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FOCUS: Russia-Ukraine War

Too Soon, Too Late: What’s Really Blocking Ukraine’s Entry To NATO?

Volodymyr Zelensky has made his demand clear: full NATO membership for Ukraine, perhaps as soon as this year. Yet member countries, from the U.S. to top European allies, are still stuck in the mindset of not “provoking” Russia. But if not now, when?

Image of Volodymyr Zelensky standing at the arrival ceremony for the Summit of the European Political Community in Bulboaca, Moldova

Volodymyr Zelensky standing at the arrival ceremony for the Summit of the European Political Community in Bulboaca, Moldova

Pierre Haski

-Analysis-

PARIS — Volodymyr Zelensky knows what he wants, and he’s not afraid to say it loud and say it clear. Yesterday in Chisinau, Moldova, before the leaders of 47 European states, the Ukrainian President demanded that NATO open its doors to Ukraine — and to do it as early as 2023.

"This is the year of decision", he added before an impressive array of heads of state and government gathered in Moldova, just across the border from his war-torn country.

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But it’s not that simple. Several of the Alliance's heavyweights, starting with its leader, the United States, are more than reluctant to let a country at war join an organization whose charter includes Article 5. This is the article that defines automatic solidarity with a member state under attack.

And beyond the United States, also Germany, and until recently France, which has begun to take action, fear being drawn unwittingly into a direct confrontation with Russia. For the past 15 months, they have been careful to calibrate their involvement so as not to become "co-belligerent," though that has not prevented them from arming Ukraine.

Between now and next month’s NATO summit in Vilnius, the U.S and its allies must find an answer to the pressing demands of Ukraine and its friends in Eastern Europe.

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