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."

Read the original article in French

Support Worldcrunch
We are grateful for reader support to continue our unique mission of delivering in English the best international journalism, regardless of language or geography. Click here to contribute whatever you can. Merci!

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

Support Worldcrunch
We are grateful for reader support to continue our unique mission of delivering in English the best international journalism, regardless of language or geography. Click here to contribute whatever you can. Merci!