Thursday, October 18, 2012

As coffee-culture grows in China, so does business for Nestle SA (PINK:NSRGY)

While the market for coffee is dominated by Green Mountain Coffee Roasters Inc.(NASDAQ:GMCR), The coffee market in Europe is mainly lead by Nestle SA (PINK:NSRGY), through the Nespresso Capsules. The market scene for China, however, is looking very lucrative, and coffee companies are considering sending out branches to the country, to reap in the benefit of the growing consumer culture in the country. Following recent results at one of the locations in China, Nestle is hopeful of the fact that demand for coffee will soon start growing, and as such, the company has been bracing itself to spread out in the country. The scene is looking lucrative for the sales of portioned coffee of good quality.
There have been demands for more Nespresso machines, and the celebration of the year of the Dragon, being held in Hong Kong which has been ornamented by the luxury brand, Shanghai Tang, is also significant in this context. Starbucks is also planning on introducing the Verismo single-serve to China by 2013. This announcement by the coffee-chain was made during April, this year.
With the wealth of the people on the rise, comes a certain taste for all things expensive and exotic, and that is exactly what is happening in China. Despite lesser number of per capita consumption of coffee as compared to many other countries, there is a demand for luxury items such as coffee, even though the demand is latent. Especially in the bigger cities such as Shanghai, the demand is palpable. Other brands such as Mondelez International are also looking to set up their business in China.
The opportunity for companies has been illustrated with the help of statistics by various analysts. Euromonitor International is a research institute which pointed out that Coffee Pod sales have gone up over the last year, and that standard ground coffee is also showing levels of growth in terms of sales. The field is ripe for companies, and this might be the perfect time for them to sow in their coffee products and machines in the country. With the growth of the Chinese middle-class, China will also see a growth in the availability of coffee. Nespresso’s expansion plans have not been revealed as of yet. 

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