Nestlé goes to Spanish court, while net profit crashes

Nestlé goes to Spanish court, while net profit crashes

Nespresso has started legal procedures against Spanish coffee pad producer Marcilla, already the fourth country in which Nespresso starts a patent lawsuit against one of Sara Lee's brands. Its parent company Nestlé meanwhile posted an 'encouraging' decrease in profit and turnover.

65 million 'copies' sold

Nespresso and its exclusive distributor on the Spanish market Daba accuse Marcilla of violating their coffee pad patents, as the latter's “L'arome Espresso” pads are compatible with Nespresso devices – but can be 15% cheaper. Marcilla's pads have had an enormous success so far, with 65 million capsules sold in barely six months.

 

Nestlé's famous coffee brand already went to court in December, but the move was only recently made public. The group earlier made similar moves in France, the Netherlands and Belgium, where the lawsuit was aimed at Douwe Egberts, another Sara Lee brand.

 

Despite the fierce competition from Marcilla, Spain is still the most important market for Nespresso. On top of the 35 Nespresso Boutiques, Spain also features 20 'boutiques gourmet' in El Corte Inglés stores and capsules are delivered to almost 2500 businesses and postal offices.

 

'Encouraging' sales and profit loss

(in Swiss franc) 2010 2011 %
Sales 93.015 billion 83.642 billion -10,1%
Net profit 34.233 billion   9.487 billion -72,3%

Meanwhile, Nespresso's parent company Nestlé issued a decrease in both profit and sales volume during 2011, but was still very happy with its “good performance, top and bottom line, in both emerging and developed markets in 2011”, as CEO Paul Bulcke put it.

 

Sales went down from 77,1 billion to 69,4 billion euro, which the Swiss company attributed to negative exchange rate evolutions and asset disposals. In local currencies, Nestlé grew in every region of the world, especially in Asia and Africa.

 

Net profit decreased from 28,4 billion to only 7,9 billion euro, but Nestlé maintains this is an 8% growth if the sale of its eye care division Alcon is not counted. Bulcke called 2011 “a challenging year” and does “not expect 2012 to be any easier”, but thinks his company is “well positioned in 2012 to deliver the Nestlé Model of organic growth between 5% and 6% as well as an improved margin and underlying earnings per share in constant currencies.”

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