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NESTLE

Nestlé fails to stop copycat coffee capsules

Nestlé was left steaming by a court which said on Thursday it could not stop competitors from selling coffee capsules for its Nespresso machines in Germany.

Nestlé fails to stop copycat coffee capsules
Photo: DPA

The Düsseldorf court rejected an application by Swiss food giant Nestlé to ban the sale of unlicensed coffee capsules for its Nespresso coffee machines, giving the green light to copycat manufacturers to sell cheaper versions at up to two thirds of the price of originals.

The capsules, advertised by Hollywood star George Clooney, generated revenues of €2.5 billion for Nestlé last year. The overall market for capsules is booming and is expected to reach €6.6 billion by 2014.

That is now likely to be spread a little more widely. The regional court rejected Nestlé’s application for an injunction against two rival Swiss companies – Betron and Ethical Coffee Company (ECC) – from selling cheaper coffee capsules labelled “suitable for Nespresso machines”, despite not having a license to do so from Nestlé.

But the court found that although Nestlé subsidiary Nestec held the patent on the Nespresso machines and both it and its license holders produced original Nespresso capsules, consumers were not infringing Nestlé’s patent if they used coffee capsules made by other manufacturers in the machines.

The consumer’s right to unlimited use of their own property had higher priority than the protective interests of Nestlé, said a court spokesman.

The patent covered the machines themselves, but not the capsules, which although are essential for making coffee with the machines, they are not the devices’ “functional core,” said the court.

Nestec will continue to fight to prevent the two Swiss competitors from using the “suitable for Nespresso machines” label on their products, wrote Die Welt newspaper on Thursday.

Nestlé’s capsules are threatened in many countries by similar copycat competition and the multinational is suing in several places at once, with little success.

“We are disappointed that the Düsseldorf regional court did not grant our application for an injunction to protect our intellectual property,” Holger Feldmann, head of Nespresso Germany said in a statement, adding that Nestle would appeal, possibly at the Higher Regional Court in Düsseldorf.

DAPD/AFP/The Local/jlb

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NESTLE

‘Unlimited resources’: Switzerland’s Nestle goes vegan

Swiss food giant Nestle, which has made billions with dairy products, said Monday it will host start-ups that want to develop vegetarian alternatives.

'Unlimited resources': Switzerland's Nestle goes vegan
Photo: SEBASTIEN BOZON / AFP

Nestle could thus find itself at the forefront of a sector that has strong growth potential, an analyst commented.

It plans to open its research and development (R&D) centre in Konolfingen, Switzerland to “start-ups, students and scientists” a statement said.

In addition to testing sustainable dairy products, the group plans to encourage work on plant-based dairy alternatives, it added.

Chief executive Mark Schneider was quoted as saying that “innovation in milk products and plant-based dairy alternatives is core to Nestle's portfolio strategy.”

The group unveiled a vegetable-based milk that had already been developed with the process, and technical director Stefan Palzer told AFP it planned to focus on 100-200 such projects a year.

Jon Cox, an analyst at Kepler Cheuvreux, noted that while Nestle had missed some consumer trends in the past, it has now “taken something of a lead in the plant-based alternative market for food”.

And “given its pretty much unlimited resources, Nestle is going to come out one of the winners in the space,” Cox forecast in an e-mail.

Nestle said that “internal, external and mixed teams” would work at the R&D centre over six-month periods.

Nestle would provide “expertise and key equipment such as small to medium-scale production equipment to facilitate the rapid upscaling of products for a test launch in a retail environment,” it added.

The Swiss food giant has long been known for its dairy products, but faced a boycott in the 1970s for allegedly discouraging mothers in developing countries from breastfeeding even though it was cheaper and more nutritious than powdered formula.

On Monday, the group's statement also underscored that the research initiative was part of its commitment to help fight global warming.

“As a company, we have set ambitious climate goals. This is part of our promise to develop products that are good for you and good for the planet,” it said.

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