By Marcelo Teixeira
NEW YORK (Reuters) – Nespresso, the premium coffee division controlled by Nestlé SA, has yet to increase the prices of its capsules despite a sharp increase in benchmark prices for arabica beans, choosing to wait and see if the upward trend is sustainable over time.
Alfonso Gonzales Loeschen, managing director of Nespresso North America, said in an interview on Wednesday that the company has so far absorbed the price increases instead of passing the higher costs on to consumers, until the market direction to be clearer.
“It will all depend on how long these higher prices are maintained,” Loeschen said.
Benchmark prices for Arabica coffee on the ICE exchange reached their highest level since November 2016 earlier this month, due to lower production in the main Brazilian producer and supply chain disruptions.
Nespresso, along with other high-end coffee processors, typically pay a hefty premium over New York futures contracts to associate producers around the world, in order to ensure supplies of the best coffees.
The CEO, who took over the post in the United States in early 2020 just weeks before the pandemic caused lockdowns, said direct-to-consumer sales increased by 20% during the period, forcing the business to adapt to higher demand for online sales and logistics.
His coffee shops are all open again, but office sales are slow and he does not see volumes on this sales channel return to pre-pandemic levels until at least 2022.
“It appears that only around 20% of workers are back in the office, and many people will continue to work in a hybrid system,” Loeschen said, adding that some companies have provided home workers with Nespresso packages during the pandemic. , a new selling point for the Swiss firm.
(Reporting by Marcelo Teixeira; Editing by Chizu Nomiyama)