The well-known coffee journal “Global Coffee Review” published a five-page cover story about Eric Favre, Mocoffee and the world of coffee capsules.
“AS HIS MULTI-MILLION DOLLAR COFFEE CAPSULE PATENTS
ENTER THE PUBLIC DOMAIN, MONODOR FOUNDER AND
NESPRESSO INVENTOR, ERIC FAVRE, SPEAKS TO GCR ABOUT HIS
STORY OF INNOVATION, HIS DECISION TO LEAVE NESTLÉ, AND
THE FUTURE OF THE COFFEE CAPSULE INDUSTRY.”
In the black and white dated modernity found in 1960s television commercials, a slick-haired husband gives his wife a hard time about the quality of her coffee. “The girls at the office make better coffee on their hot plates,” he bitterly complains. Eager to please her man, the woman turns to a friend who pulls out a jar of instant coffee. As she serves it to him that evening, she asks him: “Is it better than the girls’ at the office?” to which he replies: “Honey, their coffee can’t hold a candle to yours.” It was in this era – at a time when the instant variety was the miracle product ready to transform the quality of coffee being served in the modern world – that Eric Favre saw an opportunity. Long before he came to be known as the father of coffee capsules, having invented the Nespresso system and served as the company’s first President, Favre was a young engineering graduate looking to make his mark in the world. His father had also been an inventor and had encouraged him to study both engineering and business. “He said an engineer who invents something but who doesn’t know how to sell it is useless,” he tells GCR from his office in St. Barthelemy, Switzerland. Following his graduation from a Technical Institute in Lausanne, Switzerland, he took up a position with Nestlé in 1975 because they had an opening in their packaging division. Favre was particularly interested in this sector, as it allowed contact with research, development and production, as well as commercial marketing and point-of-sale. Nestlé at the time was heavily focusing its efforts on instant coffee. In 1975, Favre explains that there was general understanding in the industry that instant coffee would see the end of coffee machines. During one conference he attended, a retiring director of the company gave a presentation explaining how he didn’t understand why machines that were trying to replicate the Italian espresso market had to be so complicated, when instant coffee could provide a better product. Favre wasn’t convinced. He was keen to do something different and his inspiration came in the form of new love. He had just married an Italian, and in his honeymoon period he was keen to show himself worthy to his new wife. “I wanted to make her happy, I wanted to show her I could do something really new,” he says. “I told her I could find a way to make the best espresso that was easy to make and everyone could enjoy. She burst out laughing, saying, ‘How are you going to make a good espresso, you don’t even know what real coffee is?’” His wife rectified that by taking Favre to Italy on every vacation they had to start their study in espresso, travelling the country north to south to see what made some better than others. She served as his translator and tactical “spy” who could detract from his commercial motivations. In one particularly busy square in Rome, a few coffee shops sat empty while one tiny little stall attracted a brimming crowd of locals. Here, Favre got to know the stall’s barista, Eugenio, and carefully studied exactly what it was that led to a good espresso shot. He came to understand at this little stall, the barista’s ongoing challenge to get the right balance between grind and packing, to achieve the elusive perfect extraction. How to translate this into an invention, however, was a different question. Favre can’t help but chuckle, as he admits the answer came to him in the shower – an infamous ‘Aha!’ moment often recounted by inventors. What he came up with then, Favre explains, was not the design of the machine – that would come later – but a formula. The careful balance that made Eugenio’s coffee the most popular in the square was in fact an equation: a combination of oxygen pressure mixed with packed coffee to extract all the aromas and tastes. Returning to the office, he brought his ideas to Nestlé, but they weren’t easily convinced. Instant coffee was still a market favourite and the company was mainly focused on growing this part of its operations. He agreed to let Favre work on espresso extraction as a personal side project. Using the company’s lab, Favre continued to work on his equation, finding the balance between the factors that create a good espresso. His first design was a half-sphere, as it could deal with the strong pressure that had to pass through the coffee. When he was confident he had found the right balance he brought it to his boss – not as a formula, but rather as a concept through capsules and a machine. This was the birth of Nespresso and as Favre was a Nestlé employee, the company patented the design. As the years passed, espresso culture grew and Favre was given the green light to bring his machines to the market. This is where his father’s insistence on his business training paid off, as Favre proved to have a sharp business mindset. To test out the marketability of the machines, he set up the first display in a hair salon in Rome, followed by a display on a high-end shopping street in Lausanne. The choice of venues was strategic – from the beginning, he saw the success of the product lying in its appeal to women. It’s a strategy that Nespresso has carried on today, with Actor George Clooney starring in their most famous recent campaign. Favre explains that being named General Director of Nespresso put him in a challenging position. He recalls having to meet with all the General Directors of Nestlé in the world and explain how his product would no longer fall under their jurisdiction. “We had to tell all the bosses from Japan, Germany – all over the world that they were the masters of all of Nestlé’s products, except for one – Nespresso,” he says. “This naturally led to a large amount of antagonism and the more success I had with Nespresso, the more problems I had in dealing with these global markets.” Favre had warned his bosses at the beginning that this would cause some problems. When he looks back, he recounts that this move was the beginning of the end of his time at Nestlé. He ultimately took the decision to leave to company in March 1990. The conflict he felt in dealing with leadership at Nestlé falls in line with a book he was commissioned to write, which has never been published, aptly titled “Comment faire autre choses que du miel dans une ruche sans se faire piquer” which translates into “How to make something other than honey in a hive without being stung”. The decision to leave Nestlé, Favre says, also stemmed from his desire to go back to the drawing board in his designs and address long-standing ecological concerns he had with his product. In his original designs, each capsule contained a filter that was made largely of aluminium. He had the idea that if he could somehow inverse the capsule, with the filter on the outside, then the filter could be reused on each capsule as part of the machine. It was the design of these more ecologically-friendly capsules that led to Monodor in 1991, a company he established that would be 100 per cent family owned. Monodor patented the new design – and offered it first to Nestlé, who chose not to use it. He then brought the designs to Lavazza and Migros who paid Monodor to use it under license. Today, he says most capsule machines in the world use a variation on his 1991 patent. Another ecological benefit that Favre developed under Monodor, was the ability to improve the extraction to be able to use less coffee. As he explains, two thirds of the ecological footprint of coffee sits at origin and so to limit the amount of coffee used is one of the greatest benefits to improving the ecological footprint. Favre also changed the design of the Monodor capsules to use a polypropylene container. With the use of polypropylene, the seal of the capsule can be “knitted” to the capsule, rather than glued as per the older aluminium design. This allows an impressive shelf life of 52 months. Furthermore, as a combustible, polypropylene disintegrates at a far faster rate in landfills. Favre, and Monodor, are set to see the final royalty cheques come in for this latest capsule design. As this magazine went to press on 31 October, it marks 20 years since Favre’s second major invention in 1991, meaning that patents have expired and are now in the public domain. As such, his license arrangements with Lavazza and Migros have finished. Naturally, Favre has planned for this, and since 2009 he has worked to establish Mocoffee, a separate capsule system to be marketed independently. “The capsules aren’t compatible with Nespresso,” Favre is quick to point out. “That just wouldn’t be fair.” Following from Favre’s initial vision with Nespresso, he sees Mocoffee as a product for a female market, and will likely follow a similar marketing strategy. Mocoffee offers a 6.5 gram capsule that will compare to Nespresso’s 5.5 gram capsule. Mocoffee will additionally, however, offer an 11 gram capsule, allowing for very long coffees, ideal for a regional preference for café-au-lait. While Favre will continue as a partner, Pascal Schlittler will serve as CEO. Favre says having the “father of the coffee capsule” on board should help the company, but their plans are relatively humble. They have already captured part of the Swiss market and are moving strongly into South Korea. In a market that is now becoming flooded with competition, Favre is confident there’s room for a variety of players. In 2010, he notes that around 15 billion coffee capsules were sold, of which 6.5 billion where Nespresso. Of the remainder, 1.5 billion were sold by Monodor’s licensees and the large remainder were sold by Green Mountain Coffee Roasters’ Keurig system. For Mocoffee, he’s not counting on the growth coming from other companies’ market share, but rather in the growth of the market. In the next decade, he says that market leaders envision that the demand for capsules will grow up to 150 to 200 billion a year. “Considering 800 billion coffees are drunk per year, a 20 per cent share for coffee capsules seems logical,” he says. “Especially now that the technology is in the public domain, we’re going to see a lot of new capsules on the market. I think the market leaders will stay ahead, however, as this is a difficult product to make. It’s easy to copy, but those copies aren’t providing a quality product.” He sees Nespresso continuing its strong market position even following the recent launch of compatible capsules. Nespresso had taken two companies to court for launching capsules that can be used in their machines, but Favre says the company shouldn’t fear loosing too much business to inexpensive competitors. The salvation, he says, will come in the quality. Whereas Nespresso’s capsules offer around 5.5 grams of coffee, he says the copies require cheaper, and therefore more, materials. To fit into the Nespresso systems, the compatible capsules have had to cut down on the amount of coffee used, with these copies using between 4.8 to 4.5 grams. “You can’t cheat when it comes to quality. If you put less coffee in the capsule, you’re going to get less aromas in the coffee,” he says. “It’s been a good war, but Nespresso has done their time and they will continue to come out ahead.” Taking a step back from his active involvement in coffee capsules, however, the Favre family isn’t ready to step back from the battle lines just yet. In early 2011, Favre and his wife Anna Maria held a press conference where they revealed the Tpresso – a specialised tea infusion machine that brews tea along seven different parametres. It’s the result of 10 years of Anna Maria’s work in experimenting with the secrets to tea brewing. “This is really quite the innovation, it takes out all the acid taste of a tea and you can drink it and appreciate it like a fine wine,” says Favre. The company is releasing the product in China, an appropriate tea-drinking nation. With tea more widely drunk than coffee, at around 1200 billion cups a year, Favre is confident of the market potential. The trick, naturally, will be to convince drinkers there’s a better way to brew than simply adding the tea to water. Rewind half a century of work, to the 1960s housewife and Nestlé’s faith in the dominant future of instant coffee and it would seem that at the age of 64, Favre and his wife have found themselves back in a familiar situation.
(Source GCR, November/December 2011)