How Nestle lost the capsule war

The Nestle trial in Dusseldorf ended in failure for the world's largest food producer. The court rejected Nestle’s demand for a temporary ban on competitors to make capsule coffee compatible with Nespresso coffee machines.

Nestle, still the monopolist in the capsule coffee market, went to court immediately after several coffee companies launched their product in capsules compatible with Nestle's Nespresso coffee machines. These companies include Master Blenders 1753, Betron DE, and Ethical Coffee. Nestle considered that this violates her intellectual property right.

It should be noted that the release of this coffee machine last year brought the company 3.5 million Swiss francs, which leaves about 4% of Nestle's total revenue. And Nespresso sales grew by 20% every year. Given all this, as well as the fact that new capsules are much cheaper, the outrage of one of the largest food producers is understandable.

However, the Dusseldorf court refused to satisfy the Nestle lawsuit because it did not find in the company's patents clauses indicating the right to make capsules for Nespresso machines exclusively by Swiss companies. According to the court, capsules are not a key component of the coffee machine and are not entitled to separate protection. The court also noted that with the purchase of this equipment, the buyer acquires all the rights to it, which allows him to independently decide which capsules should be used.

After this decision, Nestle's shares fell 1.1% in Zurich, but again rose to 0.6% by the end of trading. According to well-known analysts, this hearing is only the beginning of a flare-up of capsule warfare. Indeed, representatives of Nestle have already stated that they are going to appeal this court decision, as they are confident in their arguments and the need to protect intellectual property.