Innovation in Coffee Pods: Contrasting Market Strategies in France and the US

Coffee section at Monoprix in France

When I was in France this summer and went to Monoprix (one of the local supermarkets), I was struck by the coffee section.

In addition to coffee in a package, a third of the section was dedicated to pods for the coffee machines and sold under many brands (like the Nespresso one or the Keurig one in the US). 

In contrast, in the US, Keurig is the only brand available in supermarkets, while Nestlé pods can only be found online and in select Nestlé-branded stores in a few cities.

And the prices are so much cheaper too (in the US it is around $1 a pod, while in France it is more like $ 0.30-0.40) 

Why the difference?

First, the French traditionally drink much more espresso, so the pod market is more developed. Additionally, Nestlé lost its patent, so other brands, such as L’Oréal, Carte Noire, Lavazza, and supermarket brands, are now offering pods.

KitKat Nestle/Nescafe Partnership

In France, you can see pods from many brands, as well as partnerships (such as Starbucks or KitKat)  and many innovations like using the machine to make chocolate or mocha and compostable pods (they are usually non-compostable metal ones).

Compostable Pods

By contrast, the US market is dominated by Keurig, and the pods are made for larger cups of coffee that resemble brewed coffee. Keurig gained a dominant market share by partnering with many American coffee brands to sell K-Cups for its system.

In addition, when their initial pattern expired, Keurig responded by releasing the Keurig 2.0 system. This new brewer utilized technology to prevent unlicensed pods from competitors; however, the system was eventually hacked, and it also led to antitrust lawsuits. This strategy initially deterred the kind of broad third-party pod market seen in Europe.

By contrast, in the US, Nespresso remains a smaller, more premium brand that is often found in a few specialty stores, its own boutique shops, or online. The broader, more competitive market for its compatible pods that exists in France never developed on the same scale in the US. 

As an innovator, I love the story of two companies and their distinct cultures, which have radically different product offerings and strategies in each country. 

It is a good reminder that even in a world that seems to be increasingly standardized, your offers need to fit the unique culture of your market.