Nespresso: Brewing a Business Case for High-Risk Markets

Nespresso: Brewing a Business Case for High-Risk Markets

By Naki B. Mendoza
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Freshly picked coffee cherries. Nespresso creates shared value for smallholder farmers in fragile South Sudan. Photo by: Nestlé / CC BY-NC-ND

Monday, July 6, 2015 - 10:00am

CONTENT: Article

The challenge to create shared value can extend to creating entirely new industries, particularly for companies operating in fragile markets newly emerging from conflict.A post-conflict environment presents myriad opportunities for new business — opportunities that must be weighed against ever-present risks of high operating costs, value chain bottlenecks and, of course, a resurgence of hostilities.

How does a major corporation balance those tradeoffs to build a strong case for investment? That is precisely the issue that coffee giant Nespresso grappled with when undertaking a flagship project to revitalize coffee production in South Sudan in 2011.

Four years on, 2015 marks a critical next step for the project as the first year beyond initial startup phase.

From cradle to grave and back

For Nespresso, the global coffee brand of Swiss food giant Nestlé, the decision to enter South Sudan was rooted foremost in the attractive source of supply of its core product. The world’s youngest country is also one of its oldest coffee-producing cultures, home to a tradition of coffee cultivation that stretches back several millennia in east and central Africa.

“Africa is the cradle of coffee and there are exceptional coffees in South Sudan,” Daniel Weston, Nespresso’s director for creating shared value, told Devex. “We are rediscovering something that has been unexploited for many, many years.”

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