Nespresso is known globally for its premium single-serving coffees, and key to its success and customer loyalty is the company’s emphasis on—and investment in—the consistency of its coffee’s flavour.
However, coffee is a delicate crop, frequently grown in developing countries and highly dependent on healthy ecosystems. This leaves coffee—and Nespresso—susceptible to the increasingly volatile effects of sociocultural events and climate change.
For Nespresso, acting today to avoid the perils of tomorrow is not just good citizenship; it’s sustainable business.
“Sustainability is really at the core of our business. It is an imperative to our long-term business success,” explains Yann De Pietro, operations and sustainability technology manager for coffee at Nespresso.
“There have been studies saying that by 2050, Arabica coffee may not be available anymore in some countries if we don’t do anything now.”
The company is working to combat that decline so that the seeds of Nespresso’s competitive advantage remain fertile long into the future.
Nespresso has made a deliberate choice to integrate these challenges into its decision-making process and act on them through sustainability programs. These programs help convert liabilities into business opportunities while supporting the farmers and communities that grow coffee.
A smarter approach to agribusiness
Nespresso works with over 100,000 farmers in 13 countries, up from 300 farmers 15 years ago. In 2003, the company launched its responsible coffee sourcing program, the Nespresso AAA Sustainability Quality Program, in partnership with the Rainforest Alliance.
The program is built on two convictions: that high-quality coffee and the sustainability of farming communities are interconnected, and that only by building trusting, long-standing relationships with coffee producers can Nespresso hope to make a positive difference.
The company supports the implementation of sustainable agricultural practices at farms by investing in technical assistance, paying premiums directly to coffee farmers, and co-financing infrastructure improvements.
Communicating with customers through maps
Nespresso communicates its sustainability work to customers with the help of location intelligence technology.
“When we need to explain something to [customers], a map is much more relevant than a report,” says Nespresso’s Yann De Pietro.
The company’s sustainability dashboard features information such as the location of Nespresso-supported farms, farmers’ profiles, and the dates when farms were last visited by a Nespresso agronomist.
“We can always say we work with 100,000 farmers in the world, but if people don’t see it, they won’t believe it,” De Pietro says. “That’s the big win that we have with GIS. It’s sharing, communicating, and making people understand.”
As part of that effort, the company has invested in a network of over 450 agronomists—specialists who provide coffee growers with on-site technical assistance and trainings on practices such as pruning, crop renovation, fair treatment of workers, water usage, and biodiversity conservation, all of which can earn farmers industry certifications.
Through the AAA program, Nespresso invests approximately US$35 million per year in technical assistance and premiums paid to farmers for their quality coffee. The educational program is free to farmers and doesn’t require them to sell to Nespresso, De Pietro explains. But the benefits to each side help create long-lasting relationships and loyalty.
Nespresso has a publicly stated goal of sourcing 100 percent of its “permanent range” coffee—the brand’s most prominent line of coffee capsules—from AAA farmers by the year 2020.
In 2017, the company bought approximately 90 percent of its beans from those farmers.
Progress through digital transformation
Today, Nespresso is using GIS technology – and the resulting location intelligence – to build a comprehensive view of farming operations and accessibility across regions.
“We have started to have a global vision of accessibility of the farms,” De Pietro says.
While the sustainability program has been in effect for years, Nespresso has seen recent rapid results due to advances in digital technology.
“Digital transformation is a key change for sustainability at Nespresso”, De Pietro says. “[We] want to provide maximum impact, so we need the tools to help us to maximise our efforts.”
On the balance sheet, the results look promising. When Nestlé announced its 2017 results, it singled out Nespresso’s growth worldwide.
At the centre of Nespresso’s digital transformation is location intelligence. The company has built a robust monitoring and evaluation system using advanced digital technology that records, maps, and shares data about farms, farmers, and coffee crops.
This reveals local feedback and insight on AAA’s impact, as well as the status of each farm, including its objectives, achievements, and performance.
The digital platform—which is powered by a geographic information system (GIS) and data analytics—also reveals insights into the way farmers deliver coffee beans to central mills to be harvested, a key factor in supply chain productivity and efficiency.
Using location to identify new opportunities for farmers
One of De Pietro’s goals is to help farmers get their crop to market more efficiently. A recent analysis in Colombia exemplifies how location intelligence can create business advantage for the company and its partners.
Location analytics revealed that farmers brought their crops to certain Colombian mills—many of them close to their farms—less frequently than projected.
De Pietro queried the GIS technology to dig deeper into the data so that he could understand these behavioural patterns. What he discovered was a reminder of topography’s effect on time-to-market.
With basic maps, he says, the team could work out the distance between farmers and mills. But only with sophisticated location intelligence could they understand the true travel distances to each central mill.
Applying a similar analysis to the agronomists who visit Nespresso’s AAA farms, De Pietro and the team found a similar pattern. The analysis uncovered areas where the terrain required long rides or walks through the mountains to reach certain farms, making frequent visits impractical. For a company that works with 100,000 farmers, having a digital engine to deliver that kind of intelligence is crucial.
In both cases, location intelligence pointed the way to better business and sustainability practices.
If the mills were more centrally located, farmers could get coffee to market more quickly. And when the agronomists can reach the farms faster, they can hasten the day when 100 percent of Nespresso’s coffee is sourced from sustainable farmers.
The future of sustainability for Nespresso
There is no doubt the use of location intelligence to shed light on the granular details of day-to-day coffee farming sets Nespresso apart from its competitors.
By examining and adjusting locations for farmers, the company frees up precious time and increases productivity.
This impacts not only farming, but also time for education and strategic planning—the very activities Nespresso hopes will sustain its coffee crops far into the future.
This blog is an extract from WhereNext magazine. Read the full article by Mike Johnson – The Business Value of Sustainability – or email us for further information on how location intelligence can support your agribusiness goals and sustainability efforts.