Why Bialetti enters the single serve coffee machine market?

by chee leng-Oncoffeemakers
(Singapore)

Until the launch of Bialetti single serve coffee machine, the Mini Express, Bialetti's bread and butter product is its stove top espresso maker.

And personally, it is difficult to generate high growth, here's why:

1. People will buy a Stove top espresso maker and probably use it for 3-5 years.

2. And when they change, they are likely to get the easier to use single serve coffee machine, i.e. Keurig, Nespresso etc.

3. Stove top in the current context, is just too difficult to use.

If Bialetti will to continue peddling just its stove top espresso maker, no matter how much they innovate, Bialetti should still be around, but it will not register hyper growth.

The single serve coffee machine market is directly opposite. It is the highest growing coffee segment. Many new users are coming on board, trading in their old coffee maker for new coffee machine.

And current users are not particularly loyal to any brands. How do I know that? Take a look at the problems Nespresso are facing: compatible products from ECC, Sara Lee, Nexpod etc.

Nespresso spends millions on branding. If they cannot capture the mind share of their customers, nobody can.

Then there is the sustainability of almost every coffee companies that get into the single serve coffee machine market.

CBTL, Bunn, Gloria Jeans, Starbucks, some came in for a few years and some just entered, but you have not heard of anyone bowing out.

The single serve market is booming so much that there is enough dough for everyone. Even companies that are doing compatible pods are making money!

While, it is easy to make some money, it is not easy to capture market share. With so many competitors and many more to come, it is an uphill task to just be maintaining your market share.

My $0.02

Bialetti mini express looks almost like a Dolce Gusto or CBTL (now that is my personal view). So, I do not think Bialetti is positioning their machine based on technical specs.

They introduces quite a few interesting flavors and boast of high quality coffee beans, so it is likely that coffee is their positioning.

This put them in direct competition with Nespresso. Nespresso marketing centers on its exceptional quality and it might not be easy to compete with Nespresso, given their huge marketing war chest,

Of course, if you are playing the coffee cards, other than quality, you need quantity. Without variety, users will look for alternatives.

And with the low cost of single serve coffee machine, the barriers to purchase a new machine is not much.

I think this mini express will create another stream of income for Bialetti. But, for them to make serious money, they will to find strategic partners.

They need to create reasons for customers to pick up their machines, i.e. Bialetti machine can serve illy coffee pods etc.

This is my $0.02, do you agree or have any comments on the above?