Coffee machines don’t just make coffee, they make us happy too.
The other day I found myself at a suburban railway station at 07:10 and noticed that on the top floor of the, still somewhat Brief Encounter-ish, station building there was a small coffee shop. It was early-morning-English-winter-cold. The tiny gas fire barely dulling the jagged edges of the icy chill that hung in the air, but they did have coffee.
As I spend my life observing and advising business owners I couldn’t help getting into conversation with the owner about his rationale for starting this business, with such an incredibly peaked demand profile; the only custom he got was from commuters and that just a few hours a day. He didn’t have a great answer to that question but he did mention that he had been an early adopter of a particular type of capsule coffee machine and this was something he was very proud of. As I left I realised that this pride was misplaced: to my taste buds at least, capsule coffee machines do not the best of coffee make. It got me wondering how many first-timers like me didn’t return because his coffee just wasn’t up to the benchmark set by the now ubiquitous branded coffee parlours littering the modern townscape.
Most of us have now embraced the coffee culture colonialism of the US coffee shops who, to be fair, make pretty good coffee. Even though consumption of such beverages is now routine for many of us there is still a hint of aspiration built into every cup. We can now sit in Central Perk with Jennifer Aniston and Friends. We have even embraced an extravagant coffee lexicon with “barista” and “skinny” and any number of different words for small, medium or large, now just everyday language. It still makes me smile though to hear a grown man asking for a “Java Chip Frappuccino”, or anything similar.
No wonder then that we should want to emulate our local barista at home and impress our friends with a shiny new coffee machine; we can now bring this cultural phenomenon into our very homes. Even though, at least to me, capsule coffee is not a patch on more conventionally brewed coffee, it has made Nestle in particular a lot of money with its Nespresso brand of capsule machine. We want the benefit of coffee sophistication at home so much we are prepared to pay an awful lot for it. Nespresso’s accessory pricing strategy means they make little on the machines but 30% profit on the capsules. We can only guess at their pique at having lost a court case this week that will allow Dualit and others to sell capsules for use in these machines too.
Nespresso have used George Cloony to personify the brand of late. As a Hollywood A-Lister he is a true aristocrat in the US social pecking order and it seems we all want to emulate him, to live George’s life, and one little way we can do that, the adverts tell us subliminally, is to buy a Nespresso machine. (George clearly loves his machine and probably carries one with him as he circumnavigates the globe: an extra seat in First Class perhaps? Or maybe that is why he just has to have a private jet these days.) Really? Are we really that superficial? Sadly, the answer is, Yes. You have to look no further than Abraham Maslow for an explanation. He came up with an idea that we all have a Hierarchy of Needs and the second from the top, above Love and Belonging and Safety, is Esteem. We all need esteem and if we can afford it we will buy things to help build it into our lives.
When you are buying a Nespresso machine you might get a cup of coffee, but what you are buying is self-esteem and you are paying a lot of money for it. Esteem driven aspirational spending often has a great return on capital. If you run a business you could do a lot worse than copy the lessons of the self-esteem coffee bean and think of how to incorporate something similar into what you do. If it has a “tang” of the US about it, so much the better. If you are looking to start a business, have a good think about it too – The Spring Break Holiday Company perhaps?
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