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Nespresso shares new insights on coffee farm economics to build its AAA Sustainable Quality™ Program

Go back to list Paudex, SWITZERLAND, Nov 12, 2009

Nestlé Nespresso SA, the worldwide pioneer and market leader in highest-quality premium portioned coffee, has concluded its Third AAA Sustainable Quality™ Coffee Forum, from 10 to 11 November 2009 in Boston. The Forum brought together experts, partners and key stakeholders to debate the Nespresso concept of Real Farmer Income™ which will deliver a clear roadmap to build and finance a truly sustainable future for the highest quality coffee sector.

Guillaume Le Cunff, International Marketing,
Strategy & Sustainability Director at 
Nespresso and Harvard Business School
Professor Michael Porter

Launched in collaboration with the Rainforest Alliance in 2003, the Nespresso AAA Sustainable Quality™ Program aims to safeguard the long-term supply of highest quality coffee, while at the same time improve the quality of life of farmers and their communities. The program is a unique approach to sustainability, with a vision to add highest quality to sustainability, which is now further differentiated from other programs by adding the dimension of long term economic value creation. In June 2009, Nespresso committed to a target to source 80% of its coffee through the AAA Program, from Rainforest Alliance Certified™ farms, by 2013. Real Farmer Income™ is the set of new insights into the economics of highest quality sustainable coffee cultivation that will allow Nespresso to meet this challenging target – as well as many thousands of smallholder coffee farmers with limited other opportunities to meet the standards required for certification.

“The Rainforest Alliance is delighted to be part of any effort to create long-term economic value for coffee farmers on their journey to certification. As a founding partner in the Nespresso AAA Sustainable Quality™ Program, we have already seen that improved economic outcomes can go hand in hand with increased environmental sustainability. Synthesizing economics and sustainability is the action of a 21st century coffee company. We look forward to making an active contribution at the Forum,” said Tensie Whelan, President of The Rainforest Alliance.

Real Farmer Income™ brings long-term economic value creation as a key financial enabler into the Nespresso AAA Sustainable Quality™ Program. It is an integral part of the program’s virtuous circle that offers enhanced environmental, social and income benefits for partner farmers, while providing consumers with highest quality coffee from farms well along the path to achieve sustainability. Nespresso launched Real Farmer Income™ in 2007, and the groundbreaking work identifies enhancing quality and yield as the two critical drivers of long term economic value creation for coffee farmers.

“We are delighted to bring together our partners and industry experts to discuss a key challenge facing the coffee industry – how to fuse together economic value creation and enhanced environmental and social performance. Balancing long-term economic, environmental and social considerations has always been our vision for the Nespresso AAA Sustainable Quality™ Program. In fact, this balance is vital if we are to create a truly holistic sustainable future coffee industry, ” said Richard Girardot, CEO of Nestlé Nespresso SA. “Real Farmer Income™ has established that sound economics must go hand in hand with enhanced environmental and social outcomes. The discussions of this forum will take us toward an action plan for investment to deliver this future for our partner farmers.”

 

Third Nestlé Nespresso AAA Sustainable Quality™ Coffee Forum

The Third Forum, hosted from 10 to 11 November 2009 in Boston, brings together experts, academics, industry leaders, commercial partners, farmers, NGOs, public and agri-finance specialists to debate about “Financing the Future and Creating Real Farmer Income™”– the Forum’s focus.

The Forum will specifically consider six short-term pragmatic issues with longer-term implications to develop the road map to finance the future.

  • Creating Real Farmer Income™ through farm renovation
  • Certifying smallholders in Colombia
  • Driving optimal yield and quality through new varieties
  • Stabilizing the long term sourcing from AAA farmers through innovative pricing mechanisms
  • Building long term farmer loyalty with breakthrough support services
  • Creating Real Farmer Income ™ through environmental services

Celebrated strategist, author, and Harvard Business School Professor Michael Porter is among the experts addressing the Forum. Professor Porter, one of the originators of the shared value concept and member of the Nestlé Creating Shared Value Advisory Board, said: "The challenges of economic, environmental, and social development in coffee growing regions are all interrelated, and there is no quick fix. Instead, we must approach them with the concept of shared value. Nespresso's innovative program, which helps farmer's achieve higher prices, better yields, and greater environmental performance and sustainability, is not driven by charity but by creating value. Nespresso will benefit strategically from the quality improvements that farmers achieve and coffee supplies that will be far more sustainable over time. It is this alignment between corporations and social challenges, not a mindset of separation and tradeoffs, which is the key to both economic and social progress."

At the Forum, participants will review a ground-breaking study commissioned by Nespresso and undertaken by leading South American business school, INCAE. Based on this study Nespresso has developed a detailed economic model that identifies the short-term economic barriers preventing farmers and partners from investing in a sustainable future. This data will impact the development of the Real Farmer Income™ concept as a predictive tool for use in different coffee regions as part of the overall Nespresso AAA Sustainability Quality™ Program.

The INCAE study was conducted in Brazil, Guatemala, Colombia and Costa Rica, four of the Nespresso coffee countries of origin. The study analysed data from 510 farms participating in the Nespresso AAA Sustainable Quality™ Program and compared that with data from farms located in the same regions that were not part of the program, developing P&L models for each.

Professor Lawrence Pratt from INCAE said: “Our independent study highlighted that in most cases farmers do not know their production costs or productivity levels. Those farmers are most concerned with the final sale price of their crop, rather than the net farm income. There is a real opportunity for Nespresso to continue to positively contribute to improving farming and management practices, notably quality and yield improvements, to deliver long term economic creation as well as environmental and social benefits as part of its AAA Program”.

Real Farmer Income™ and the AAA Sustainable Quality™ Program are part of the Nespresso contribution to the Creating Shared Value initiative of Nestlé.

Contact information
H.-Joachim Richter
Director, Corporate Communications
Nestlé Nespresso SA
T +41 21 796 96 20

Note to Editors:

Nespresso AAA Sustainable Quality™ Program
AAA Sustainable Quality™ Program is a program of integrated coffee farm management practices ensuring compliance with quality and sustainability guidelines. The aim of the Program is not only to safeguard the long-term supply of highest quality coffee but also to reward farmers who produce these beans by focusing on quality and by using sustainable methods. The program aims to:

  • Stabilise the supply chain and safeguard the long-term supply of highest quality coffee
  • Created shared value with strategic partners in the value chain (from the farmers through to the Club Members)
  • Improve the quality of life of farmers and their communities

About Nestlé Nespresso SA
Nestlé Nespresso S.A., the worldwide pioneer and market leader in highest-quality premium portioned coffee, introduces consumers to the world’s finest Grand Cru coffee to be enjoyed in the comfort of their own homes and savoured outside the home, in locations such as gourmet restaurants, upscale hotels, luxury outlets and offices. Nespresso’s offer focuses on its unique NespressoTrilogy, the unmatched combination of exceptional coffee, smart and stylish coffee machines and personalized customer service. Together, these three elements deliver moments of pure indulgence - the Nespresso Ultimate Coffee Experience. Headquartered in Paudex, Switzerland with more than 3,900 employees, Nestlé Nespresso S.A. sells products in more than 50 countries directly to its customers and at the end of 2008 operated a global retail network of more than 157 exclusive boutiques in key cities around the world. For a third year, it was named the fastest growing brand within the Nestlé Group and one of its "billionaire brands", achieving in 2008 revenue surpassing CHF 2 billion for the first time and maintaining average annual growth of more than 30 percent since 2000.

About INCAE
INCAE is the leading Latin American business school. Since 2008 it has been in partnership with Nespresso to help move forward the debate around the economics of coffee farming. It conducted an independent study in order to understand if, in fact, the Nespresso AAA Sustainable Quality™ Program was really having a positive impact on farmers’ income levels. The study was conducted in four Nespresso coffee origins: Brazil, Guatemala, Colombia and Costa Rica.

About Rainforest Alliance
The Rainforest Alliance works with people whose livelihoods depend on the land, helping them transform the way they grow food, harvest wood and host travellers. From large multinational corporations to small, community-based cooperatives, businesses and consumers worldwide are involved in the Rainforest Alliance’s efforts to bring responsibly produced goods and services to a global marketplace where the demand for sustainability is growing steadily. For more information, visit www.rainforest-alliance.org.

     

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