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Nestle's Coffee Business Is Competing With Itself

  • A cheaper brand of single-serve pods gets increasing attention
  • Dolce Gusto “is coming in to take the baton and move forward”

Nespresso beware: Your status as Nestle’s favorite child is under threat from your scruffy kid brother. Nestle SA, creator of the high-end Nespresso brand of coffee pods and espresso machines, is increasingly leaning on a cheaper range of single-serve coffees that it calls Nescafe Dolce Gusto.

Since Nestle launched Nespresso three decades ago, the brand has become one of the Swiss company’s most profitable products. In recent years, though, Nespresso has faded as rivals have eaten into the market and upstarts sell less-expensive pods that fit Nestle’s machines -- likely making the brand a top priority for Ulf Mark Schneider, who will take over as Nestle’s chief executive officer at yearend.