Company will sell capsules made of paper and a biodegradable polymer that can be used in home composting


Marcelo Melchior — Foto: Claudio Belli/Valor

Marcelo Melchior — Foto: Claudio Belli/Valor

When asked about what scenario he draws for 2023, the CEO of Nestlé in Brazil, Marcelo Melchior, raises his eyebrows, opens a smile, and says “next year in Brazil is never peaceful. I have been working at Nestlé for 34 years and it is that way. We are confident, though. We have great investments, in many fronts.”

Next year Mr. Melchior will run investments of R$2 billion. In 2022, he had planned to invest R$1.8 billion but will reach December having disbursed R$1.3 billion, due to delays in some construction works. The difference of R$500 million will be spent in 2023.

The company is expanding operations in several areas — from animal feed to coffee. And Mr. Melchior, who spoke to Valor this week alongside Nestlé’s top coffee executive Rachel Muller, is especially excited about Dolce Gusto, the coffee brand that debuted in Brazil in 2009, three years after Nespresso.

The company that invented the market for coffee in aluminum capsules to be used in its machines, and was copied by rivals, chose Brazil to launch its newest business in the coffee market: the sale of capsules made of paper and a biodegradable polymer that can be used in home composting. They break down in the ground in six months and have a watermark on the lid that can be “read” by the coffee maker, adjusting the machine to the type of coffee. This project in Brazil received investments of R$300 million.

The new machines, made in China by Wik, can be activated by the consumer’s cell phone, through an app. This way, Nestlé collects data and knows how the product is being consumed. “We can establish a closer relationship with the consumer,” says Ms. Muller. If the customer used to drink four coffees a day and now drinks one or none, the company can send him a message. The development of the machine and capsules took five years and was done by Nestlé technicians in Switzerland.

The executive notes that the Dolce Gusto Neo project was designed to be an environmentally friendly line, in line with ESG practices. The factory in Montes Claros (Minas Gerais) is the first Nestlé unit in the world to receive neutral environmental impact certification at all stages — it uses only reuse water, does not generate waste for landfills, and neutralizes 100% of its emissions. Women make up 50% of the workforce and some hold leadership positions.

The sale will start slowly, on December 1st, through Nestlé’s website. The marketing campaign will debut on November 20 on social media. “We will not make a massive sale because we do not know the size of the demand yet,” said Mr. Melchior. It takes 90 days for the machines shipped from China to arrive in the country.

Those who want to buy the novelty can sign up for a list on Nestlé’s website. On December 7, a megastore for Dolce Gusto Neo, as the new machine was named, is expected to be inaugurated. Also in December three kiosks are expected to be opened in shopping malls in the city of São Paulo.

This is not a cheap product. The machine, made from recycled plastic and metal, will cost R$899, and each capsule will cost R$2.8. There are 10 flavors of coffee from farms in Minas Gerais and Espírito Santo — six of the regular line, two organics, and two of Starbucks brand.

The Minas Gerais plant received new machinery to manufacture the capsules, certified by the non-governmental organization Forest Stewardship Council (FSC). The paper and polymer are imported, but Nestlé is already in talks to have local suppliers.

Melchior estimates that exports to other Nestlé units around the world will begin in 2023. His goal now is to map the Brazilian market. The consumer who likes coffee is concerned about the environment and has enough income to afford the machine and the capsules.

The executive says that this new biodegradable line is the future of the capsule system. The new capsule can be used in composting at the consumer’s home — mixed into the soil of a vase, for example, or it can go into the household’s regular organic waste. The paper and biodegradable polymer are gone within six months. The Nespresso line uses aluminum capsules. To recycle, consumers must take their capsules to the brand’s collection points.

Nestlé is not alone in this segment. The Swiss supermarket chain Migros announced two months ago for its CoffeeB coffee machines a biodegradable coffee capsule, covered by an algae-based film, which can also be used in home composting.

In Brazil, Nestlé says it is a pioneer in compostable capsules — made of paper and that can be composted at home, with certification. Other capsules on the Brazilian market “communicate the attribute of being biodegradable, however, they are made of plastic and require industrial composting,” Nestle says in a statement.

The new launch is being seen by the company as a way to get closer to customers — a concern that was put to the test a few weeks ago when Nestlé decreed a recall of Garoto brand chocolates. The sensor of a control equipment had broken on top of the production line and there was suspicion that glass fragments could have contaminated the product. The recall is now over, and the company has received no complaints from consumers.

When asked about what measures had been taken so that the accident would not happen again, Mr. Melchior said: “We are going to change the control and we are not going to use glass.” He was emphatic when affirming that the company is present in 99% of Brazilian homes and that it is concerned with the quality of what it produces. “We cannot disappoint. Otherwise, you buy another brand.”

*By Cynthia Malta, Ana Luiza de Carvalho — São Paulo

Source: Valor International
Nestlé inaugura Empório com produtos de todas as marcas em sua nova sede

Nestlé launched on Wednesday its first social impact food: a cereal bar with sale profits going entirely to NGO Gerando Falcões, which fights poverty in 1,700 poor neighborhoods in Brazil.

Called Gerando Falcões bar, the product is a global novelty of the multinational, present in 83 countries, and will initially be sold only on the internet, on platforms Mercado Libre and Empório Nestlé. “This is the first of many. My dream is to one day see, in supermarkets, exclusive shelves with all kinds of products, chocolates, cookies, coffees, whose profits are donated to social transformation,” said Nestlé Brazil CEO Marcelo Melchior.

The initial expectation, according to Carolina Sevciuc, head of digital transformation at Nestlé Brasil, is to generate R$1 million monthly, which will be allocated to the NGO´s iniciative Favela 3D.

The Favela 3D project — “dignified, digital and developed” — aims to restructure Brazilian poor neighborhoods to promote transformation through income generation, housing, citizenship, health, culture, education, and entrepreneurship programs.

This is the second major partnership announced by Gerando Falcões in less than two months. In December, Ânima Educação announced it will invest in courses in the communities where the project is being developed: Marte, in São José do Rio Preto (São Paulo state); Vergel, in Maceió (Alagoas state); Morro da Providência, in Rio de Janeiro; and the Boca do Sapo neighborhood, in Ferraz de Vasconcelos, Greater São Paulo.

“This initiative with Nestlé opens the way and will accelerate the development of social technologies. It can lead other companies to also want to create similar products, with actions that are institutionalized, that last,” said Eduardo Lyra, founder and CEO of Gerando Falcões.

According to Mr. Lyra, the NGO is supported by Kayma, an Israeli company run by Dan Ariely, a prestigious researcher in psychology and behavioral economics. The company specializes in creating digital solutions and methodologies that will help measure and assess the impacts of Favela 3D. “The goal is that it can be replicated in all the favelas in Brazil.”

The creation of the cereal bar involved the participation of 60 people, including employees of Nestlé and the NGO. There were more than 40 ideas presented, until reaching 12 final concepts that resulted in the bar. “We are starting sales through online channels because we don’t want to make this a chicken flight, but a hawk flight. We want all this learning, whether in distribution, in the price point, or in the investment made, to help us build something bigger, with sales that reach the whole of Brazil,” said Mr. Melchior.

According to Instituto Locomotiva, around 17.1 million people live in Brazilian favelas, equivalent to 8% of the population. Added together, they would form the fourth most populous state in the country, behind only São Paulo, Minas Gerais and Rio de Janeiro.

Source: Valor International

Nestlé plans to invest R$500 million over the coming year in its confectionery business in Brazil, which makes chocolate and cookies. During the first phase, R$200 million will be injected into the Garoto brand’s plant in Vila Velha, Espírito Santo. Another R$200 million will go to Nestlé’s chocolate plant in Caçapava and R$100 million to its cookie plant in Marília, both in the state of São Paulo. “For us, the recession never came. We have even managed to create 550 new permanent and temporary jobs for our two chocolate plants and 100 for the cookie plant,” says Liberato Milo, head of the chocolates division at Nestlé Brasil.

Source: Valor International

The demand for coffee is likely to take time to recover from the impact of the pandemic, even as cafes and restaurants are open again in large cities such as São Paulo. “The expectation for the coming months is to maintain the levels of consumption at home, but outside the home the recovery will be slow,” says the head of the Brazilian Association of Coffee Industry (Abic), Ricardo Silveira. According to him, in recent months the increase in home consumption has not fully compensated for the drop in sales in cafes and restaurants. But companies are betting on higher-end products for consumption at home. Nestlé, for example, is investing R$151 million in the Nescafé, Dolce Gusto and Starbucks brands in 2020, focusing mainly on premium products. Suplicy, for its part, seeks ways to survive the crisis after a 90% drop in sales in the first quarter due to social distancing measures. The company’s roasting facility saw production fall to 12 tonnes of beans per month. “Our expectation was to grow 40% this year, but I think we will shrink 30%,” CEO Felipe Braga says.

Source: Valor International