Italian MP Elisabetta Zamparutti's tone while questioning Mrs. Prestigiacomo, the Italian Environment Minister, played on two underlying concepts described in similar tones in the "Nespresso" entry in the English-language version of Wikipedia (consulted on March 13th, 2010). One: the "ecological footprint" of a coffee prepared with capsules is far greater than "all other preparation" methods. Two: as Nespresso machines and capsules are linked to each other, the Nespresso model "is contrary to everything that is done for other types of coffee" - basically it's against the free market. 

Some people abide by these concepts. Hence it is obvious that somebody wanted to capitalize upon the "urge for sustainability" expressed by some segments of the coffee market. It is peculiar, though, that the first to do this is Jean-Paul Gaillard, Nespresso's leader until 1997. Those were the stormy days of Nespresso's cold-start in the world of single-portion systems, when Nespresso's "Club" was launched. The figures speak for themselves: on the first day three members joined, on the second day there were eleven of them, but on the third day: none. Today their non conventional distribution channel profiles customers with an accuracy unavailable to any competitor relying on traditional channels, and presents itself as a marketing case study on a par with Amazon or iTunes Store - as well as the perfect launching pad for any rocket Nestlè should wish to send into "food-for-status" space.

Twenty years after those hard days, Nespresso's former boss is the first to announce a Nespresso-compatible capsule sold utilizing quite the opposite business model: distributed by supermarkets, leveraging on the installed-field of machines the Nespresso people have built during the past two decades. Patented by Gaillard's Ethical Coffee Company (ECC), these capsules boxes should finally "free the market" and offer a couple of advantages: they will cost less (20% less, they say) and will offer (being "biodegradable in 60 days") a sustainable solution, whatever that means.

To the tune of "I do not copy, I innovate", Gaillard announced that he had "seen a gap in the perforation system of the bottom of the [Nespresso] capsule" and after zigzagging around the "1500 patents" that constitute Nespresso's IP platform, he used this gap as the basis for ECC's 2008 patent that is in fact intended to improve "existing capsules". No names mentioned.

Starting from next May, the French retail chain Casino will distribute - thanks to an 18-month exclusive deal with ECC - the "green" Nespresso-clone. Casino was virtually an obligatory choice, as monsieur Gaillard explains, both "for the vision and the guts" of Casino's CEO and majority shareholder, M. Jean-Charles Naouri. Naouri is the man known to the French as the "Einstein of the supermarkets" and was - in 2009, according to the magazine Challenges - the 63rd richest man in France.

The reference to M. Naouri's manly attributes is hardly surprising, since some considered that Nestlè's lawyers would probably line up to buy ECC/Casino capsules, as part of their vow to defend Nespresso's IP rights from unlawful attacks.  Gaillard, jokingly referring to himself as David (as opposed to Goliath, a.k.a. Nestlè), has indeed chosen a heavyweight to help him carry out his task: the 2nd largest retailer in France - with sales of 26.75 billion Euro and 1,849 million EBITDA, in 2009.

So: is this the ideal path towards a freer, environmentally friendlier world. Or not?

Well, on the subject of "free competition" let us follow the advice of the experts. For instance the President of one of the world's largest agro-industrial companies, Archer-Daniels-Midland (ADM). A forthright speaker and a generous bi-partisan political contributor, Dwayne Andreas stated in a 1995 interview, that "the only place where you see a free market is in the mouth of politicians". Indeed, although the term "perfect competition" would lead us to think that it represents the ideal market structure, empirical observation leads us to agree that companies naturally aim at attaining a monopoly. This is the perfect market structure from a seller's standpoint - for it's the provider (supply) who sets the prices. And this is a whole different ball-game from perfect competition, where it's the client (demand) who sets the prices.

Therefore it is difficult to switch from one mobile-phone operator to another, and my freely downloaded Opera browser prompts me to use it as the default choice. Similarly, in Italy, both coffee roasters and vending operators tend to free-loan coffee machines to restaurants and offices, so that they can create an exclusive relationship. Even Casino negotiated an exclusive deal with Galliard - and the ECC capsule is patented, so that (if ECC's patents stand on solid grounds) ECC's technical solution may be not used by other players.

In brief, it is normal to surround your business with barbed wire: it is reasonable for companies to be allowed to recover R&D (and marketing) investments, so that other companies cannot piggy-back on a company's investments and - quite simply - start selling a compatible, less expensive (and/or more profitable) product. Also, machines using closed systems (see for instance PC printers) tend to be sold at attractive prices that often do not make it possible to fully recover the costs associated with launching a product on a national (or international) scale. The machine, indeed, is more of an investment than a cash-cow, even for coffee-roasters: only huge capsule volumes make for "big business", but huge volumes involve huge investments (especially when launching into the in-home coffee market). It is therefore to be expected that coffee players protect their systems - it would be rather risky not to.

As for the other main topic, the environmental impact of coffee-capsules, let me use a privileged observation point - the one I am writing from: flying at 24.000 feet above Lake Neuchatel. I am right on top of the new quadrangle of "international espresso", as defined by the four cornerstones of Avanches (the Nespresso production plant), Orbe (Nestec's R&D center), Friburg and Paudex (respectively the headquarters of ECC and Nespresso). If we drew a circle around those four small Swiss villages, within a radius of a mere 25 kilometres we would find (at least in terms of patents) more capsule technology and coffee inventors than in any other part of the world.

But I digress. Back in the plane the flight assistant is serving airline lunches in single-use containers and I am counting the objects destined to become garbage: the entire tray and its cover, a paper napkin, two spoons plus knife and fork and their packaging, two cups, the plastic "tablecloth", five single-portion containers (pepper, salt, sugar, butter and coffee whitener), the packaging of the chocolate chip biscuit, one container for the main course, including the lid (some people - as the food is of pretty average quality - don't even care to lift the lid and the crew throws the whole thing away). In total I have counted nineteen items ready for disposal: actually twenty, if you consider yourself a gourmet.

Let me put this a different way: when we talk about the environment, we would do better not to mince our words. In 2010, our existence is swamped by environmental luxuries our world might not be able to sustain in the long run: cotton swabs and diapers and pocket paper tissues, pre-washed pre-cut pre-packaged salads, Kiwi and strawberries and lamb-chops from Lake Taupo flown across the globe, papayas and tangerines that land in our plates from Ecuador, Australian Wagyu beef steaks served on Engadin tables. In addition (half-empty, gas-guzzling) cars or public buses do not fit into the environmentally-friendly picture we would love to believe is a true portrait of our world. And should we dare to mention bio-fuels? Even Vancouver 2010, heralded as the "green Olympics", prompted environmentalists to hold massive demonstrations against the allegedly catastrophic eco-balance of the event.

Talking of closed systems, take safety razors: they create a lot of waste plastic and metal, compared to good old fashioned cut-throats. And what about the printer cartridges in my office? Whenever one colour runs out, the outer box is so big it doesn't fit in the waste paper basket. I mean: I throw away almost two pounds of paper, plastic, ink and heaven knows what else - and that is per single colour. Made in Singapore, that cartridge will enjoy one or two months of glory in Milan and then it will be buried (or incinerated) in don't-ask-me-where.

All this waste is a great help to the general economic system - yet it remains what it is: unsustainable waste. Let's lay things on the line: our capitalistic way of life with its steadily growing consumption patterns is destined - in a short span of time, at least short in historical terms - to change into a conservation and selective model of consumption. But, while we wait for the old model to die, there is one thing that coffee capsules do, and help the coffee industry with it: to lead the concept of "drinking a good coffee" back to its sacred, ritual roots. Because coffee drinkers should not forget what coffee used to be: a pleasurable luxury, an intense ritual for our senses.

Yes. Use European-level labour costs throughout the value chain (and not - as it is often the case today - underpaid labour, at least by "first-world" standards) and coffee as a commodity would cost three or four times more than it does today. Judged from this perspective, coffee-capsules avoid wasting a precious commodity. A coffee-capsule raises to new heights a noble raw material that the 21st and 20th century have reduced to a banalised swill prone to free-refills.

As my Dutch friends like to joke: "Since Senseo kicked in heavily, soft-pads have seriously affected the consumption of Holland's biggest coffee drinker". And who might this be? "The sink". Yes: single-portions have drastically reduced the amount of stale coffee gurgling down sinks in the bathrooms of homes or convenience stores. The same applies in Italy and the Latin countries, where coffee consumption uses different paraphernalia but wastage is again a problem - happily curbed by coffee-capsules.

Moreover: a capsule-machine is more energy-efficient than a traditional coffee machine, where high wattage and repeated brewing cycles are required to reach that thermal balance needed to brew a perfect cup. Also let me mention what would be the end result of replacing the millions of capsule-machines installed in Europe and elsewhere with fully-automatic coffee-machines - which means changing from a simple water-heater to a complex unit full of mechanisms and (because of them) very prone to technical break downs. This would mean beefing up the technical staff, as well as increased transportation costs and related environmental costs: the bottom line being a more expensive cup of coffee.

On top of all this (and now I am thinking about Kimbo's MaxEx or Illy's Iper-Espresso), capsules - to date - guarantee an additional bonus: great brewing technology.

So it's easier to take pot shots at the economic and environmental cost of coffee-capsules than it is to draw informed conclusions. M. Gaillard's capsule has "opened" the world of Nespresso to competition by drawing up an exclusive contract with Casino, patenting around its features and offering "a capsule biodegradable in 60 days" - even though I have never heard of a fully environment-friendly, oxygen-impermeable, economically-sustainable packaging material.

One thing is for sure: the ECC/Casino capsule will cost less because - as Gaillard explains - the business model hinges on 9000 stores promoting and selling (at their cost and at once) a product that took almost 25 years (and a lot of effort) for Nespresso to introduce to the world. What a sharp idea.

This is probably the reason why the Belgian economic magazine Trends-Tendances wondered whether the move might not have been piloted by Nestlè. Their idea? ECC is a smoke-screen created not so much to hurt Nespresso but to penetrate Senseo's market: Douwe Egberts' system selling their soft pads at between 16 and 39 eurocents per cup, mainly in Benelux and France.

Such a scenario would be enticing for anybody who has invested in Nestle's shares: a) the biodegradable arena fenced off by patents (at least to a certain extent); b) ECC's Troy horse opening a pathway to supermarkets for Nespresso-compatible coffee, and c) definitely (and literally) the first cartridge shot against Sara Lee - the one company (with Nestlè and perhaps Kraft) able to impose a single-portion format on European retail chains. All the above d) right in the heart of Nespresso's stronghold, France, and e) leaving Nespresso's brand-clout intact - distributing its "exclusive" capsules to the "privileged few" (simply a manner of speaking).

Monsieur Gaillard's upbeat tone would lead us to believe that Nestlé is not behind this one. For sure we know Douwe Egberts/Sara Lee are not caught asleep at the wheel: indeed, hardly a month after Gaillard's public announcement, the American-Dutch conglomerate (whose food and beverage division alone declared sales of 3 billion USD in 2009) has announced it will market a Nespresso-compatible capsule with its high-profile brand, "l'Or".

The move is ripe with symbolism: a few days after Easter 2010, Sara Lee will launch its effort to resurrect customers who fell prey to the darkness and "slavery" of the Nespresso club. That is roughly one month before the Casino/ECC launch. And using one of Gaillard's refrains (environmental and economical sustainability) - in Sara Lee's case guaranteed by the Utz certification.

Last but not least, this story brings some good news for Italy, after Nespresso had proudly stated it had surpassed Lavazza's machine sales "in the cradle of espresso" - the Italian market. Indeed, as the specialized press has reported, one of ECC's private equity funds appears to be Alessandro Benetton's.

So: the tournament is not over yet. We know, instead, that its start is set for next May. And it will not be a tournament for pushovers.

(First published in Italian on April 2nd, 2010 in Comunicaffè)