Wednesday, August 27, 2008

Nespresso 1 / Amex 0

Up near the Opera, I was very surprised to see that the venerable old office of American Express on the rue Scribe is being converted into … a Nespresso store. Apparently Amex is keeping a small office next door, but the big corner entrance now leads into a Nespresso outlet that is under construction. It's amazing because that Amex office has been there for ages, and it is (was) something of an icon. Nestlé hasn't torn down the Amex sign over the door (yet?), but the rest is being completely rebuilt.

Nestlé seems to be pulling out all the stops to sell its Nespresso machines and cartridges. It's very obviously a variation on the razor-blade model: sell the razor for almost nothing and then make your huge profits on the blades. In this case, sell the machines at a reasonable (but not cheap) price, then make your billions on the proprietary coffee cartridges that people must buy for the machines. It's as transparent as the giant picture windows at the front of the store, but people still go for it.

This store that vanquished Amex is big, but not as big as the gigantic Nespresso store on the Champs, with George Clooney half-smiling from every window. That store is comparable to the extremely chichi and huge Louis Vuitton store down the avenue. The money Nestlé must be spending to push their Nespressio line … the mind boggles. It's just coffee!

Then again, if Starbucks can put a coffee shop every 300 feet in Paris today (and yes, they have one on the Champs, and several others nearby), coffee must be big business, at least this week. There were no Starbucks here a few years ago; now they seem as common as McDonalds. At least Starbucks offers a very tasty vanilla Frappucino that is not polluted by the taste of coffee, although it's extremely expensive (as it must be in order to maintain 95% margins). When I can save up for it, I like to buy one occasionally, especially in summer because the Frappucinos are very cold (as they should be, since they are 99% crushed ice).

It's getting warmer again; high temps predicted for days to come. I hope the weather reports are wrong—they often are.

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