A small British manufacturer has struck at the heart of the $10bn coffee capsule market after a UK court ruled that its pods do not infringe patents on the world’s largest food company’s Nespresso machines.
In a classic David versus Goliath case, the High Court of Justice ruled in favour of Dualit, which sells capsules that fit Nestlé’s Nespresso machines and typically cost about 12 per cent less than Nespresso’s own brand.
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The ruling is a blow for Nestlé, which has a higher sales density for Nespresso machines at its stores than Louis Vuitton can boast for goods in its shops.
It is “the closest thing to a luxury brand within fast-moving consumer goods”, according to Jamie Isenwater, an analyst at Deutsche Bank. He estimated the division has annual sales of SFr4.5bn ($4.76bn) and produces some of the company’s biggest margins.
Leslie Gort-Barten, the managing director of Dualit, who commissioned a factory to produce rival coffee pods while the case was still in court, said his counsel was dwarfed by that of Nespresso.
“They had a whole football team or even rugby team of lawyers; they tended to outnumber us five-to-one,” he said.
Even so, Mr Gort-Barten said he ran up legal bills of about £1m, a hefty cut for a company with revenues of £15m – or about the same as Nestlé generates in a matter of hours.
“It was a big risk,” he said. “But that’s the little man – he has to stand up for himself really.”
