1. Finding the New Locus of Competitive Advantage

The story of the coffee pods business that Nestlé invented and dominates serves as a wake-up call for companies in other industries facing maturing markets. For decades, Nestlé has been the world’s largest coffee company. Its Nescafé brand dominates the global instant coffee market, accounting for more than 360 million of the almost 2 billion cups of coffee consumed daily on the planet.1 But by the turn of the twentieth century, the company had identified several trends in the coffee market that were cause for concern. Eking out growth and maintaining strong margins in the maturing coffee market was becoming increasingly difficult. Despite the company’s marketing and product development efforts, ...

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