Annals of commerce

Printer cartridges and safety razor blades, move over: this year’s Ramsey pricing award winner is the Nespresso coffee system…and these guys don’t even have the good grace to give you a break on the initial purchase that puts the tapeworm’s head in your wallet.

Making espresso-family drinks at home has always been something of a nuisance.  If you want a really nice cup of Giuseppe in this mode, you need to grind beans, fill a little cup with a porous bottom and attach it to a machine, wait while hot water is squooshed through it, and steam some milk  (with a nozzle on the same machine) if you aren’t taking it neat.  For the next cup, you knock the grounds out of the cup and start again…pretty much the same sequence you see at your neighborhood bar, but you don’t have the automatic grinder/tamper they have that makes the process quick and repeatable, nor the grounds bin with a rubber bar for knocking out the basket.  We had one of these machines for several years and didn’t use it much after a while, because it was just too much bother for one or two cups, and the jouer-avec entertainment faded quickly.

Now you can get a more automated espresso machine that represents real progress.  It holds a largish tank of water and a hopper of beans.  Push one button, and it grinds the beans, brews a cup, and empties the brewing basket.  To steam your milk, you still have to stick a nozzle into it and open a steam valve (but as my dad used to say, “what do you expect with a bowl of soup, a ham?”).  We have a Saeco that originally cost $300 as an impulse-purchased open-box item at Fry’s that has been trouble-free for four years, making about a thousand cups a year; this model costs $1200 now, but Amazon offers a DeLonghi with similar functionality for about $600.  Peet’s $13/lb Italian roast comes out to about 10c per serving for this system, plus 16c for a latte’s worth of milk.  As the cycle takes about 30-60 seconds and the machine is 1200w, maybe half a cent for electricity, less without the milk.

What I’m working up to is truly a wonder of modern enterprise. The corresponding Nespresso machine costs about $550 (these are all on-line prices) and you don’t pour beans into a hopper every twenty cups.   Instead, you drop a little aluminum “pod” into it for every one cup, close a lid, push a button, and voila! a cup of espresso.  The aluminum cup – I just dumped one out and weighed the contents -  contains 4g  of coffee that was ground heaven knows when and sealed in its little cup to age in a warehouse (g means grams, gentle reader; a gram is about 1/30 of an ounce).  These pods cost about $1 each on-line, though the sales clerk at Sur la Table, where I came upon this system today, told me that while they don’t sell them, they are available for $.55.   Even at the lower price, which I can’t find on the web, this coffee costs $66/lb, and no, you cannot use the machine with anything else; not someone else’s pods, and certainly not ground coffee.  Nestlé pods, pal; it’s a lifetime relationship.  That $500 machine is a down payment on a 400-900% tax on every cup of coffee you make with it: three cups a day and you pay for the machine again, or more, every year you own it. Next, a frying pan customized to work only with a single brand of eggs, yup.

What I can’t understand is how these geniuses were so dumb as to market a machine that uses tap water.  How hard could it be to design a sealed aluminum non-refillable $15 water pod, filled with one of several different gourmet waters matched to the coffee blends (the coffee pods come in about twenty different color-coded blends), like, say, Milano da rubinetto,  Pioggia pura romana da mattina, Nestlé’s own Poland Spring (in 3 elastic modulus grades) already in pods, Amazona prima colheita do verão, Flaque Boulevard St. Germain, Fiji-Dasani custom coffee blend (also approved for Mercedes engine cooling systems), Gelbschnee fondé puro (Nestlé’s local house brand), and so on.  People who will pay five to ten times extra for stale coffee grounds will certainly pay through the nose for water with a name on it.

Forget the flu-impregnated monogrammed hankies, the baby python, and the exploding cigars; imperfect as the Nespresso realization is so far, it’s still this year’s best gift idea for your worst enemy.  And you can do something nice for the folks who have had so much trouble understanding why every baby in the world shouldn’t drink formula, almost as good as breast milk for the child and so much nicer for the suits in Vevey – not to mention their determination to cover the world in empty plastic water bottles.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

21 thoughts on “Annals of commerce”

  1. I hope you got appropriate intellectual property protection for your valuable water pod idea before posting it online.

  2. I don't get the point of this product. I would buy an espresso machine for the beautiful machining/industrial design; this thing is ugly. If i just wanted some good coffee, i'd use my french press.

  3. Machines like that have existed for many years already.

    We had one in the Canadian office (London) at least 5 years ago.

    In an office environment, it's nice to have a low-mess espresso in house, so the drones don't leave the cubes as long.

    The home office actually had a real steam espresso machine, manual style. And yes, this was during some of the .com era madness. Crimes against the shareholders.

  4. Nestlé also do a much more reasonable "Dolce Gusto" line where you can buy the pods in supermarkets and a machine for €80.

    I gave up the dream of the all-singing all-dancing bean-to-cup model when I ran myself through the quesrionnaire at livingto100.com. The results sheet claimed that drinking a lot of coffee lowers my life expectancy: not by much, but still. The fancy machine only made sense if I planned ro drink more caffeine, so I settled for second-best monopoly.

  5. James Wimberley, a coworker of my wife's got all excited about lifestyle changes for long life. No red meat, running ten miles/day, the usual. He reported on this to his maiden aunt, and said he would live to be 90. She said, well, yes, he would live to be 90, but it would FEEL like 120.

  6. I too have one in my office for the same reason–it's more convenient, even if the quality is lower. But $550 is almost 4x what we paid, and we don't pay $1 a cartridge, either.

  7. What Megan said. We got ours for $230 from Amazon, and we don't pay anywhere near $1 a pod. If you like decent espresso, don't drink 64oz a day, and have some disposable income, this is a good purchase.

  8. Real Italian espresso is made in an $20 stovetop espresso pot. I use mine every day. Actually, mine cost $18, I think.

    No accessories, no futzing. Just coffee, water, and a stove burner. 5 minutes.

    It also makes the best "regular" coffee you ever tasted.

  9. James and Megan, it appears the cheaper machines use dried milk capsules rather than being able to steam fresh milk. Am I missing something? I was trying to compare equipment with similar specs.

    Megan, I guess I don't see the convenience advantage of having to stock a box of pods rather than a bag of coffee beans, and drop in a pod for every cup rather than a cup of beans every twenty servings…

    In another post, I will discuss the success of radicals and anarchist commies (who else, after all?) in teaching us to accept espresso from machines that have no eagle whatever on top, something I would have believed impossible a couple of decades ago. First they came for the eagles, then Santa Claus…

  10. In an office context, it saves the trouble of organizing and funding a communal coffee-bean supply. Each coffee drinker buys and keeps his or her own stockpile of pods.

  11. In office context, the 'man' wants you to keep your nose to the grindstone. So the man provides free coffee, so you don't stray out to starbucks. Does not apply to jobs with strict clocks.

  12. Ah, mine does not steam milk at all–just makes espresso. I use an embarassing contraption called the "Froth au Lait" if I want hot frothed milk. It's really a quite decent cup of espresso–I'd rather drink it than nasty Starbucks "extra burned" drinks. Not, obviously, anything close to what you get at a real coffee shop, but the Watergate does not have a lot of coffee options.

  13. As for the convenience, I used to grind my own beans, but the mess got to me. If there was a machine that ground, never needed to be cleaned, and cost me $150, I might own it.

  14. I use a simple espresso machine and a simple grinder with generic espresso roast beans to make straight shots. It doesn't seem to take any longer than instant. Someday the hardware will wear out (it's been 15 years) and I expect to replace both for less than $100.

  15. Heh, my sister gave my mom one of these for Christmas. Maybe makes sense in this case, mom being 86 and wheel chair bound, even at those prices making it easier for her to make a cup of coffee might be worth it.

    I actually had that aluminum cup come across my desk for quoting, as a stamped component. My reaction was, "THAT is a 'disposable' part???"

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