The new machine, which uses a different capsule, "probably brings them closer to the American style of filtered coffee, but they are so far behind Green Mountain in the U.S. that it hardly changes the game," Andrew Wood, an analyst at Bernstein, said by phone. "While there is a potential for the U.S. to become more espresso-based, we think this will take time to develop."
Green Mountain's Keurig Rivo R500 espresso maker is $315 on Bloomingdale's website, while Starbucks's Verismo 600 machine sells for $199.
North America accounts for about 30 percent of the $8 billion single-serve coffee market, second only to Europe, according to Euromonitor. Over the past decade, single-serve has grown to almost 10 percent of global coffee sales from about 2 percent, fueled in large part by Nespresso, which controls about one-third of the single-serve sector. Last year Nespresso added about 500 million Swiss francs ($563 million) in sales, the company said Feb. 13.
Nespresso represents about 25 percent of Nestle's coffee sales and 4 percent of its 92.4 billion francs in total revenue, Bernstein estimates. The brand has more than two dozen boutiques dotted across the U.S., according to its website, and last year opened its largest in Beverly Hills, Calif., complete with two 13-foot-tall cacti.
VertuoLine "will revolutionize the most successful segment of the coffee market in North America and change the way coffee is brewed and enjoyed at home," Nespresso Chief Executive Officer Jean-Marc Duvoisin said in the statement.
Nestle has sought to expand Nespresso outside Europe, where it faces an ever-increasing number of copycat capsules from rivals like Mondelez International Inc., the world's second- biggest coffee maker, and D.E Master Blenders 1753 NV, which sells Douwe Egberts coffee.
"The attractiveness of the space has brought on a slew of competitors," Wood said. "This has led to share losses and slowing growth for Nespresso." Nestle no longer discloses Nespresso's growth rate or sales by region.
Nestle introduced its Nespresso system in the U.S. more than 10 years ago. The VertuoLine capsules won't work with other machines, according to Diane Duperret, a Nespresso spokeswoman.