due to the failure of Maxwell House's Private Collection whole-bean coffee. Nestle did, however, purchase a small West-coast company called Sark's that markets straight to supermarkets and sells bulk beans in plastic bins. The winner in the bulk coffee war has been a small company, Brothers Gourmet Coffee, which caters to consumer demand for high-quality, fresh coffee by offering 75 varieties.
Nestle's vulnerability in the coffee market could have a significant impact on the company's future financial prospects. Coffee accounts for 20 percent of Nestle's sales and an even greater percentage of its profits. The bulk of these profits come from the sale of instant coffee via Nestle's "megabrand" Nescafe. As one industry analyst observes, "Nestle believes in instant coffee the way IBM believes in mainframe computers" (Marcom, 1990, p. 118). Nestle makes huge investments in its coffee sector, purchasing 15 percent of world coffee production and financing physical production facilities around the world. This degree of investment discourages competition.
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