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Breville Partnership

Breville Partnership

Announced on Tuesday via a leading retail industry Appliance Website, Breville (ASX: BRG) is set to partner with Nespresso to produce a new range of co-branded portioned coffee machines in 2013.

 
In what appears to be a slight change of strategy, traditionally an innovator and product development leader, the focus on manual espresso machines in Australia as well as filter coffee machines in North American markets is shifting towards a partnership which combines the world’s best portioned coffee system (according to Nespresso) with Australia and New Zealand’s most trusted kitchen appliance brand.

While it would take many years and millions in R&D costs for Breville to develop and patent its own product range, the tie-up enables the business to quickly provide Breville branded espresso solutions to a booming market which until now has been dominated by De’Longhi. A market with estimated sales in excess of $100m per annum.

This is yet another growth category for the business. Notch another reputation win and another lever pulled by BRG management.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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4 Comments

  1. Having done my calculations (from Value.Able) today on Breville, I’d love to hear Russell’s and Andrew Schlig’s thoughts on BRG’s current intrinsic value.

    Using a book value of $1.64, ROE of 26% and a payout ratio of 68%, I came up with $5.52 … does this sounds about right?

  2. The problem the Breville faces is that the retailers are doing their best to commoditise the world. On the weekend I saw Woolies flogging a cheapy version of the coffee capsule machines.

    Retailers are evil machines who believe they are the only point in the supply chain that should turn a profit

  3. I’m a BRG fan but I offer a comment on Nespresso. I have a machine; a birthday gift. Frankly, I can’t recommend them because – at least on the model I have – the frothing unit only froths the milk so its not heated and a ‘flat white’ coffee is lukewarm at best.

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