Article 1 NESPREsso N N OUR STORY HOWFTALL STARTED The Nespresso story began more than 30 years ago with a simple idea: enable anyone to create the perfect cup of espresso coffee just like a skilled bartsta. From its beginning in 1986. Nespresso has redefined and revolutionised the way millions of people enjoy their espresso coffee and shaped the global coffee culture, RADICAL EXPERIMENTATION A BIG BREAKTHROUGH Building on the earlier wort-2 of Luiggi Bezzera. who first invented the espresso machine in the early 1900s. a new system was developed that would allow anybody to craft. and enjoy, a perfect ltalian espresso: the world's rst portioned coee system. What followed were our company's most pivotal years. lled with radical experimentation and many triats and errors. But finally. in 1986. we had our big breakthrough. and Nespressc was born along with our rst coffee machine {the {3-100} and four signature portioned coffee blends: Capriocio. Cosi. Bolero [now Vollulo}. and Decatfeinato. A GLOBAL PRESENCE THE REST i3 HISTORY For more than 30 years. our innovations have redefined the way millions of people enjoy their coffee. growing from a groundbreaking idea in Switzerland to a global brand with a presence in 31 countries. At the touch of a button. customers in homes, ofces, hotels, restaurants, and cafes can enjoy high-quality. sustainably produced coffee. cup after cup. Yes. we continue to grow and are still relentless in our focus on delivering sustainable quality at every stage of our value chain while at the same time maintaining a direct privileged relationship with our customers. DISCOVER THE AAA $U$TAINABLE QUALITY" PROGRAM The AAA Program is a coffee sourcing program designed to ensure the continued supply of high- quality coffee while improving the livelihoods of farmers and their communities and protecting the SOCIEIJETIEG environment. DEVELOPED FUR FARMERS TOGETHER WITH THE RAINFORESTi ALLIANCE ' | The sustainability challenges of coffee cultivation and more specifically high- l quality ccftee cultivation are widelyr recognised. Farmers are exoosed t0! unacceptable levels of uncertainty and risk. such as climate change and I economic volatility. which threaten their livelihoods. That's why. in 2003. our 5 sourcing team partnered with the Rainforest Alliance' to develop an innovative ' and sustainable approach to coffee sourcing. lOur combined expertise gave rise to two truths. Firstly. high-quality coffee and the sustainability of farming communities are interconnected. And secondly, only by building trust. loyalty. and tong-standing relationships with coffee producers can we hope to make a positive difference. With that, the Nespresso AAA Sustainable QualityT\" Program was born. TRUTH N\"1:H|GH-QUALITY COFFEE AND SUSTAINABILITY GO HAND- IN-HAND Quality cannot be assured and maintained without the scale-economic and environmental sustainability of farming communities. That's why the AAA Program aims to improve productivity and quality while promoting the adoption of socio-environmental practices and approaches. AAA IS BUILT ON 3 PILLARS OF IMPACT A A A SOCIAL AND QUALITY PRODUCTIVITY ENVIRONMENTAL SUSTAINABILITY Help farmers produce higher Enable productivity improvements Improve the social and quality coffees which benefit from and assist in farm economic environmental sustainability increased revenues and also management, providing greater of farming practices provide access to new and income stability to farmers. to increase the wellbeing differentiated markets. and financial security of farmers, and protect natural capital. AAA ENCOMPASSES 3 SCOPES OF INTERVENTION TO DELIVER POSITIVE IMPACT 1. FARM 2. COMMUNITY 3. WIDER SYSTEMIC MANAGEMENT RESILIENCE SOLUTIONS Empower farmers through Act as a catalyst to build Leverage the collective sustainable quality agricultural solutions for communities resources of farmer practices - the heart and landscapes in organisations, academics, of the AAA Program. the face of off-farm risks municipalities and such as climate change. governments to address wider coffee sector challenges "We're proud to have helped build AAA. It's working to drive our shared mission and achieve meaningful social and environmental impacts." Santiago Gowland, CEO, of the Rainforest Alliance. TRUTH N 2: THE FARMER-AGRONOMIST RELATIONSHIP MAKES THE POSITIVE DIFFERENCE The journey towards sustainable quality that farmers undertake is guided and supported by Nespresso agronomists, working closely with them on the ground. The strong bonds formed lie at the heart of the relationship's enduring success. The Tool for the Assessment of Sustainable Quality (TASQTM) plays a pivotal role, in underpinning the relationship. Available via an app, the TASQIM enables real-time data to be collected on the adoption of AAA practices across the three pillars of impact and encourages farmers to learn by doing."With the program, Nespresso has taught us to focus on quality rather than quantity. " Humberto Galeano Sanchez, AAA coffee farmer, Aguadas Caldas, Colombia MEASURING THE SUCCESS OF THE AAA PROGRAM Independent organisations such as the Sustainable Agricultural Network (SAN) are responsible for monitoring and evaluating a sample of farms every other year. They help identify gaps in practice adoption and further qualify the underlying drivers of impact on coffee quality, farm productivity, social well- being, farmer livelihood, and environmental protection. Independent certification Today, farmers can opt to certify the performance of their farms via the Rainforest Alliance, Fairtrade International, and Fairtrade USA certifications. This means Nespresso coffees can carry the respective organisation's seals. Recently, agroforestry operations within AAA farms and landscapes have also been certified against recognised Carbon Standards, confirming the fact they are generating carbon credits. Proven impact In addition to independent verification, we're eager to be part of impact studies that evaluate how the AAA Program performs on the ground. In 2013, the research institute CRECE's study showed the AAA Program delivering positive impacts versus conventional coffee farming on social (+22.6%), environmental (+52.1%), and economic (+41.0%) indices. In 2018, an independent review of AAA Program operations in Colombia, by the London and Toulouse Schools of Economics, concluded that the program achieved a greater value transmission to farmers and the adoption of quality production practices - both contributing to improved farmer welfare. These studies not only recognise the achievements of farmers and agronomists but also provide valuable input to steer us into the future.REACH MEANS OUTCOME Over 140,000 farmers 491 agronomists More than 85,000 farmers wer in 18 countries visited at least once in 2021 CHF 45.579m investment per year in technical assistance 92.5% of Nespresso coffee and premiums sourced through the AAA Program Assessment tools for agronomists and verifiers 49.34% of Nespresso volume sourced from certified farms The AAA shared commitment (Rainforest Alliance. defining roles and FLO, FTUSA) responsibilities with our suppliers for the deployment Around 20,000 of farms of the AAA Program have obtained certification (Rainforest Alliance, FLO. Fairtrade USA) enabling farmers to realise greater value from their coffee Contributions to 11 SDGs 1 POVERTY 2 ZERO HUNGER 6 CLEAN WATER 8 DECENT WORK AND AND SANITATION ECONOMIC GROWTH 12 RESPONSIBLE 13 CLIMATE CONSUMPTION ACTION 15 BIT LAND 16 PEACE, JUSTICE PARTNERSHIPS AND STRONG 17 FOR THE GOALS NO PRODUCTION INSTITUTIONS CO KEY PARTNERS RAINFOREST *ALLIANCE FAIR LABOR ECOM ASSOCIATION Cale de Colombia IUCN HOWPUR TechnoServe Business Solutions in Poverty FAIRTRADE For further information about Nespresso, please visit: https:/estle-nespresso.com/ Source: https:/estle-nespresso.com/NESPRESSO I NESPRESSO . NESCAFE 100 LEADERSHIP 100 NICHE OR UNREALIZED POTENTIAL 75 MASS it fitbit MARKET BRAND STRENGTH DIFFERENTIATION & RELEVANCE 50 1 FONTS 25 NEW. UNFOCUSED COMMODITY OR UNKNOWN OR ERODED 50 100 BRAND STATURE ESTEEM & KNOWLEDGE Source: https://www.bavgroup.com/about-bav/brandasset-valuatorr as of 1st June 2023 Figure 1: BAV result 3. Figure 1 above shows the Brand Asset Valuator (BAV) result of the Nespresso and Nescafe brands. Based on the results above, recommend THREE (3) marketing strategies to improve Nespresso's brand equity. (15 Marks) 4. The Rainforest Alliance is a 501 (c)(3) Nonprofit registered in the US under EIN:13- 3377893. The Rainforest Alliance is an international non-profit organization working at the intersection of business, agriculture, and forests to make responsible business the new normal. The organization is building an alliance to protect forests, improve the livelihoods of farmers and forest communities, promote their human rights, and help them mitigate and adapt to the climate crisis. A Frog Seal will be awarded to companies that fulfill the criteria set by the organization, such as: i) the product or specified ingredient was grown on farms certified to the Rainforest Alliance Sustainable Agriculture Standard; ii) the herbs and spices follow the Union for Ethical Biotrade (UEBT) standard; iii) Forestry products, such as paper and cardboard packaging, is sourced from forests certified by Forest Stewardship Council, iv) member of the Forest Allies Initiative. Elaborate on the THREE (3) impacts of Rainforest Alliance certification on the Environment, Social, and Governance of Nespresso. (15 Marks)