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Swiss Coffee Machine Maker Is Starbucks' 'secret Weapon'

Dec 10, 2019

As Starbucks Corp intensifies its charge on China, one of its little-known weapons is a family-owned company in a sleepy Swiss village.

Thermoplan, based among cow pastures in Weggis, a town of 4,400 inhabitants near Lucerne, makes the automatic machines for espressos and cappuccinos in each of Starbucks' almost 21,000 shops around the world.

"Fully automatic machines are something very German and Swiss," said chief executive Adrian Steiner, an electrical engineer who has worked for Thermoplan for 17 years.

"It's a product that matches the technology of those countries. It's like the watch industry, where you have everything from education to the people, the quality, value, to reliability."

With 230 employees, Thermoplan, which exports 98 per cent of its wares, is emblematic of Switzerland's globally oriented small and medium-sized enterprises that bank on craftsmanship to drive their business.

A free-trade accord between Switzerland and China and the rising popularity of creamy coffee drinks in the Asian giant, with China set to become Starbucks' biggest market outside the United States, have given Steiner cause for optimism.

While Switzerland is home to big listed companies such as Nestle and UBS, 99 per cent of its businesses are SMEs, generating two-thirds of employment.

Thermoplan joins companies from watchmakers such as Swatch Group and producers of precision tools like Mikron Holding setting their sights on more business from Beijing and Shanghai.

Starbucks said last month that it planned to add 800 new stores in China and Asia-Pacific in the 2015 financial year.

Thermoplan's foray into the world of coffee can be traced back three decades when it made whipped cream machines.

Then, in 1999, with just 20 employees, its fortunes soared on an exclusive global contract for Starbucks. The Seattle-based coffee-shop chain had decided to replace traditional espresso machines, which require baristas to prepare grounds and steam milk, with automatic models.

With the contract, Thermoplan's machines have become ubiquitous at Starbucks outlets from New York and Paris to Beijing.

A basic Thermoplan model starts at 7,000 Swiss francs (HK$59,700), with bigger self-cleaning ones going for as much as 17,000 francs. The Mastrena, which Thermoplan produces just for Starbucks, was introduced in 2008.

Thermoplan's contract with Starbucks is up for renewal next year. Both companies declined to comment on the possibility. Steiner said his company's ability to work swiftly and innovatively was what clinched the deal, calling it "the power of the big and the flexibility of the small".

Assembling a machine, primarily by hand, takes six to eight hours. At one point, Thermoplan was delivering 84 machines a day to the world's largest coffee-shop operator. Today, the Seattle-based giant accounts for a third of Thermoplan's sales. Other clients include Nestle, Google and Costa Coffee.

Before a machine heads out the door, it must successfully brew 100 cups of coffee. A trained technician from one of Thermoplan's service partners is on site within four hours to fix a problem wherever a machine breaks down. Modular components kept maintenance simple, Steiner said.

For now, the company plans to ride the gains from the spreading social phenomenon that coffee drinking has become.

"Ukraine, Russia, Kazakhstan - they're just discovering cappuccino," Steiner said, sitting in a room overlooking a soccer pitch that Brazil's national team used as a training ground for the 2006 World Cup. "It's fascinating how a drink like a cappuccino is changing the world."