The case traces the development of the Nespresso System in a 100%-owned affiliate deliberately placed outside of Nestlé's main organisational structure. It highlights the team's successes and challenges in creating a new, small, niche segment in the mature coffee market and its prospects for growing the business from Sfr 150 million to Sfr 1 billion within the next decade. A radical departure from most Nestlé lines of businesses targeted to the mass market, the Nespresso story offers provocative lessons about innovation in large, highly structured organisations.