Sara Lee to sell Nespresso-compatible coffee capsule

Sara Lee Corp. will begin selling a coffee capsule compatible with Nespresso machines next week, as Nestle SA's fastest-growing brand faces more competition.

Sara Lee's L'OR Espresso capsules will go on sale in stores in France on April 7, the Downers Grove-based company said today in a statement.

Nespresso is facing direct competition in its capsule business for the first time this year. French retailer Casino Guichard-Perrachon SA announced it would start selling Nespresso-compatible capsules made by Ethical Coffee Co. in May. Nespresso said it has 1,700 patents on its capsules and how they interact with the machines.

"We will defend our intellectual property vigorously and are confident of our ability to retain our loyal customers' trust for many years," Nespresso said in an e-mailed statement. "We are ready to compete and do so already, every day."

Nespresso's 2009 revenue rose 22 percent to 2.77 billion Swiss francs ($2.6 billion), slowing from growth of 33 percent in 2008, the Swiss company has said. The unit has capacity to make about 9 billion capsules and adds 0.9 percentage points to Nestlés organic sales growth, according to an estimate by Nomura.