An email promotion from Nespresso, received on 29 October 2018, offered a free milk frother. Text stated “Stock up on your favourite Nespresso coffees and we’ll treat you to a complimentary Aeroccino4 Milk Frother.* Simply order 400 capsules before 11th November to enjoy milky coffee creations worthy of any Barista!”. Smaller text underneath stated “*T&Cs apply. Offer ends 23:59 11/11/2018. Gifts available whilst stocks last”. The email featured an image of the milk frother beside a badge with the text “FREE GIFT*”.
Three complainants challenged whether the promotion had been administered fairly, because they had bought the required number of promotional products but were told that the free gift was out of stock.
Nespresso UK Ltd stated they had appointed a line manager to supervise the administering and functioning of the promotion which was run by an experienced team of marketing experts.
Nespresso based their estimation of the likely response to the promotion on five previous promotions which offered free gifts with purchases of different products. They provided a list of those promotions, detailing the gifts that were offered and the value of those gifts. They had never previously run a promotion offering the Aeroccino4 Milk frother. In previous promotions consumers were required to order 200 capsules to qualify for the free gift. That saw an average redemption rate of around five per cent, so for every 500 orders of promotional capsules, 25 were for over 200 capsules and therefore qualified for the free gift.
In the frother promotion they required consumers to purchase 400 capsules to qualify for the free gift, which was double the level of previous promotions. They said that level was set higher than in the previous promotions to take into account the time of year they were running the promotion; there would likely be an increase in orders close to the Christmas period. However, the redemption rate was over 10 per cent. That level of demand for a promotion was unprecedented and they considered it could not have been reasonably foreseen.
Nespresso said that in response to the promotion failing due to a lack of stock, a 24/7 helpline was available to handle customer queries and they ensured that emails were promptly responded to. They provided refunds to those who had purchased 400 capsules but were not able to receive the gift. In some cases, a complimentary Aeroccino3 Milk frother was offered or alternatively £60 credit was added to customers’ Nespresso accounts. They considered that fulfilled the Code’s requirement to provide a reasonable equivalent to the gift for those consumers who had already purchased the required number of capsules.
They stated that their terms and conditions contained the disclaimer that the gift was subject to availability and they believed they had also taken reasonable steps to inform customers who had not yet taken advantage of the promotion that stocks of the Aeroccino4 Milk frother had run out. They added a banner to the page of the website which was accessed by clicking through from the email ad, which stated that the promotion had ended early due to the unforeseen high level of responses. A banner was also included at the checkout stage of the ordering process.
The CAP Code stated that promoters must be able to demonstrate that they had made a reasonable estimate of the likely response to a promotion and either that they were capable of meeting it, or that they clearly presented sufficient information to consumers to make an informed decision on whether to participate, for example any limitation on availability and the likely demand. Phrases such as “subject to availability” did not relieve promoters of their obligation to do everything reasonable to avoid disappointing participants.
When considering whether Nespresso had made a reasonable estimate of the likely response to the promotion, we reviewed the information they provided regarding their previous promotions and how they planned for the advertised promotion based on those previous promotions. In this instance the gift was worth a higher amount than in previous promotions, and the promotion ran in the lead-up to Christmas, which we considered were factors likely to increase demand. We understood that Nespresso had doubled the number of capsules consumers must purchase to qualify for the gift in comparison with previous promotions, which we considered might reduce demand, and that they had forecasted that there would be a higher redemption rate based on the time of year. However, Nespresso had not provided us with details of the redemption rates, the dates, or the amount consumers would need to spend relative to the value of the gift in each of those promotions. It was therefore unclear whether they had taken sufficient account of the differences (and/or similarities) between those promotions and the advertised promotion when estimating the likely response to the promotion. We therefore considered Nespresso had not provided sufficient evidence to demonstrate that they had made a reasonable estimate of the likely response to the promotion.
We acknowledged that once stocks of the free gift had run out, Nespresso included a notification on the page of their website that consumers clicked through to from the email promotion, and another before the checkout process was completed. We also acknowledged that they had offered refunds and a substituted milk frother or £60 credit (which was the value of the free gift) to customers’ Nespresso accounts. However, the Code required that advertisers must first make a reasonable estimate of the likely response to the promotion. Based on the information we had received, we considered that Nespresso had not made a reasonable estimation of the likely response to the promotion. We concluded the promotion had not been administered fairly and breached the Code.
The promotion breached CAP Code (Edition 12) rules 8.2 8.2 Promoters must conduct their promotions equitably, promptly and efficiently and be seen to deal fairly and honourably with participants and potential participants. Promoters must avoid causing unnecessary disappointment. (Promotional marketing), 8.9 8.9 Phrases such as “subject to availability” do not relieve promoters of their obligation to do everything reasonable to avoid disappointing participants. 8.10 8.10 Promoters must be able to demonstrate that they have made a reasonable estimate of the likely response and either that they were capable of meeting that response or that consumers had sufficient information, presented clearly and in a timely fashion, to make an informed decision on whether or not to participate - for example regarding any limitation on availability and the likely demand. (Availability) and 8.14 8.14 Promoters must ensure that their promotions are conducted under proper supervision and make adequate resources available to administer them. Promoters, agencies and intermediaries should not give consumers justifiable grounds for complaint. (Administration).
We told Nespresso UK Ltd to ensure that for future promotions they were able to demonstrate that they had made a reasonable estimate of the likely response and either that they were capable of meeting that response or that consumers had sufficient information to make an informed decision on whether or not to participate.