| Italy

Lavazza to focus on "organic growth" following 2018 acquisitions

Veteran 124-year-old Italian firm has no plans for market listing and will focus on US, France, Germany, Britain, Australia, Russia and Poland as key regions for future expansion according to Vice President, Giuseppe Lavazza
 

A Lavazza cup with Espression café concept branding. The Italian firm announced profits of €87.9m for 2018, up 12.9% on the previous year | Photo via Flickr


 

In an interview with Reuters, Lavazza Vice President, Giuseppe Lavazza, confirmed his company has no plans for a market listing and would instead focus on integrating companies it purchased in 2018.

“2019 will mostly be a year dedicated to organic growth and integrating companies we bought last year,” he told reporters. “For now, our projects are already well funded through our internal resources. A listing is always a possibility but it’s not on the radar, not even on the medium-term radar,” he added.

Following the acquisition of two prominent self-serve and vending coffee businesses, Lavazza is seeking to consolidate its reach across international retail markets as part of a growth strategy. In July 2018 the Italian coffee roaster acquired Australian coffee pod firm, Blue Pod, describing the Australian market as strategically important for driving growth at an international level. The following October Lavazza agreed to acquire Mars Drinks’ coffee vending business, a move which the veteran Italian coffee brand said would bolster its presence in Europe and open a new front in the US.

Lavazza also owns French at-home coffee market leader, Carte Noir, which it purchased from Douwe Egberts for a reported €800m in 2016, a move which granted the Italian coffee firm access to Carte Noir’s brands and businesses across 28 EU member states. Later in 2017, Lavazza acquired an 80% stake in Canadian specialty coffee retailer, Kicking Horse.

2018 saw major coffee firms engage in a flurry of M&A activity across international retail and vending channels, with Giuseppe Lavazza asserting in April his company was “not for sale” after confirming several offers from rivals. In May, Starbucks granted Nestlé perpetual rights to market its consumer products globally as part of a $7.15bn ‘global coffee alliance’ to raise both brand’s standing in global coffee at-home markets. In July, JAB Holdings created the third-largest US beverage company in the US, with estimated revenues of $11bn, after successfully merging its Keurig Green Mountain and Dr Pepper businesses.

Coca-Cola’s $4.9bn acquisition of the UK’s largest coffee chain, Costa Coffee, is also widely perceived as a strategic move by the US beverage giant to develop Costa’s extensive vending machine business as well as branded retail products.

Lavazza’s revenues currently stand at just under €2bn euros, placing it some way behind industry rivals, Nestlé, JAB Holdings and Starbucks. The Italian firm aims to generate 70% of group revenue outside Italy by 2021, posting profits of €87.9m in April 2019, a12.9% compared to €77.9 million in 2017 – with international markets generating 64% of revenues.
 

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