The Italian coffee roaster is anticipating a significant decline in underlying earnings this year as it looks to limit price rises for cost-conscious consumers
Lavazza hopes to be able to cut its prices in 2024 | Photo credit: Lavazza
Lavazza is expecting a double-digit fall in earnings for 2023 and has warned it will not be in a position to lower its prices for consumers until next year amid surging green coffee costs.
The Italian coffee roaster raised its prices by an average of 6% in 2022 as its own costs increased to €550m ($599m) – almost double its underlying earnings last year.
Lavazza said its spend on green coffee has increased 80% since 2021, with profit margins also hampered by rising energy and freight costs, as well as the stronger dollar.
Speaking to the PA news agency, Chairman Giuseppe Lavazza said the Turin-based business had not increased prices further in 2023. However, the decision will negatively impact Lavazza’s profits as the coffee roaster faces ‘unprecedented’ increases in coffee prices, he added.
Lavazza hopes to be able to cut its prices in 2024 with the coffee roaster forecasting ‘stability in terms of price of raw materials and energy'.
“The global economy has seen an unprecedented increase in operating costs in most sectors and in all aspects of the supply chain. The situation is still highly sensitive. But we will absorb most of these costs and believe we are well positioned now for when inflation starts to decline significantly, which we expect will be next year,” Giuseppe Lavazza said.
Lavazza achieved 17.6% year-on-year revenue growth in 2022 to reach €2.7bn ($2.9bn).