The new point of Lavazza
- Tea & Coffee Trade Journal - Among the very large coffee companies, Lavazza is by far the most audacious in its self-challenge to alter the image of coff
Among the very large coffee companies, Lavazza is by far the most audacious in its self-challenge to alter the image of coffee in general, create a new image specifically for Italian espresso and draw in a new generation of consumers. if one turns away from the Lavazza company for a few months or a year there can be many surprises in store when one looks again. This phenomenon of espresso coffee has been amebic by nature for the past two decades, but never before so as now.
Among the very large coffee companies it is by far the most audacious in its self-challenge to alter the image of coffee in general, create a new image specifically for Italian espresso and draw in a new generation of consumers.
Take for example its management. In the past two years new faces and names have come into play, giving the company a much stronger "Lavazza" family presence while also utilizing a professional management leader.
The new president of the Lavazza Group is Alberto Lavazza, long associated in top management with the company. Gaetano Mele has been named CEO as well as continuing in his role as managing director. Lavazza Group vice president is Guiseppe Lavazza. Other Lavaza family members in leading company roles now include a young group of flambouyant cousins--Francesca, Marco and Antonella Lavazza. The changes follow the retirement of legendary coffee industry personality Emilio Lavazza, Dr. Emilio to many, who remains present as honorary chairman.
Where is Lavazza now? Almost everywhere, is the answer. Present in more than 90 national markets with a very wide array of choice in espresso products, the company is exporting more than 38% of its production. This means a lot of coffee because Lavazza buys around 230 million bags of green coffee per annum.
These purchases are then roasted, processed and packaged in a plethora of genres and formats at the company's four Italian factories.
The majority goes to the vast Turin factory (Settimo Torinese), the largest coffee factory in Europe and perhaps the world as it includes 73,000 sq. meters of space. Turin produces only roast and ground coffees. Currently it is producing 88,000 tons of product per year.
The company's Guttinari factory is dedicated to making cartridges and capsules. With 55,000 sq. meters it figures prominently in Lavazza capacity. The factory's current annual product is of two billion units.
In Verres, north of Turin, Lavazza maintains a specialized factory for R&G. It has a yearly production of 17,000 tons. Lavazza's Pozzilla factory is specifically and only for decaffeinated products. Last year it shipped out 7,200 tons of packaged decaf.
Despite its burst of international activity, Lavazza always holds dear to its place in Italy where 62% of sales are maintained. As leader in the retail sector, Lavazza commands a quite dominant 48% share among all coffees sold in value according to a recent Nielsen report. In volume it held 44.6%.
This reports shows the following breakdown of the Italian retail coffee market by volume and value in 2007:
The retail sector handles 65% of all coffee consumed in Italy; out of home represents 35% of all coffees.
In the out-of-home Italian market, 75% of sales are by middle- to- small sized roasters, who number some 600 roasteries. Segafredo Zanetti, Hausbrandt, Illycaffe, Consorcio Caffe and Lavazza control the remaining 25%.
Year 2007 was a landmark for Lavazza, as then for the first time turnover--all in coffee--passed the one billion euro mark. Sales in 2008 rose again to reach 1.1 billion Euros. During the five-year period 2004-2008 growth whizzed along at about 8% per year. This meant turnover over the period grew by almost 66%. Expectations for this uncertain year remain for the company to maintain stable profitability while continuing to expand sales volume.
Internationally, during the past two years the company has also been spreading its wings. First it acquired two companies in India, then more recently two more in Brazil.
The Indian companies are Fresh & Honest and the Barista Coffee Shop chain. The former has a roasting facility in Chennai that is producing close to 10,000 tons of product annually. The Brazilian companies now in the Lavazza Group include Cafe Grao Nobre and Cafe Terra Brasil. One of these acquisitions roasts coffee for the Cafe Florenca brand in Tres Rios, producing about 400 tons per year
Abroad, Lavazza also has subsidiaries in France, UK, Austria, Germany, the U.S., Spain and Portugal. The vast network of its global presence is otherwise conducted with local partners, importers and distributors. Turnover from abroad sales is divided 50-50 at this time between at-home and away-from-home sectors. However, the company has announced a long-term commitment to expanding the out-of-home business outside of Italy. Supporting this commitment are the Lavazza coffee bars and serving outlets. The most noted of these in Europe is the Il Caffe di Roma chain, with 80 units; "Barista" in Asia has 200 espresso bars; Lavazza Coffee Espresso Bars in Germany number 42 outlets; and there are now five Espression formats. The newest Espression by Lavazza is located in the Observatory level, 94th floor, of the John Hancock Building in Chicago. This is highest spot on earth, for now, to drink an Italian espresso.
Beyond extending its own coffee serving outlet concepts, Lavazza is directing itself toward international vending, office coffee service and HORECA channels. Already it has two million of its own dedicated coffee machines placed at vending locations and in offices. These units are serving two billion cups of Lavazza coffee per year. The majority of the above is via the Lavazza Point system, a brewer- plus-cartridge combination. "Point" placements consume 1.5 billion cartridges annually. The system is targeted directly at office coffee service. Additionally, the company actively promotes its Lavazza Blue machine line and caps. This system is for both at-home and out-of-home markets. The smaller Blues are for retail--home or office, as might be the case. There are some 720,000 Blue machines placed. These brewers are consuming 525 million caps yearly.
The new professional line of Lavazza Blue has all the looks of a classic Italian espresso machine--serving heads, steam wands, LCD indicator, cup warmer on top and for larger units connections to mains. "Pro Blue" offers five models to choose from. It is sourced by Lavazza with an array of eight coffee blends in caps. This includes the company's retail and bar brand!Terra!, Lavazza's notable and honored sustainable coffee initiative.
A Modo Mio completes the current array of closed Lavazza systems. A Modo Mio (My Way) is being rolled out now in several European national markets. Market tested for years in Italy, its coming out into international markets is seen by observers as the company's answer to Nespresso. To this end, it is all sleek styling, comes in different colors and is sourced with four choices in caps, including a decaffeinated version.
New in France, for one market example--France is also a key retail market for Lavazza R&G--A Modo Mio brewers begin at 160 Euros. A box of 16 cartridges costs 5.12 Euros.
While the company does have an extensive presence with pods too, for home and out-of-home usage, it belongs to the ESE system. Therefore these are not dedicated to a specific Lavazza maker and do not figure as prominently in group turnover.
As a strategic backup to its global ambitions, Lavazza is increasingly emphasizing its ever expanding network of training centers. The centers are focused on educating and give hands-on experience to espresso service professionals and related business interests.
Begun some 15 years ago, the hug training center in Turin is now housed in its own building, an investment that a sure indication of its importance to Lavazza. This mother-center is quite large and well equipped, but although satellite centers might be smaller they nevertheless all follow the same model in training, using training guidebooks and multi media learning materials developed in Turin. Today, there are 44 training centers, from Europe to the Americas, Africa, the Far East and Australia. The networks main objective is to spread the culture of coffee, and to maintain espresso quality standards at a consistent level--the highest possible.
That Lavazza is fearless before larger competitors is clear in its bold approach to incorporating youthful high fashion and design driven marketing into all it does, from packaging to the lines of a brewing machine, from formats for espresso bars to totally new and unique recipes for enjoying coffee, hot or cold--even unto an espresso spoon with a hole in it!
There are no traditions to obey at Lavazza except those in keeping with the family's pride in its product standards. Bold and creative seems to be the Lavazza motto as it proceeds further into the 21st century. There is good business reason in this "madness." Time Magazine included Lavazza's Espesso, "the coffee that you eat," among its best new products of 2006. In 2008 the prestigious A.R.E Grand Award for Restaurant Design went to the company's Espression establishment interiors.
Its fame for some scandalous series of Lavazza calendars prove the point. The 2009 edition, photographed by famed New York photographer Annie Liebowitz contains one photo, "Romulus and Remus" that has raised a critical furor on the web (probably to the delight of the unorthodox Ms. Liebowitz) as either being brilliant or the "ugliest photo ever taken."
Needless to say, either way, Lavazza is joyful at having put coffee back in the heat of day-to-day culture. Where it belongs. What is admirable from an industry standpoint about Lavazza is not so much its successes but its serious effort to return coffee to its place as a good drink that people want to stimulate their work, thought, creativity and yes, a discussion of controversies.
Value Volume
Lavazza 48.0% 44.6%
KJS 10.9% 12.0%
Cafe do Brasil (Kimbo) 8.5% 9.5%
Private Label 6.3% 7.7%
Illycaffe 6.0% 2.2%
Segafredo Zaneti 3.8% 5.2%
Other * 17.1% 18.8%
* Pertains to grouping a good number of
smaller roasters with retail presence regionaly
or natzonally.