Turin, April 10 - Leading Italian coffee roaster Lavazza aims to expand abroad to sustain growth, riding a wave of increasing coffee consumption in nascent markets while its domestic market stagnates, its senior managers said.
Turin-based Lavazza is the world's seventh biggest coffee roaster by purchases of green coffee and sells roasted coffee in 80 countries. Two thirds of Lavazza's revenues come from Italy, where its retail coffee market share is 48 percent by value.
"Not being able to grow more in Italy, where we have a market share close to 50 percent, but willing to grow, we are implementing a strategy which foresees international growth, outside of Italy, where there are no longer significant growth margins," said Gaetano Mele, Lavazza's General Director.
In March, Lavazza agreed to buy India's second-biggest coffee shop chain Barista Coffee Company and Indian coffee vending company Fresh & Honest Cafe in a 100 million euro deal, betting on the rapid growth of the Indian coffee market.
Mele said the immediate impact of the acquisitions on the group's sales volumes and revenues was negligible but they would strengthen Lavazza's positions in India where coffee consumption has been growing with increasing per capita incomes.
"Our long-term objective is to spread the coffee culture in a country which is so big and so interesting and get the benefits of the expected growth of (coffee) consumption," Mele told Reuters in an interview at Lavazza's headquarters.
He said the acquisitions, yet to be finalised, were strategic for Lavazza, a family-owned and unlisted company, which hoped to see revenues coming from India in 5-10 years matching those from the Italian market.
Lavazza's consolidated revenues rose to 930 million euros ($1.24 billion) in 2006 from 867 million euros in 2005.
Mele said the group was keeping a close eye on other booming economies -- China, Russia, Brazil -- where coffee demand is on the rise, but have not yet selected any acquisition targets.
BOOMING ESPRESSO DEMAND
Lavazza would aim to boost sales in Europe, where despite a stable overall coffee consumption, demand for the famous strong Italian expresso coffee has been booming recently, powered by Germany where it has soared 20 percent a year.
The expresso boom has been helped by the spread of new technology which allows people to make the trademark Italian coffee at home or in a bar anywhere in the world.
Lavazza, one of the global leaders of producing coffee for espresso machines, plans to boost capacity of one of its Italian plants which makes coffee especially packaged in capsules for machines, to meet the growing demand, Mele said.
Lavazza, which sells about 100,000 tonnes of roasted coffee a year, saw a 3 percent rise in sales volumes last year, said Lavazza's director of supply chain and coffee buying department Mario Cerutti.
He said there have been no significant changes to the group's annual purchases of green coffee which average 2.2-2.3 million 60-kg bags.