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Riding Lavazza's espresso express.

Near here, in the small city of Castres, in far southwestern France. I recently witnessed an in-store promotion for Lavazza coffee. Nothing too unusual about the effort--two pleasant young people inviting supermarket customers to stop for a free little cup of espresso This was served up hot from an espresso machine with a small mountain of Lavazza packages as backdrop. Commonplace as such promotions might seem, the event was actually noteworthy for one because the young promoters were a couple of obviously well-trained Italians speaking fluent French and who clearly shared a genuine enthusiasm for their product; and even more so because the throng of passersby were obviously already familiar with the 'Lavazza' name and connected it to coffee.

In other words, Lavazza, the world's largest espresso coffee company, is now investing to such a degree in France that its sales initiatives are extending even into the most obscure locales. And, supporting this heightened effort is the fact that the company has achieved real market penetration with its name and its coffee. True, no other nation in the world has taken so warmly and quickly to the marketing concept of Italian espresso as France, nor is Lavazza alone on the French espresso market--several Italian companies, and most particularly, Segafredo Zanetti (via its brand San Marco) have seen some sweet success

But Lavazza has earned recognition here as the Italian coffee company, and in only 10 years of presence in France. At the same time, the company has managed to foster the image that Italian espresso is quality coffee, and that it belongs in daily usage as a mass market item. In sum, the company has managed to free its espresso from the confines of being a specialty or ethnic-oriented product and place it on the French retail coffee market as a major player with Lavazza. In France, this is the first time this has happened for an Italian espresso coffee marketer on the international scene

This level of success, in relatively short time, explains why the company's eager to invest further in France. Not only does Lavazza want to press its advantage on the French retail market, it is naturally using France as a training ground for expansion in other markets that have the same PR and offer potential for the same results, ie. coffee markets that by tradition are already well familiar with espresso in bar/cafe usage and yet which have been sadly accustomed to lower quality coffee products. In this scene, from Dante's Inferno, Lavazza arrives as a coffee from heaven.

During 1992, Lavazza has sold more than 10,000 tons of roasted coffee in France. Sales this year have advanced by more than 20%. Retail market share stands at 4.7%, value share is 6.8%. Lavazza presence in the very dynamic '100% Arabica' store segment is now 7.5% Four of the five Lavazza brands currently sold in France are in the Arabica segment. France's food store distribution network is notoriously concentrated and difficult and among the toughest to gain access to. Lavazza can be justly pleased to have earned a penetration of about 64%.

The company has positioned both French and Italian versions of its products. The French line, blended and packaged specifically for France, has the great majority of sales and increased by about 15% in sales this year. The Italian line, or products coming directly from the company roster of brands for the Italian market, are now gaining quickly and sales increased by more than 50% in 1992. Out-of-home consumption in France accounts for about 59,000 tons of coffee and is fully an espresso market. Lavazza has a small but increasing share of this--company sales gained by 32% in 1992 and share is at about 1%.

The second most important export market for Lavazza is Germany, where its sales this year will reach nearly 2,000 tons in volume, an increase of 15%. Some 60% of these sales are in the retail area, and sales there increased by 22% during 1992. According to the company, it now has 59% of the home market for espresso coffee in Germany, a 20% share of the out-of home sector. However, unlike its universal appeal in France, Italian espresso is still a specialty product in Germany with a defined market niche. The espresso market occupies only slightly more than 1% of the total German coffee market, although it is growing--sum retail espresso sales expanded by about 20% this year while out-of-home consumption shot up by 25%. Espresso usage accounts for about 4% of out-of-home sales. The total espresso market in Germany, home and out-of-home, is placed at around 5,500 tons per year.

Other important export markets for Lavazza, by order of sales, are Australia, U.S., U.K., Belgium, Austria and Switzerland While Lavazza sales remain relatively small in the U.S., volume there is mushrooming--it boomed by 66% in 1992, with strong advances in food retail, out-of-home and specialty store sales. About 11% of its U.S. sales are through specialty stores, nearly half are through foodservice outlets. Lavazza places the sum U.S. espresso market at 2,000 tons per year and credits its products with only about 3% of the espresso retail sector, about 1% of the espresso foodservice sector (foodservice represents some 70% of the total espresso market). America boasts the fastest growing espresso coffee market to be found, with explosive expansion in foodservice.

Lavazza sales in the U.K. rose by 5.7%, in 1992, paced by a strong increase in foodservice sales--while those for retail remained flat. The British market for roasted (not soluble) espresso products is slightly less than 1,000 tons, only about 1% of the national coffee market. Espresso's share of out-of-home sales is estimated at, about 12%. Lavazza gives itself 69% of the roasted espresso retail market, and 5-10% of the out-of-home roasted coffee market.

The company reports having a particularly dynamic year in Austria, where the sum espresso market is placed at 13,300 tons per year. There, neither the very small retail nor the dominant out-of-home espresso sectors are expanding rapidly, however the shares for Lavazza are. The company has seen retail sales climb by 20% this year, while foodservice sales boomed by 32%.

Lavazza brands dominate the Italian market, which has matured. Despite slower expansion at home, the company continues to see strong gains in exports, which have grown by nearly 22% in 1992, and in total will exceed 15,000 tons. In 1991, the company had a sales turnover of 737 billion lira, of which 68 billion lira were derived from export sales. The level means that export sales more than doubled in the five year period 1987-1991 The company is indeed riding an international 'espresso express.'
COPYRIGHT 1992 Lockwood Trade Journal Co., Inc.
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Title Annotation:Luigi Lavazza S.p.A.'s marketing moves into France, Germany and elsewhere with its coffee brewing equipment and selection of coffees
Author:Bell, Jonathan
Publication:Tea & Coffee Trade Journal
Date:Nov 1, 1992
Previous Article:The carts are coming, the carts are coming.
Next Article:Espresso machine review: the French alternative.

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