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The Lavazza landscape: color it bold and bright.

The Lavazza Landscape Color It Bold and Bright

We often become aware of significant change suddenly. We then call it dramatic and are impressed, even though the change may have been years in the making.

This now seems the case for Lavazza, which many people are seeing for the first time as a coffee power, the espresso king, another Italian miracle. Yet Lavazza is spectacular foremost for its very long record of consistent annual growth. It remains a company that has expanded steadily, purposefully, since its founding in 1895, even if most energetically since WWII.

The robust pace of expansion at Lavazza does, however, become dramatic when viewed over the past decade. During the ten year period, 1980-89, company sales in volume rose by 182 percent. In 1980, Lavazza coffee sales rang up 231 billion lire; in 1989 they fetched 630 billion lire (approximately 500 million dollars). Such growth taxes quantification, but is sufficiently impressive.

To proceed, in 1984 the company was selling 45,000 tons of roasted coffee and commanded about 35% of the Italian in-home market for packaged coffee. During 1989, the company acquired 1.4 million bags of green coffee, sold 65,000 tons of roasted coffee, and, as of this writing - following three important acquisitions last year - controls a group of coffee brands that accounts for about 50% of the Italian domestic market.

The Lavazza entries in Italy, by sales rank, include Rossa, Crema e Gusto, Oro (100% Arabica), Paulista, Club (100% Arabica) and Dek (decaffeinated, 100% Colombia). Although Rossa remains a sturdy market leader, the company has seen strong performances by the newest entries - Crema e Gusto and Club (positioned as Lavazza's premier product) - and Dek, which is benefitting from the sudden surge in decaffeinated sales in Italy.

As for Lavazza's presence on the vast and intricate Italian out-of-home market, the company serves some 15,000 cafes with a wide range of recently redesigned bar brands.

Regarding international sales, in 1980 Lavazza had export sales of less than three billion lire, and no foreign subsidiaries. For the year 1989, however, the company was achieving export sales worth 51 billion lire, and with such intensity of growth that the annual volume boomed by 30% over the level of 1988. As part of this, by the end of the 1980s, Lavazza subsidiaries had been established in France, Germany, Austria, USA and the UK. Exports now represent 15% of Lavazza production, with all foreign sales being of coffee roasted and packaged in Italy.

Until quite recently, the entire Lavazza coffee production was accomplished in a single sprawling plant in suburban Turin, only 15 minutes by car from its headquarters on the Corso Novara. This has meant that the facility has grown to rank as one of the world's largest coffee roasting/packaging plants, with an annual handling capacity of 1.5 million bags of green coffee, and a daily production capacity of up to 300,000 kg of vacuum-packs. Such are the level and diversity of demands here that the plant runs simultaneously the latest packaging lines from Goglio, SIC and Bosch.

The Lavazza plant is completely automated, data-and process-controlled facility that appears to be continuously in a state of either technical improvement or expansion. the multi-million dollar expansion underway at the moment involves a new product distribution center. When completed, the center will incorporate the most recent advances in distribution science, with capacity for more than 20 days of plant production, and a mandate to cope with Lavazza growth into the 1990s.

This past year, in addition to acquiring the Suerte brand from Star and Mestle's Italian roasted coffee product, Bourbon, Lavazza also purchased Coinca, a well-regarded regional roasting company. The Coinca acquisition is seen as strategic for a number of reasons - it gives Lavazza membership in Italy's Sao Group of roasters, plus a couple of small but up-scale market brands with growth potential (under the Coinca and DeSilva brand names). The purchase also provides the company with a well located and sophisticated new roasting plant (see TEA & COFFEE TRADE JOURNAL, November 1987). The plant is being enlarged now to handle specialized Lavazza group productions.

From a foreign standpoint, the Lavazza landscape looms bold and bright. It is encouraging, too, in that the company has pursued highly visible, assertive market strategies on an international basis, such as sponsorship of the Ski World Cup. How often do we see a roasted coffee brand gaining at least the hint of a global resonance?

Something else striking about the company, given its size, is its unique commitment to coffee - coffee only, for the moment at least. What else to define the company? It does have style, controlled to the point of elegance - for this, tour through the headquarters building memorable by itself, or look through the fine art publications with coffee themes that the company has been producing, even consider the famous black packaging.

Finally, however, we come back to "change." Change seems to fuel Lavazza, surprisingly so perhaps for a family company. But no matter how dramatic the company's development might seem, it follows from the many years of hard work and the long recipe of shrewd coffee buying, packaging and marketing decisions.

PHOTO : These key people combine their energies on behalf of Lavazza, and from key positions. They are, left to right, Dr. Mario Cerutti (Coffee Buying Dept.), Prof. Renato Wegner (Member of the Board), Ing. Michela Stama (Coffee Buying Dept.), Dr. Tullio Toledo (General Director). Not in photo but very much on the scene as top managers are Emilio Lavazza, president, and Alberto Lavazza, managing director.

PHOTO : The Lavazza coffee plant, near Turin, is one of the world's largest - and now getting even larger with this addition. When finished, the mammoth new distribution center will bring technical sophistication to the ever-increasing flow of packaged coffee.
COPYRIGHT 1990 Lockwood Trade Journal Co., Inc.
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Title Annotation:the growth of the Italian coffee company Lavazza
Author:Bell, Jonathan
Publication:Tea & Coffee Trade Journal
Article Type:company profile
Date:Mar 1, 1990
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