кейси для індивідуальної роботи 2014 н.р. / LAVAZZA SPA, LUIGI IN HOT DRINKS

SCOPE OF THE REPORT

Scope

This global profile focuses on the industry trends in coffee, tea and other hot drinks.

All data sourced by Euromonitor International unless otherwise stated.

All value and volume figures are off-trade/retail unless otherwise stated.

All value figures show US$, RSP (retail sales prices), unless otherwise stated.

HOT DRINKS

US$125.9 billion

Disclaimer

Much of the information in this briefing is of a statistical nature and, while every attempt has been made to ensure accuracy and reliability, Euromonitor International cannot be held responsible for omissions or errors.

Figures in tables and analyses are calculated from unrounded data and may not sum. Analyses found in the briefings may not totally reflect the companies’ opinions, reader discretion is advised.

With the Italian economy on shaky ground, and with Nestlé on one side and Sara Lee on the other, what will the future hold for the Italian premium coffee purveyor? In this report, Euromonitor International assesses the outlook for Lavazza and asks if the company can see a return on its investments in Brazil and India.

STRATEGIC EVALUATION

Key company facts

Source: Euromonitor International

From family business to top 10 hot drinks player

Lavazza is a privately-owned coffee business founded in 1895 by the Lavazza family. The company claims to be present in over 90 countries worldwide with a turnover of over €1.2 billion in 2011 via its direct distributors and subsidiaries. Lavazza ranked ninth in global hot drinks in 2011.

The company’s hot drinks profile is based entirely on fresh coffee, with fresh ground coffee, especially espresso, its main focus. It is a premium segment player. The company is expanding quickly in the foodservice sector through a string of acquisitions over the past few years.

Expansion plans on both sides of the globe

 The company has recently invested in a stake in US coffee merchants Green Mountain as well as forming an alliance with a US pod coffee machine maker. The company has also demonstrated growth ambitions in emerging markets including Brazil and India.

 Lavazza saw total revenue rise in 2011 to a reported €1.3 billion, however net profit was squeezed due to the continued rise in prices of green coffee, with the company reporting a 60% increase in arabica coffee prices and a 40% increase in robusta prices, compared to 2010. This came on top of reported difficulties in the food sector during 2011. This gave Lavazza a consolidated net loss of €9.1 million, compared to net profit of €21.5 million for 2010. The Lavazza parent company meanwhile saw net profit of €1.1 million, compared to €17.3 million for 2010.

Lavazza: Total Revenue and Net Profit

2008-2011

Source: Lavazza

US cents per pound of coffee

Commodity Price of Coffee by Quarter 2006-2011

140

120

100

80

60

40

20

0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011

Lavazza makes 65% of its off-trade coffee sales in its domestic market, Italy, and most of this comes from its fresh coffee sales. At the same time, Lavazza is a minor player in the burgeoning coffee pod segment. Its strongest track record is in Italy, where its A Modo Mio (My Way) coffee pod system has been present for several years. The company began rolling out this system to other European markets in 2010.

It also announced an agreement with Electrolux in 2011 to launch a coffee pod system in Sweden and Finland, which is then to be rolled out to other European markets.

Lavazza: Hot Drinks Retail Sales (US$ million) by Country 2011

Italy Germany France Australia UK Russia Sweden Other

STRENGTHS

Strong brand of Italian coffee

 Lavazza places strong emphasis on its Italian roots and the high quality of its offer, which helps underline the sophistication of the brand and to differentiate it from mass-market rivals.

OPPORTUNITIES

Strong in fresh, premium entry coffee

 Lavazza is strong in fresh coffee with a premium end appeal, which is generally a good growth category, especially as coffeedrinking markets mature and consumers switch to fresh varieties of coffee.

WEAKNESSES

Overreliance on Western Europe

 Lavazza is acutely overexposed to Western Europe, and in particular its domestic Italian market, and is highly vulnerable to downturn in this sales area.

THREATS

No presence in instant coffee or other hot drinks  Lavazza relies solely on

fresh ground coffee, a profile that severely limits its capacity to immediately target key instant coffee trends in both developed and developing markets

 Lavazza has a presence  With US$100 million invested thus far and with plans to expand its Barista coffee chain and introduce a Lavazzabranded coffee chain, Lavazza is betting on the Indian market.

Nestlé and its pods Douwe Egberts Europe

 Nestlé already has almost  Sara Lee’s split into two businesses will give its

beverages business increased focus, particularly in competing in the fresh coffee market of Western Europe. Lavazza and Douwe may need to go head to head.

Pushing on into emerging markets

 Lavazza has made a slow start in Brazil with its acquired brands there. However, the company has no noticeable emerging market share. Russia and China could be markets that are switching onto coffee but instant coffee is forecast the stronger growth. Lavazza should consider an instant coffee market entry in Russia, before market entry becomes too costly. The company needs to build equity in these markets in order to attract consumers to its fresh coffee as the market matures.

Focus on India

 Lavazza entered the Indian market in 2007 with the purchase of the Barista chain of coffee shops in order to progressively roll out the Lavazza brand through the Barista chain until the chain sells 100%

Lavazza coffee. Lavazza’s goal is to make India its second largest market outside Italy over the next five years. However, it will face competition from the likes of Starbucks in the on-trade and Nestlé in the off-trade.

Compete strongly in fresh pod coffees with its Lavazza A Modo Mio and Lavazza Keurig brands

 Nestlé’s Nespresso pod coffee is already the fifth biggest hot drinks brand globally (in 2011), while Lavazza A Modo Mio is not even in the top 10. The pod system could become a hugely important development in fresh coffee as consumers increasingly look for convenience and less mess. Lavazza should better market its pod system and look to win a market share in the US and French pod coffee markets.

Retain its premium positioning

 A key strategy at Lavazza is the strengthening of its upmarket profile as it strives to establish itself in an increasingly competitive marketplace. Important moves have included the repositioning of mass products (Lavazza Paulista), the opening of highconcept Espression by Lavazza cafés in the US and the use of celebrity endorsements for its new premium products including the recent use of Julia Roberts.