Lavazza’s shot at Australia’s growing coffee culture

Three big brands are in an intense battle for the lucrative Aussie coffee market. Are you ready for instant Lavazza?

Lavazza Coffee

Ask cousins Giuseppe and Marco Lavazza what their favourite type of coffee is and they provide the same answer: an espresso.

What the Italian duo also share is a passion for Australia and the growth opportunities up for grabs in one of the most important coffee cultures in the world, leading family-owned Lavazza to last year buy back the local business from the Valmorbida family which introduced the brand to Australians in the 1970s.

Visiting Melbourne to oversee their recently acquired business and take in a bit of tennis — the 120-year old Lavazza is a major sponsor of the Australian Open — Giuseppe and Marco have big plans for the region that include boosting annual sales from its present levels of about $60 million to over $100m in the next five years.

Marco and Giuseppe, who share the role of vice-president, are the fourth generation of the Lavazza family to run the company. Marco says the buyback of its Australian franchise underlines the importance the Turin-based group now placed on the region.

“Australia is the fourth-biggest region for us and so we invest heavily. We need to invest heavily and we need to control the branding. We want to control marketing, we want to control every point and aspect, every point of touch we have with the customer.

“They (the Valmorbida family) have done a tremendous job over the past 30 years, but now it is time for us to invest heavily in Australia because we believe in this country.”

Lavazza is No 2 in the Australian market, behind market leader Vittoria Coffee, and has a 16 per cent market share of sales through the retail chains, such as Woolworths and Coles, with 80 per cent of Lavazza’s business in the sale of coffee beans direct to consumers.

Giuseppe believes there is room for growth in the restaurant and cafe trade with Lavazza only sitting on a 2.4 per cent slice of that booming sector. “We want to grow in restaurant and cafes,” said Giuseppe, “and that is why we want to invest more in the country, and that part of the market is where you have a high fragmentation, in terms of customers, and so you need quite a large quantity of capex and investment.”

It’s a model that Lavazza has also adopted in the world’s biggest coffee market, the US, where it plans to direct more than a third of its investment budget in the short term to help triple its sales in North America. At the moment the region accounts for less than 10 per cent of Lavazza’s total sales.

And while Lavazza has a product for the increasingly popular capsule market, where it is battling monster brand Nespresso and its highly visible George Clooney-fronted marketing campaign, the Italian group is seeking to launch an instant coffee offer too — despite many Italians, including Marco and as Giuseppe, branding it as “not real coffee”.

“Instant coffee is an easy solution to try to get something hot with a coffee taste, so it’s very convenient. But now with innovation and technology it allows you to develop good products and Lavazza is working on that. We are near to launching in some European markets our interpretation of instant coffee, which will be a first for Lavazza.”