LAVAZZA ex­plores Made in In­dia cof­fee

Financial Chronicle - - BRANDS - SANGEETHA G Chennai sangeethag@my­dig­i­

IL Mat­tino Vi­vace is the first pure fil­ter cof­fee brand of Lavazza to be sourced and pro­cessed in In­dia

HAV­ING ex­ited cafe busi­ness after sell­ing off Barista in 2014, Ital­ian cof­fee roaster Lavazza has been largely fo­cus­ing on in­sti­tu­tional cof­fee vend­ing busi­ness. To make it big in the larger mar­ket of home con­sump­tion, the com­pany has launched a Made in In­dia fil­ter cof­fee brand in the pre­mium seg­ment.

IL Mat­tino Vi­vace is the first pure fil­ter cof­fee brand of Lavazza to be sourced and pro­cessed in In­dia for the do­mes­tic mar­ket. The non-chicory, non-in­stant brand is be­ing sourced from Chik­ma­galur and Coorg in Kar­nataka and pro­cessed in Lavazza’a man­u­fac­tur­ing fa­cil­ity at Sri City in Andhra Pradesh.

Ac­cord­ing to Sil­vio Zac­careo, man­ag­ing di­rec­tor of Lavazza In­dia, the com­pany is ex­plor­ing the “at home con­sump­tion mar­ket” where 80 per cent of the coun­try’s 70,000 tonne cof­fee con­sump­tion oc­curs. “We are largely in the “away from home’ cat­e­gory, which in In­dia is just 20 per cent of the mar­ket. Glob­ally “away from home” seg­ment ac­counts for 60 per cent of the con­sump­tion. Most of the in­ter­na­tional brands have pres­ence in this smaller seg­ment of the mar­ket. Con­sid­er­ing the Indian con­sump­tion pat­tern, it makes sense to be present in the larger seg­ment as well,” he said.

There are a few na­tional and lo­cal in­stant cof­fee and chicory cof­fee brands in the home seg­ment. In the pure fil­ter cof­fee cat­e­gory, there are only lo­cal brands with pres­ence largely con­cen­trated in the south. The first in­ter­na­tional brand to ven­ture into the home seg­ment of pure cof­fee has cho­sen an Ital­ian brand name for its Made in In­dia prod­uct as it thinks that the ac­cep­tance would be higher.

“The ac­cep­tance of Ital­ian food and bev­er­ages like pizza and pasta are high in the Indian mar­ket. More­over, Italy dom­i­nates the global cof­fee mar­ket with its in­no­va­tions,” said Zac­careo. Ital­ian Mocha and Espresso are widely ac­cepted among Indian cof­fee lovers.

Cur­rently the in­sti­tu­tional cof­fee vend­ing busi­ness, which in­cludes equip­ment as well as prod­uct, ac­counts for Lavazza’s 90 per

cent sales. It pro­vides vend­ing ma­chines and cof­fee to ho­tels, of­fices and vend­ing lo­ca­tions along with after sales ser­vice sup­port. In the “away from home” cof­fee mar­ket in In­dia, ho­tels and cafes are lead­ers in terms of growth. The vol­umes are high in of­fice space, but the growth is slower due to higher pen­e­tra­tion. Lavazza had ex­ited the café busi­ness after sell­ing off Barista as the busi­ness was not mak­ing sense in terms of bot­tom line. The com­pe­ti­tion too is heavy in this space, which has seen en­try of sev­eral in­ter­na­tional play­ers. High real es­tate cost and lower per capita con­sump­tion of cof­fee in In­dia are af­fect­ing prof­itabil­ity of most of the café chains.

In the home seg­ment, Lavazza has a few prod­ucts, which are mainly im­ported into the coun­try and sold through mod­ern re­tail chan­nel. For Il Mat­tino Vi­vace, the com­pany will ex­plore mod­ern trade as well as the gen­eral trade. By the end of this year, Il Mat­tino Vi­vace will be a pan-In­dia brand.

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