AFTER A SUCCESSFUL 2021, LAVAZZA GROUP FACES DIFFICULT YEAR AHED

Lavazza is a family-owned company established in 1895 and has been one of the leading players in the coffee sector for a long time. It continues to be so as it strengthens its presence in the North American and Asian markets.

2021 was a difficult year for the coffee sector. Droughts in Brazil and heavy rains in Colombia reduced coffee yields, which will continue to affect the market in the future. In addition, bottlenecks in logistics and a lack of containers have contributed to an increase in prices for Arabica and Robusta by about 80%.

In spite of these difficulties, the Turin-based Lavazza Group saw growth in 2021. This is cause for optimism as it shows that even disadvantageous circumstances can be tackled. The company looks at the future with optimism in spite of the challenges.

An extremely complex and challenging year, due to the rise in the price of all the raw materials we use – first and foremost green coffee, but also packaging, energy, logistics – and the risks deriving from the dramatic current geopolitical situation

Antonio Baravalle, Lavazza Group CEO

According to the company, 2021 demonstrated the business robustness and the popularity of its products around the globe. Despite the complexities of the year, the company reported a turnover of over € 2.3 billion, improving its traffic in all markets where it is present.

The Group reported sales growth and good performance across the board, both in more mature markets like Italy (+6%) and France (+10%), as well as in expanding ones like North America (+21%) and Germany (+14%), testifying to the health of the Group’s brands in all territories.

The revenues for Lavazza were 11 % higher than in 2020, with operating cash flow standing at € 203 million, an improvement on 2020 (€ 125 million) and a confirmation of the Group’s excellent operating performance. An important asset of these figures is a recovering Out of Home channel, which climbed back to 80 % of the value reported in 2019 – The Covid-19 outbreak slowed down this segment in 2020. The company also reports “steadily rising revenues in the Home channel (+6.3% compared with 2020 and +23.8% with 2019), despite market trends being similar to pre-Covid levels.”

Another threat to the company’s activities is the outbreak of war in Ukraine. Both countries are important producers and exporters of raw materials such as oil, gas and metals. Lavazza has already stopped its operations in Russia and has also had to halt distribution in Ukraine temporarily.  Baravalle said that it is committed to “helping those affected by the war … both by making donations to various NGOs … as well as by sending basic necessities to organisations working to provide support, in the hope that the situation returns to normal as soon as possible.”

Photo by Max Nayman on Unsplash

Author

  • Žiga Povše is a freelance writer, translator and a full-time coffee lover. After after visiting his girlfriend's family farm in Cerrado Mineiro, they opened an online store to sell Brazilian specialty coffee, and he remains an avid reader and a prolific writer.

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