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Italy’s Lavazza Boosts US Investment to Spur Coffee Expansion

Lavazza

Lavazza will direct more than a third of its investment budget toward the US this year as Italy’s biggest coffeemaker seeks to triple revenue in a country that accounts for less than 10 per cent of sales.

Closely held Lavazza, a coffee provider for Keurig Green Mountain’s K-Cup system, is targeting “tens of millions of dollars” at US distribution and marketing in 2015, according to Vice Chairman Giuseppe Lavazza. That’s out of total spending of about $30 million.

Lavazza is seeking to tap the growth of the world’s largest coffee-consuming country, where it has barely scratched the surface since entering in 1990. The company had US sales of about $100 million last year in a market that’s worth about $12.8 billion. It seeks to double that by 2018, with a final goal of creating a $300 million business.

“Our presence is becoming more relevant, nationally speaking, in the U.S.,” Lavazza, the great-grandson of the company’s founder, said in an interview on 11 September. The Italian coffeemaker entered Florida this year when it started selling its coffee at grocer Publix Super Markets Lavazza will become available at grocers in Texas next year.

The US coffee market is dominated by giants such as Keurig, Starbucks and Nestle, whose Nespresso brand introduced its VertuoLine coffee machine in North America last year. Lavazza considers smaller companies such as Peet’s Coffee & Tea to be better benchmarks. Joh. A. Benckiser bought Peet’s and Caribou Coffee Co. for more than $1 billion in 2012, a year before acquiring D.E Master Blenders 1753 NV in what at the time was the industry’s biggest deal.

The Italian company, founded in 1895, will continue to seek strategic partnerships with restaurants, hotels and coffee shops, Lavazza said, though it won’t introduce its own machines for US household consumption yet.

The executive also ruled out the prospect of an initial public offering for the company, which offered to buy the Carte Noire coffee brand in July. That deal would catapult France to its second-biggest market behind Italy.

“We have enough cash to fuel our expansion and our acquisitions,” Lavazza said, adding that the company wants to stay independent.

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