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.