Opinion / European coffee markets face fresh challenges following the pandemic

Pietro Mazzà, General Manager for the UK market and Regional Director for UK & Nordics markets at Lavazza Group

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My role as Director of Lavazza UK started in 2021. The company was facing supply chain disruption from the pandemic, growing economic turbulence, raw materials shortages and price increases, with green coffee rising by 80%. To navigate these unprecedented times, we shifted to a shorter-term perspective.

Being an agile, resilient and family-owned business helped us immensely. The Nordic countries recovered faster than the UK, where away-from-home was shut down, but we are still at 80% of 2019 numbers. The pandemic and Brexit have had and will continue to have a long-term effect on the away-from-home market, especially in the UK’s hospitality sector.

The pandemic shifted how people consume coffee, particularly in the UK. With lockdowns in place, the shift from away-from-home consumption to in-home consumption was significant, and we saw a boom in e-commerce. As a result, consumers started paying more attention to coffee quality and moved towards premiumisation.

One of the most interesting trends we observed was the increased consumption of whole coffee beans in the UK, even if not at the same level as in other European countries.
 

“Being open to new ideas and proactivity are the best ways to overcome any challenge”

This is because people began to brew their own coffee at home, which increased purchases of grinders and coffee machines. Additionally, people now feel more secure about online purchases, which resulted in a return to buying known and reliable coffee brands.

However, coffee can be considered a luxury item for some consumers, who may opt for lower quality during tough times. We are also closely monitoring the switch of consumption from out-of-home to in-home and the potential impact on coffee quality.

In the current inflationary context, consumer purchasing power is at risk and families are struggling to pay for necessities such as food and utilities. As a result, consumers are forced to make trade-offs, which is why it is crucial for brands to be resilient and show their ability to adapt to changing circumstances.
 

Working with partners to minimise the economic impact on consumers

During these challenging times we have learned that relationships between brands, suppliers and customers should evolve and be built on mutual commitment. We believe that together, retailers and product brands are stronger. As a brand and roaster, we have absorbed as much of our additional costs as possible, limiting the impact on consumers and working closely with retailers to minimise price increases.

We understand this is an ever-changing landscape, and the key to success is being flexible and continuously improving our approach to doing business. Whether it’s in terms of products or go-to-market strategies, we believe that being open to new ideas and proactivity are the best ways to overcome any challenge and come out even stronger on the other side.
 

“Lavazza recognises the importance of aligning with the values of conscious consumerism while staying transparent and honest in its branding”

 

Supporting coffee producers is vital to avoid compromising quality

Lavazza is committed to never compromising on quality – a central part of the company’s DNA and values. As a historical roaster in the industry, Lavazza is dedicated to fighting climate change and supporting coffee communities to produce, supply and deliver the best quality coffee possible.

Rising temperatures will significantly impact coffee production, and Lavazza actively promotes ethical and environmental sustainability. The company is present in more than 20 coffee countries through its foundation, working to support these communities and fight the effects of global warming.

Lavazza recognises its responsibility to be socially and environmentally committed, and this commitment is evident in the company’s actions, even if not always part of its marketing campaigns. Lavazza’s commitment to quality and sustainability is fundamental to its business.
 

The conscious consumers is the new trend for coffee shops

Lavazza recognises the importance of aligning with the values of conscious consumerism while staying transparent and honest in its branding. Lavazza sees the future trend in the pursuit of experience and sees its coffee shops as ambassadors, offering a place to enjoy coffee and a platform for education and training in coffee making.

Lavazza focuses on being a global leader in coffee beans, premiumisation, and helping consumers become baristas at home. The company’s coffee shops, especially the flagship store in London, serve as a lab for innovation and adaptation to changing times.
 

This article was first published in Issue 14 of 5THWAVE magazine.

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