Lavazza looking to invest €2 billion in M&A activity

TURIN, ITALY – Italian coffee group Lavazza is reportedly eying up potential acquisitions within the coffee sector, with an investment budget of up to €2 billion.  Lavazza CEO Antonio Baravalle told Reuters on Tuesday that the company is looking to increase its turnover to €2.2 billion over the next four years.
 
‘We have a target of increasing annual sales to 2.2 billion euros by 2020 both through organic growth and potential acquisitions,’ Baravalle told Reuters. ‘In terms of markets we are interested in the United States, Canada, Germany and Britain,’ said Baravalle, adding that the fair-trade and organic coffee segments have been highlighted for potential M&A.
 
‘If we want to be independent in this big consolidation process, there is only one possibility — to grow. Either you sell or you grow, there is no other alternative,’ commented Baravalle on The Financial Times.
 
The family-owned company reported sales of €1.9 billion in 2016, up 29% from the previous year.  The acquisitions of Carte Noire, France’s largest coffee retail brand, and Danish roaster Merrild, significantly contributed to the increase in sales.  The group also reported an increase in the foreign portion of its sales, up from 53% in 2015 to 60% in 2016.
 
Baravalle has stated that Lavazza are not currently considering an IPO. In a quote on The Financial Times, Baravalle commented, ‘We have got enough money to spend on our own path before considering an IPO. There is only one rule — ownership of the company will remain with the Lavazza family,’
 
Lavazza is believed to be the third largest coffee company in terms of retail sales worldwide, after Nestlé and JAB Holdings. Lavazza, with circa 3% of the global coffee market, will be looking to bridge the gap with the big two, who together make up over a third of the global market.