Lavazza posts record 2021 revenues but warns of severe market headwinds

Lavazza has emerged from the pandemic in a strong position, but the inflationary pressures and the war in Ukraine present fresh challenges | Photo credit: via Shutterstock

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Lavazza has hailed the solidity of its business after emerging from the pandemic and in a strong position. The Turin-based coffee roaster posted an 11% rise in revenues to a record €2.3bn ($2.5bn) for 2021, with net profits rising 44% to €104m ($114m).
 
Lavazza said its main growth drivers were its out-of-home business, which recovered to 80% of its 2019 value in 2021, and a ‘steadily rising’ home channel, which saw revenues rise 6.3% on 2020 levels and 23.8% on 2019.
 
Lavazza’s whole bean and single serve segments were also trading favourably, with the company continuing to implement the launch of CO₂-neutral aluminium capsules.
 
Despite a positive year of trading, the Turin-based coffee roaster also highlighted rising raw materials costs as a significant headwind for the year ahead, with both Arabica and Robusta coffee prices increasing by around 80% in 2021.
 
Increased costs were largely due to global supply chain disruption and extreme weather events driven by climate change, Lavazza said, and will likely impact production in 2022.
 
Reduced coffee harvests and the continuation of an inflationary environment mean that coffee prices look set to remain ‘significantly higher’, the company added.
 
“The excellent 2021 results are not only a significant milestone for our Group but also the springboard to tackle 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,” said Antonio Baravalle, CEO, Lavazza Group CEO
 
The Russian invasion of Ukraine was also exacerbating inflationary and supply chain pressures, Lavazza said. Subsequently, the ‘dramatic geopolitical scenario’, including the fall of the value of the rouble and international sanctions, had led the Italian coffee roaster suspend operations in Russia. Lavazza has also temporarily suspended operations in Ukraine due to the ‘impossibility’ supplying its products amid the ongoing conflict.
 
Founded in 1895, family-owned Lavazza has a presence in 140 countries and operates nine manufacturing plants in six countries around the world. In addition to its own-label coffee products, Lavazza also controls the Carte Noire, Merrild and Kicking Horse brands.
 
In 2022 the company was again named one of the Top 100 most reputable companies according to the 2022 Global RepTrak index and continues to be a Top Employer in Italy.