Lavazza ‘thriving’ in Chinese market despite slow outlet growth

Yum China welcomed members of Lavazza’s global management team to China | Photo credit: Lavazza

Yum China has said its Lavazza coffee shop network is thriving in China, three years after bringing the concept to the country. 
 

The Chinese quick-service restaurant group and the Italian coffee roaster announced their partnership in April 2020 after unveiling their debut flagship store in Shanghai’s fashionable Jing'an district. 

In September 2021, Yum China and Lavazza pledged $200m to grow the concept to 1,000 stores by 2025. 

Having opened 27 Lavazza outlets in 2022 to reach 87 stores nationwide, Yum China’s first quarter results indicate a further two stores opened in the three months ended 31 March 2023. 

Despite this suggesting that the quick-service restaurant group and the Italian coffee roaster will need to drastically accelerate outlet expansion to meet their ambitious growth plans, both parties remain committed and optimistic in their ambitions. 

Following the release of its quarterly results, in which group revenues increased 9% year-on-year to $2.92bn, Yum China welcomed members of Lavazza’s global management team to China and demonstrated ‘first-hand how the Lavazza coffee shop concept is thriving’ in the Chinese branded coffee shop market.   

“It is a pleasure to spend some time back in China to follow closely the developments of our joint venture with Yum China, with whom we plan to open 1,000 Lavazza coffee shops in the next few years. Bringing our know-how here, combined with our partner’s deep knowledge of the Chinese market and of its consumers, gives us a glimpse of positive signals already today, looking at the cafés opened in recent years in Shanghai and other major Chinese cities. For a global brand like Lavazza, this is a great opportunity to contribute to the spread of coffee culture over new geographies,” said Antonio Baravalle, CEO, Lavazza Group. 

Their joint optimism towards expanding the premium Lavazza coffee shop concept is reflective of wider industry confidence across the country following the pandemic and the lifting of China’s zero-Covid policy. 

Tims China reported 57% year-on-year revenue growth to reach RMB 1bn ($146.6m) in 2022, with the coffee chain opening 227 net new stores in the 12 months ended 31 December 2022 to reach 617 outlets.   

In May 2023 Luckin Coffee posted 84.5% year-on-year first quarter revenue growth to RMB 4.4bn ($646m) and opened 1,137 stores during the period to reach 9,351 sites nationwide. 

In the same month US coffee giant Starbucks saw revenues increase 3% in its second largest market to reach $768.3m, alongside 10% outlet growth to reach 6,243 stores. 

Italian coffee roaster Lavazza achieved 17.6% year-on-year revenue growth to reach €2.7bn ($2.9bn) for the 12 months ended 31 December 2022.