Italy's coffee roaster Lavazza bets on India, Brazil for growth

Lavazza, which operates in more than 90 countries, plans to earn half of its revenues abroad in the next three years, up from about 40 percent now, but without losing its market share in Italy, Lavazza Chief Executive Gaetano Mele said.

In 2008, Lavazza's revenues rose nearly 9 percent to 1.12 billion euros ($1.66 billion).

"Espresso consumption is growing abroad. In Italy we don't have significant possibilities for further growth because we already have considerable market share there," Mele told Reuters in a telephone interview on Thursday.

Lavazza sees its main growth markets in India, China and elsewhere in Asia as well as Latin America and Eastern Europe where consumption of espresso coffee has been growing and at a faster pace than in traditional west European markets, he said.

The company, the world's sixth-biggest coffee roaster by purchases of green coffee, is looking at acquisitions in those three main growth areas and plans to build its own coffee roasting plants in India and Brazil.

"We want to grow abroad following the markets (growth there) ... we want to move as close as possible to our consumers and we will create modules (flexible capacity plants) which will grow with the market growth," Mele said.

WIDE REACH

Lavazza has focused its foreign expansion efforts in India which would become its platform for reaching as far as Australia in the future, he said.

India has a strong tea-drinking tradition and the 94,000 tonnes of coffee consumed in 2008, according to India Coffee Board (www.indiacoffee.org), is tiny for its 1.1 billion population.

But Lavazza has decided to build a coffee plant there after it bought India's second-biggest coffee shop chain Barista Coffee Company and Indian coffee vending company Fresh & Honest Cafe in 2007 for 100 million euros.

"It is part of a very long-term strategy ... (India) can become an excellent growth possibility in the long term," he said adding that Lavazza expects more young people in India will take to coffee.