Lavazza Completes MaxiCoffee Acquisition In France As Group Sales Near $3 Billion

Lavazza has completed the acquisition of MaxiCoffee after being given the green light by the French competition authorities, giving the Italian coffee giant a stronger foothold in one of the world’s biggest coffee-drinking markets by total volume, plus a valuable online platform.

The approval from France’s consumer affairs and fraud authority (DGCCRF) enabled the deal to close on March 31, placing the French business, with a turnover of about €300 million ($327 million). in Lavazza’s hands. Moreover, the Turin-based company—whose core brands are Lavazza, Carte Noire, Merrild, and Kicking Horse—will be able to increase its presence in the direct business-to-consumer (B2C) market.

MaxiCoffee’s e-commerce platform, sells around 8,000 products from over 350 different coffee brands (from beans and grounds, to capsules), plus a range of equipment including espresso machines, coffee makers, coffee grinders and accessories. In addition, it has a network of 60 sales agencies across the country, and a coffee school, the École du Café, plus concept stores that target both individual consumers and businesses.

The company will continue to operate largely autonomously as Antonio Baravalle, Lavazza Group’s CEO was keen to point out. In a statement, he said: “MaxiCoffee will have a totally separate and independent management, keeping its business model intact.”

Founder of MaxiCoffee, Christophe Brancato, will maintain a minority stake in the business and remain the chair of the French company and therefore continues to be involved in the development of the business model he started.

Rising costs remain a burden

At the same time as Lavazza was concluding the MaxiCoffee acquisition, the company also revealed solid growth in 2022, with turnover reaching €2.7 billion ($2.9 billion) up 17.6% over 2021 driven by increased volumes in all geographical markets. For comparison, smaller Italian rival Illy saw growth of 13.6% to reach €568 million last year.

Lavazza’s profitability was down, but not significantly, with net profit at €95 million, compared to €105 million in the prior year. This reflected a macroeconomic environment of rising prices for green coffee, as well as packaging materials, energy, gas, and logistics/freight services. The appreciation of the US dollar over the year was also a dampening factor.

Data from the International Coffee Organization, show green coffee prices rose steeply throughout 2021, peaked in around April 2022, and have since come back down a little.

According to Lavazza—which has two flagship stores in Milan and London, plus franchised shops and Eataly cafeterias all over the world—margins were maintained by a rise in sales, list price management, and the close monitoring of operating costs. The company also absorbed a substantial part of its added costs and only passed on a portion of it to consumers. This helped to keep sales buoyant in all regions, with volume performance above the market trend and value performance in line with last year.

Baravalle, said: “We were successful in sustaining turnover growth and keeping the margin in line with previous years. This was made possible by pursuing a strategy of international growth, combined with cost containment.” The CEO said that tackling “exceptional cost increases” would remain a battle and that these “will also have a significant impact on 2023.”

Despite rising costs for consumers, Lavazza saw turnover rise much faster in out-of-home channels such as stores and cafeterias with volumes rising by 26%. Geographically, the group reported a mixed picture for value-based sell-out growth: in Germany (18%), United States (14%), Poland (28%), while Italy and France were slower at 1.5% and 6.1% respectively after declines in 2021.