David Rogers, UK MD at Lavazza: Big Interview

Lavazza keeps good company these days. In June it joined the likes of Bollinger, Longines and Garrard & Co as an official sponsor of Royal Ascot, the latest move by the Italian brand to ensure its signature blend is sipped by the UK’s elite. 

It’s been coffee of choice at London Fashion Week for 10 years and Wimbledon for five. Then there’s the collection of five-star hotels it counts among its clients, including Piccadilly’s Ham Yard Hotel where David Rogers, UK MD, is extolling the innate luxury of a quality cup of coffee. “It’s all about the experience,” he says. “About that moment of pleasure coffee can give you.”

Brits need little convincing. We’ve already been seduced by super-premium brews served up at an estimated 18,000 cafés on the UK high street. The UK coffee market is now worth £7.2bn, up 10.7% year on year, according to the latest Allegra World Coffee Report. 

Sales of roast ground coffee are also growing, and particularly coffee pods, where Lavazza’s twin-channel approach (via grocery and direct to customer) has paid dividends since its launch in 2008. 

A strange time then for an unashamedly luxury brand such as Lavazza to launch its first venture into instant, a market that fell 3% last year and is predicted to plummet a further £80m by 2020 [Mintel]. But that’s exactly what the brand did in late 2014, with Prontissimo. So what is Lavazza playing at? One year after its launch, how is Prontissimo doing?

“The premium part of the instant coffee market isn’t in decline,” Rogers insists. “It’s an £80m segment and growing at 20% year on year. And as a privately owned independent coffee company, we need to grow to remain relevant in the world marketplace. 

“We looked at the UK and realised to stop the decline of instant coffee the main manufacturers were adopting a lot of Italian words like cappuccino and Americano. Yet none of these products have been anywhere near Italy. And Lavazza said we can have a brand here in the premium segment of the instant market. We’ve no intention of competing at the bottom end.”

There were initial concerns, he admits, that joining the instant ranks might dent Lavazza’s luxury reputation “but what we’ve done is ask consumers, and they don’t see this as detrimental to the overall Lavazza brand,” he says. “Had we believed it was in any way detrimental to the fantastic image we have, we wouldn’t have gone ahead.”

And so far so good. The two instant variants are selling “extremely well” he says, having rolled out nationwide in September after soft launches in December last year into select Waitrose and Sainsbury’s. “It’s difficult to quantify as we’ve only just gone national but from our numbers we can see it’s the third brand in the [premium instant] marketplace, which after a few months is incredible.” 

Capsules

Prontissimo is also “attracting a completely different sector of consumers to Lavazza rather than cannibalising from our existing business” adds Rogers. And that’s crucial because there’s no shortage of competition in its core market. The “constantly evolving” coffee capsules market, now worth £100m in the UK and rising according to IRI, is awash with various pods, ever since pioneer Nespresso allowed a series of patents protecting its pod designs and brewing chambers to lapse from 2011.

But the state of flux won’t last, Rogers believes. “When a market is exploding, everyone piles in to take a piece of the action and make money early. But when that trend has stabilised, it’s usually the experts in that category that are the survivors.”

One of the few players resisting the temptation to develop pods for Nespresso’s system, Lavazza’s A Modo Mio capsules have only ever worked with its own proprietary machines, and in turn its machines work with no other capsules on the market. Reciting Lavazza’s “quality proposition” word for word (7g of tamped coffee extracted for 20 seconds with 10ml of crema) Rogers thinks consumers will cotton on to the less exacting standards of some of the manufacturers now jumping on the coffee pod bandwagon. “We’re seeing other companies coming into the capsule market at the moment who wouldn’t be particularly known for being quality coffee manufacturers,” he says, diplomatically.

The brand also seems to have found a way around the environmental concerns that have plagued the booming capsule category with the development of a biodegradable version. Made of a thistle-based bio-polymer, the capsules can apparently be chucked out with other organic waste and composted. 

“Production constraints” have stopped the company setting a date for the UK arrival, Rogers explains, and currently only the Italian market is set to benefit. The innovation needs “further development” to prove a workable solution in at-home machines. “But let’s be clear, if you individually break the capsules down, the elements are recyclable separately,” Rogers adds. “The issue is no consumer really wants to do that.”

For now Rogers will focus on building Lavazza’s market share. Sales are predicted to reach £47m for 2015, a 20% increase. Building its out of home business (40% of turnover) through more deals in fancy hotels and offices will be pivotal but retail offers “massive potential”, Rogers believes. The upcoming acquisition of Carte Noire (pending approval by European and French authorities) will help Lavazza “extend our drives in the premium instant area,” he adds. Rogers won’t comment further on the reported £550m deal with Jacobs Douwe Egberts (created after the 2014 merger between Mondelez International’s coffee business and DE Master Blenders) but if it goes ahead it would likely treble Lavazza’s sales in France. 

Already listed in the major mults Lavazza isn’t stocked at discounters. But that could soon change with the brand “more interested” thanks to an increasingly posh shopper profile. And convenience stores hold prospects for its 100 machines too, he adds, as Costa Express fatigue sets in. “Costa are absolutely everywhere, they’ve done an amazing job but what we’re finding in discussions with people is that they’re looking for alternatives and Lavazza is well-placed, with its reputation, to fit into the premium end,” Rogers says.

And a rebrand is in the works to ram home the Italian roots of Lavazza. “We’re emphasising that, adding as our strapline ‘Torino Italian 1895’ on all our products,” says Rogers. “We can’t stop other companies inventing Italian positioning. All we can do is to over-emphasise our authenticity.” And rubbing shoulders with royalty won’t do it any harm either.