Italy's Lavazza to lure U.S. coffee lovers home from the cafe

Thu Dec 13, 2012 1:24pm EST

* CEO sees 2012 net profit 40-45 mln euros from loss in 2011

* Lavazza owns 7.5 pct in Green Mountain, says not to raise stake

* Sees coffee prices stable in 2013

By Antonella Ciancio

MILAN, Dec 12 (Reuters) - Italian coffee roaster Lavazza expects the United States to overtake Europe as its second-biggest market behind Italy over the next 10 years, as it expands in the growing market for single-serve coffee machines.

The Turin-based group founded by the Lavazza family in 1895 expects to return to profit this year after cutting costs and expanding its presence in foreign markets, chief executive Antonio Baravalle said on Thursday.

"Our aim is to persuade 85 percent of Americans who drink coffee on the street to brew it at home," Baravalle said at the presentation of the 2012 results.

Lavazza also plans to increase its presence in India, China and Russia through local partnerships, the CEO said.

The group, at its fourth family generation, has built up a 7.5 percent stake in U.S.-based Green Mountain Coffee Roasters Inc to strengthen its presence in north America.

Green Mountain's Keurig one-cup coffee brewers control more than three-quarters of the U.S. market.

Baravalle said Lavazza was not considering raising its stake in Green Mountain, saying it represents a long-term industrial partner for the Italian group.

Lavazza expects a revenue boost from the new single-cup espresso and cappuccino machine it launched in November with Green Mountain in the U.S. market, the executive said.

The machine, with a retail price of around $229, competes with the at-home Verismo brewer launched by Starbucks Corp , best known for serving coffee drinks at its shops.

One-cup coffee makers and the coffee-filled cups, discs or pods they use to make barista-worthy individual drinks account for just 8 percent of total worldwide coffee sales, but that share is growing fast.

Lavazza makes 30 percent of its revenues from coffee cups, a market that represents a priority for its future growth.

Nestle SA's Nespresso coffee makers, marketed by actor George Clooney, holds a 35 percent share of the global market.

Lavazza sells 60 percent of its ground coffee bags and espresso machines in recession-hit Italy, where it has a 43.4 percent market share by volumes.

Lavazza expects a net profit of around 40 million-45 million euros ($52-$59 million) this year from a loss of 9.1 million euros in 2011, when it was hit by record-high coffee prices and organisational problems.

"Profitability is back to pre-crisis levels, and we have good prospects for next year," Baravalle said.

Baravalle, who joined Lavazza last year after having once headed Turin carmaker Fiat's Alfa Romeo brand, said the family was not considering tapping financial markets to fund growth.

He said he expected coffee prices to be stable in 2013.

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