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00:00We talk every day about some supply chain issues. We talk of course about inflationary like. How does it feel at Lavazza. Are you able to increase prices. Are you able to offer consumers what they want. We are really living a very difficult time because the price of a coffee rose very much in the middle of 2021 due to a big frost affected Brazil. So price of rum became robust double in just a couple of days and then many issue related to the supply chain. Shipping cost of energy. So a lot of costs rising everywhere. So we hope of course to keep the company very competitive and not to transmit to consumer the burden of all of these increases. But how do you do that. So I know you have you know some of the prices in London have gone significantly up. I am not speaking about Lavazza in general but you know you go out for a cappuccino or an espresso. So how can you do that. Do you make margins and other things. No. We try of course to have a very tight budget control on the Reds. First of all sort of try to absorb part of the cost increase inside a company. Of course the company's not least. So we don't have any pressure regarding our margins. Except to reduce those margins for maybe a couple of years trying to keep our product very competitive just as more part of this cost increases pass on the prices towards consumers. So where do you see the biggest demand coming from or where do you see growing the most. Can China. You know traditionally a tea drinker nation you know switch more to coffee in 2021 than we. So a lot of a growth in consumption all across the board in all geographies and countries for lots of the most important geographies there remain in Europe United States. And recently also China where we say in a very interesting joint venture with a big partner young China came in to open a coffee shop chain of about 1000 coffee shops in China for 20 25 and they drink. What's the long Americanos or the espresso. I mean in Italy like coffee is a religion which is why I always say I'm half human half coffee day very much Italian style coffee. So you know our coffee shops we present a range of products at the very linked to the Italian tradition meaning espresso cappuccino cup him making out the menu recipe the way are offering to the Chinese. Big. They're very interesting in trying them and they like it very much. Who's your biggest competitor. Do you feel like you're a competitor. Starbucks. Oh yes of course. We have a large competitors. We need to grow the company because we know that our competitor is a big player says Nestlé. JD Starbucks. So for a coffee company Lavazza the main purpose is to be more international known to be stronger of course and to try to reach a size in terms of revenues and geographies distribution. Pretty much stronger to survive and to grow again. So how difficult and again this is actually for I mean for me it's quite difficult to measure right from because usually have a good sense if inflation is going up you have a little bit less money. You cut this you cut. What's the relationship between consumers and coffee. If inflation is starting to take hold. So if inflation stays low like 6 7 percent do consumers cut back on coffee or do they go for cheaper. Branded demand is still very strong. So for the moment for the time being we see that despite the price increase that the coffee demand is pretty strong and that what we are seeing that the away from a market that was crashed by the pandemic and now is bounced back and they're recovering quite a lot different situation from the coffee consuming offices because many people still are working remotely. So we are expecting that maybe this market is going back during the 2023. But you know coffee is a global beverage. People like it. So they accept the small increase. But I don't think they accept it to have a diminution in terms of quality. So we try of course to keep our mix with high quality coffee without blending it as was mentioned before with the robust that we don't it sounds like a no no. 0 to suggest given the amount of coffee drinkers we have a newsroom newsroom is like a prime. You should go round the newsrooms and sell more coffee because people are in the office and given the news flow always need to be extra caffeinated. Okay. Talk to me about Wimbledon. So you're actually you're one of the main sponsors of Wimbledon. Does it help elevate your brand or is it just a personal passion for. No no absolutely. In the company we divide the family passion for the business that needs a completely different stuff. So Wimbledon needs incredible stage it to perform and to engage consumer. And that's very high level is the demonstration. Our UK is very important for Lavazza. We say in the first partnership with Wimbledon in 2011 and I know we have renovated the partnership until 2025. So it's a perfect platform for communication for it showcase our capabilities in offering the best coffee in the same time. A great show. Yeah. And just up and suddenly. They are not only coffee lovers but they actually have really quite good coffee around the UK. Do you have any staffing issues in the UK. It does feel like some of the concerns that we've been talking about. The rest of the world there are kind of you know distilled in the UK and so amplified. UK is a great coffee market there really. It's it's a wonderful surprise for lots of its tightening. In 1990 many years ago and we followed this great development Joy for English consumer to embrace more and more coffee and a high quality coffee. So criminalisation of specialty coffee explain excitement about exult in our origins. So this is part of the British coffee culture very strong and deeply rooted. So it's a good basis to think that this market can be growth any more in the future. So when we knew you were coming out my producer said make sure you ask Jews at there what time he stops drinking coffee. Is it a myth that you have to stop at 12. Very. Or to know that at ISE and we say that you know the right number of coffee you have to consume in a day is no less than three but no more than 33. So you can stay USDA. USDA said every day. Every time. Yeah well you must switch to decaf. Oh is there not a cutoff point where you say look I drink but decaf. The coffee is that very good decaf. Lavazza is producing and offering a very great income. So you sell a lot to the Covid say yes that's great.

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Coffee Prices Rise as Lavazza Says Demand Remains Strong

Lavazza Vice Chair Giuseppe Lavazza says return to office work is boosting coffee consumption. He speaks to Francine Lacqua, on 'Surveillance Early Edition.' (Source: Bloomberg)

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