The family that grew rich on the other black stuff

To Giuseppe Lavazza, writes Martin Baker, coffee is far more important than money. It just happens to be second only to oil as a commodity

Giuseppe Lavazza doesn't offer a coffee, specifically. But then, he doesn't have to. He is the crown prince of the world's biggest independent coffee company, and the beverage that is synonymous with the family name permeates any encounter.

Ours happens to be in Turin, Italy's capital of chocolate, ice cream and, of course, coffee. I've just had a tour of the mind-boggling Lavazza factory, a few kilometres from the city centre. Amid the lava flow of facts thrown at me is the unsurprising news that this is Europe's, and possibly the world's, biggest coffee production unit. I've also sampled the best cappuccino I've ever tasted, and witnessed the strangely chilling sight of silent robots relentlessly stacking pallets of coffee in a dark warehouse the size of an aircraft hanger.

So ... Giuseppe Lavazza makes an easy, open-palmed gesture, confident that his product has worked its magic: would I like a drink? I decline. The image of the macchiato Robo Cop slaves is still with me, and I don't want to spoil the memory of that cappuccino.

We sit on leather benches, and Lavazza hits his conversational stride quickly. The group marketing director and coming man of that exceptional rarity, a globally known, €1bn-plus (£800m-plus) family business, has a lithe self-assurance about him. And so he might. Coffee is nearly the most valuable soft commodity in the world right now – second only, ounce for ounce, to oil.

Tanned from skiing with his family, and gently balding, Lavazza warms to his favourite topic – coffee as a cultural icon: "Coming from a country where coffee is recognised as a benchmark, you can put together a creative and artistic job with a large, mass-market product. We work to keeping the old traditions and have a great focus on the pleasure a cup of coffee can afford.

"It's like running a clothes boutique, where you choose certain clothes to give a look, philosophy and style. We do something similar with coffee."

Phew. That cappuccino was quite something – but a clothes boutique? Lavazza is quite clear that coffee has cultural value – something he reiterates during our meeting. "This is a country where coffee is not considered a commodity – for Italian people, it is truly a pleasure," he says with conviction. "We lead the market in Italy, with a 45 per cent share."

Lavazza's marketing people have told me that the company has a 48 per cent share in Italy. I query this, only to be told that 48 per cent is merely a monetary figure. In terms of volume, of the sale of the beautiful thing that is coffee (and implicitly more important than money), the figure is 45 per cent.

At which point it's time to get all Anglo-Saxon and global capitalist with the undoubtedly charming Lavazza. His grandfather founded the firm in the late 19th century, his father is chairman and his cousin vice-chairman, but won't the Lavazza empire find itself going to the equity capital markets sooner or later, as it tries to take on giants such as Kraft, Nestlé and Sara Lee? Surely, Lavazza will have to tap the markets or sell at least part of itself?

"No, for a very simple reason," insists Giuseppe. "The business is profitable enough to make enough money to reinvest." For the moment, the profits are running at some €100m per annum, and the two families who own it (Giuseppe's own and his cousin's clan) take a low dividend to facilitate that reinvestment.

Turmoil in the equity and bond markets is another reason why Lavazza sees the family firm as sitting pretty. He is clearly glad the two controlling families have held out against the many offers from their quoted global competitors: "Procter & Gamble, Sara Lee, Kraft, Nestlé – everybody has approached us."

Few of them could easily afford Lavazza right now, though. The flight out of shares has led to record soft commodity prices for sugar, wheat and coffee.

So if Lavazza can fight off the multinational producers, for the moment at least, what about the ever-growing presence of Starbucks coffee shops?

"Starbucks' expansion of the market is a very good thing," says Lavazza. "Until they arrived in the US, the market in coffee was dead. Very cheap, very poor, of no value. It was difficult to find an espresso coffee machine outside fine-dining restaurants. Espresso machines are our life! So thanks very much. They have a strategy that's focused on their core approach, which is shops, shops, shops. They were looking for some sort of partnership, but not the acquisition of something that's not Starbucks-branded. For us it's the same. Developing the business through acquisition is difficult because our strategy is focused on the brand."

Lavazza has acquired the Barista and Fresh & Honest coffee chains in India, and is "looking for more acquisitions in Russia, Brazil, China. European markets are very mature".

So isn't Lavazza now in direct competition with Starbucks? "They're not in India. We're sniffing at the coffee shop business, because it's important for a brand. It's a sort of window. We're not really competing." It will be interesting to see whether the view from Starbucks' Seattle headquarters is the same as Lavazza's on that one.

If it isn't, the mild-mannered, workaholic Lavazza can expect more approaches from the giant producers and retailers. Of course, so long as the families remain united, the private empire that is Lavazza will remain untouchable. Yet as the generations move on, the ownership of the business will diversify, and achieving what Giuseppe Lavazza describes as "consensus, agreement and mutual respect" will become more difficult.

And for all his love of coffee, his real job is to find and keep those last three intangible commodities.

Start your day with The Independent, sign up for daily news emails
News
newsAnother week, another dress controversy on the internet
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
health
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
news... and what your reaction to the creatures above says about you
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn