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Lavazza Exits Barista But To Make Coffee For The Chain

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Turin-based Lavazza, on Tuesday (12 August) announced its decision to exit coffee shop business in India. Lavazza has decided to lay greater focus on its core business, which is coffee and sold the café shop chain Barista which it bought in 2007  to Carnation Hospitality Pvt Ltd, a company owned by Rollatainers.  However, the coffee shops will continue to provide Lavazza Coffee thanks to a long-term supply agreement between Fresh & Honest Café Ltd. (FHCL) and Barista.

New Delhi-based Carnation Hospitality bought Barista Coffee Co for about Rs 100 crore from Lavazza, becoming the fourth owner of the struggling coffee chain.

Lavazza has been hawking Barista for almost a year as the Italian group wanted to exit the business after it failed to turn around the loss-making coffee chain.

Antonio Baravalle, CEO of Lavazza, said: “The decision to move out of Barista has been taken accordingly with the global business guidelines of the Group to no longer manage directly the coffee shop business. Instead, they will continue to provide Lavazza Coffee to Barista coffee chain thanks to a long-term supply agreement, in connection with a licence agreement of the Lavazza trademark. Changes in the market required us to relook at our commercial penetration methods and as a result, Lavazza has decided to concentrate on coffee in the region. In fact, India continues to remain an extremely important market to Lavazza’s international operations and it is strategic to the brand’s overall growth initiatives across the world. Furthermore, we will continue to develop our presence in the country through the AFH business and through the investments in the Sri City plant, our first and only production facility outside of Italy.”

Lavazza was assisted in the deal by Rothschild, as financial advisor, and Desai & Diwanji, as legal advisor.
Lavazza, established in Turin in 1895, has been owned by the family of the same name for four generations. The world’s seventh ranking coffee roaster, today Lavazza is the retail market leader in Italy with a market share by value of over 47 per cent  (source: Nielsen) and sales of EUR 1,340 million (as of December 31, 2013). The company has five production sites, four in Italy and one abroad, and operates through associated companies and distributors in more than 90 countries. Lavazza exports 46 per cent of its production today.

Lavazza invented the concept of blending - or in other words the art of combining different types of coffee from different geographical areas - in its early years and this continues to be a distinctive feature of all its products. As a family run company, Lavazza has always had a special concern for the ethics and sustainability of its business model.

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