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Italian espresso going strong on foreign markets

by Ilaria Vesentini

Coffee is not just the favorite pick-me-up of Italians, it is also an invigorating driver for the country’s economy. This is because Italian espresso – from roasted and ground black powder, bar and home machines and packaging plants – boasts uncontested world records and a business worth €5 billion on the production side. There is also big potential beyond its borders: this is a “Made in Italy” brand that has connotations of authenticity, quality, tradition and lifestyle, factors that can open the doors of global markets to Italian companies.

Italy is the second importer of coffee beans in the world (about €1.4 billion in value) and the second consumer of coffee (5.65 kg per capita), behind Germany only. The sector starts from the more than 800 coffee roasters (with 7,000 employees and €3.3 billion turnover, more than a third from exports), with a strong growth trend that will come close to 8% this year after an increase of 11% in 2015, according to food sector association Aiipa.

Then there is the segment of professional espresso machines: 34 plants provide work in Italy for 1,250 people and have a turnover of more than €430 million (according to coffee machine manufacturers association Unimac).

“We attain 75% of volumes on foreign markets, where we are leaders in the segment of traditional machines for bars and hotel and restaurant catering, and we have doubled our exports in the last 10 years. The espresso is a symbol of the status of the modern, cosmopolitan and sophisticated consumer, and the compass is directing us increasingly towards the Middle and Far East, where consumption is becoming more westernized,” said Unimac President Maurizio Giuli.

Italy’s leadership is paramount also when talking about little espresso machines for the house: on its own the Veneto company De’ Longhi has 34% of the global market of “espresso coffee makers” (more than €720 million in revenues).

In industrial packaging plants that produce bags, filters and capsules, Italian firms are challengers for the top spot alongside their German and Swiss counterparts, in a market segment that is worth about €200 million. The sector is “one of the most dynamic niches for investments and margins, that has been growing for years at a rhythm of 10%,” said Lorenzo Maldarelli, chief executive of Gima, part of the Bologna-based packaging group Ima that has 20% of the global market.

The numbers point to a manufacturing sector that is seeing a great deal of activity, from the revolution of the single dose capsules (+19% in sales in 2015) and the explosion of e-commerce (+43 % in the last year according to estimates from Competitive data).

“We owe a thank you to the Americans of Starbucks that have made coffee and cappuccino a global mass phenomenon, but now it’s down to us to work to take back the business linked to authentic Italian espresso,” said Patrick Hoffer, president of the Consorzio promozione caffè. He added that the “Italian sounding” phenomenon of foreign companies making products that look and sound very similar to their Italian equivalents was a scourge that the sector needed to fight against.

The fragmented structure of the market does not help: three quarters of retail is in the hands of a few global brands (Nestlè, Lavazza, Illy). Hundreds of roasters share up pockets of local demand, working hard to defend themselves from the private labels of the supermarket chains.

Meanwhile small artisan roasters are up and coming, in a similar trend to micro-breweries in the beer sector.

This is a symptom of a new approach to coffee, no longer about swiftly gulping down a cup at the bar (a business worth €6.6 billion in the 149,000 bars in the country, says restaurant and tourism sector association FIPE) but a focus on the Italian “know how” of tasting and appreciating at a calm pace.

This is the approach that has led the Emilia-Romagna region (the second region for roasters after Lombardy) to test a new form of “exhibition,” halfway between a fair and a gallery: the Cafèstival. Debuting at the beginning of the month in Bologna, the festival brought together the various key players of the sector to “construct a journey, a story of the espresso, between culture and business,” said organizer Marco Meletti, adding that the event was part exhibition, part museum and part conference.