Yum China and Lavazza have announced that they plan to accelerate the expansion of the store network of Lavazza cafés in China through their existing joint venture, aiming to open 1000 stores by 2025.
Together, they will inject $200 million initially into the joint venture to fund its future growth. In addition, the joint venture is expected to be Lavazza’s exclusive distributor in mainland China to introduce more products from Lavazza’s global portfolio.
Lavazza formed the joint venture with Yum China – the largest restaurant company in China in terms of 2020 system sales – in early 2020, to explore and develop a Lavazza café concept in China.
“The potential for coffee in China is vast; there is a lot of unexplored white space. As the largest restaurant operator in China, Yum China is the best partner to further grow the Lavazza brand in this market given its deep understanding of local consumers and market dynamics. Likewise, we believe Lavazza is the perfect premium brand for Yum China to achieve its coffee aspirations, bringing outstanding quality products and in-depth expertise of the coffee sector, nurtured over the 126 years of our history,” says Antonio Baravalle, CEO of Lavazza Group.
“The strengths contributed by each partner create a solid foundation for the success of our joint venture, and we are excited to collaborate with Yum China to develop Lavazza into a leading coffee brand in China.”
The joint venture is owned by Yum China and Lavazza with a stake of 65 and 35 per cent, respectively.
The first Lavazza flagship store in Shanghai, its first outside of Italy, opened its doors to customers in April 2020. Lavazza has since grown to more than 20 stores in China across Shanghai, Hangzhou, Beijing, and Guangzhou. Meanwhile, digital channels play an important role in Lavazza’s initial success. Sales to Lavazza members accounted for approximately 50 per cent of total sales for the first half of 2021.
“The recent progress of Lavazza cafés in China has been encouraging and reaffirms our belief that our partnership is well positioned to capture the significant coffee opportunity in China with accelerated store network development. We are excited about what the future holds for this iconic Italian brand,” says Joey Wat, CEO of Yum China.
“Leveraging Yum China’s world-class supply chain, digital capabilities and in depth knowledge of Chinese consumers, we look forward to bringing Lavazza’s premium and authentic Italian coffee experience and products to even more consumers in China.”
The next phase of Lavazza’s store expansion in China is to increase the density of Lavazza café network in higher tier cities with a variety of store formats for a wider range of occasions. With 22 stores as of 31 August 2021, the joint venture plans to more than double that by the end of 2021.
The joint venture will further enhance capabilities to drive efficiencies, in particular in-store operation, branding and marketing efforts.
In addition, the joint venture will market, sell, and distribute Lavazza’s retail products in mainland China, including coffee beans, ground coffee and coffee capsules.