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Lavazza Seeks French Coffee Leadership With Carte Noire Deal

by Thomas MulierMatthew Boyle

Luigi Lavazza SpA offered to buy the Carte Noire coffee brand from Jacobs Douwe Egberts, a deal that would give the Italian company command of the French market.

Closely-held Lavazza didn’t disclose the value of its bid in a statement Wednesday, though Les Echos reported that it is paying just less than 800 million euros ($872 million).

Founded in 1978, Carte Noire is the biggest java brand in France, the world’s fourth-largest coffee market. The purchase would make France Lavazza’s second-biggest country behind Italy, where it has a market share of about 45 percent. Carte Noire accounts for about a fifth of coffee sales made by French retailers.

“Now is perhaps the moment for Italian players to make a meaningful transition from a domestically focused business to international expansion,” said Hope Lee, an analyst at researcher Euromonitor. “Although success is not guaranteed, it is a risk that they may have to take.”

The purchase of Carte Noire would support Lavazza’s goal to expand beyond Italy, Chief Executive Officer Antonio Baravalle said in the statement. The company’s strategy is to grow both organically and through acquisitions, he said.

Lavazza’s investments in coffee include a stake of about 3.1 percent in Keurig Green Mountain Inc.
The binding offer for Carte Noire is subject to works council consultations and regulatory approval. It includes the Carte Noire business within the 31-nation European Economic Area with the exception of instant coffee, single-serve capsules called T-Discs and out-of-home businesses. A factory in Laverune, France would also be included.

Jacobs Douwe Egberts is the upshot of a merger between Mondelez International Inc.’s coffee business and D.E Master Blenders 1753 BV. That union was completed earlier this month after the new company agreed to sell Carte Noire to allay concerns from European Union regulators, who said the deal would limit competition in markets like France.

Jacobs Douwe Egberts is the world’s second-largest coffee company, with annual revenue exceeding 5 billion euros. The Netherlands-based entity is majority-owned by JAB Holding Co., the investment arm of Austria’s billionaire Reimann family.

--Adapted from http://www.bloomberg.com/--


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