Italian coffee major Lavazza has decided to establish a manufacturing base at Sri City near Tada in Andhra Pradesh, about 60 km from Chennai, with an outlay of €20 million (Rs 120 crore).

The foundation stone for the manufacturing unit with a capacity to handle 1,100 tonnes a year, with capability to ramp it up to 1,400 tonnes and later to 1,600 tonnes was laid two day ago.

This follows its entry into the country with the acquisition of Barista Coffee and Fresh & Honest Café Ltd in 2007. The company, which has a small manufacturing unit near Chennai, plans to relocate it to Sri City. The new unit is expected to be operational by middle of 2012.

Second Phase

Describing this as second phase of expansion, Mr Giuseppe Lavazza, Vice-President and Marketing Director, said the company sees India emerging as its second largest market in the next five years. At present, of the total revenues of €1.13 million (about $1.5 billion), 60 per cent business is within Italy and the rest from other parts of the globe.

The company has four manufacturing units in Italy and one in Brazil.

Addressing a press conference, Mr. Lavazza, who flew here along with some of the family members now into their fourth generation of business of coffee products, said they take pride in being a family-owned company. Tracing the company's 116-year history, he said the company has grown organically followed by a series of acquisitions, including India in 2007. The Italian Ambassador, Mr Giacomo Sanfelice di Monteforte, said “our intention is to make India our second largest market of reference following Italy. The Indian economy withstood the pressure of global turmoil and offers opportunities for collaborative growth.”

The Andhra Pradesh Major Industries Minister, Ms J. Geetha Reddy, said there are lot of similarities between India and Italy and the potential is immense to work together.

Retail expansion

Mr Lavazza told Business Line : “the company plans to expand the retail chain significantly over the next three years. This will not only help the company introduce and popularise its products but also accelerate the growth. As a part of this initiative, we plan to double the number of stores within three years.”

“Thus far we have invested over €100 million in India. Once we stabilise the operations with new manufacturing unit, we will be able to fund the expansion from revenues generated here,” he said.

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