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05 December 2023

Coffee king's death may not be an easy gulp for business

By Martin Baker




I was saddened to read of the recent death of Emilio Lavazza. He made his family's name synonymous with coffee, and has died at the age of 78. I visited the headquarters of the world's largest independent coffee producer (and sixth-largest overall, competing as it does with the likes of Kraft and Nestle) some three years ago. My trip to Turin engendered a lasting affection for the company, and the passion for coffee that drives of one of the world's last truly significant family-owned businesses.

The death of Lavazza, however, may have some sad commercial consequences. The Lavazza company has had dozens of offers from its global conglomerate competitors over the years. With its turnover of more than €1 billion (Dh4.96bn) and a reasonable profit, much of which has been re-invested in the business, the management has been able to fend off the corporate raiders.

Part of the reason for this has been the fact that the ownership of the business has been concentrated in a few hands. My understanding is that Lavazza is split mainly between two families. However, as generations go on and the number of family members grows, the pressure on the ownership and management of the business will increase. Of course, the use of trusts can help streamline the business and easier to manage, but the fact is that the more beneficiaries or owners of equity there are, the more difficult the management's job will be.

I could be wrong – and I hope I am – but I suspect that one of these days some big corporate beast will swallow Lavazza down like a tasty shot of espresso.





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