Italian Firm Lavazza Takes on Mars Inc. Coffee Unit

October 1, 2018

2 Min Read
Italian Firm Lavazza Takes on Mars Inc. Coffee Unit
Mars Inc. is selling its coffee business to Lavazza. Image courtesy of Flickr user angermann

Turin, Italy-based coffee manufacturing firm Lavazza Group is poised to expand its presence in the Office Coffee Service (OCS) and vending channels in North America and several European markets with the acquisition of Mars Inc.’s Drinks business, the company announced in a release Monday. 

Sources told news wire service Reuters that the enterprise value of the transaction is about $650 million, with Lavazza securing a $463 million loan to finance the deal. The acquisition includes the Flavia brand, a single serving system for hot drinks, and Klix freestanding beverage vending machines.

“This acquisition fits perfectly within our international expansion strategy, the objective of strengthening key markets, as well as the pursuit of having an even closer relationship with end consumers,” said Antonio Baravalle, chief executive officer of Lavazza, in a statement. “Indeed, this acquisition strengthens the Lavazza Group’s position in the OCS and Vending segments, which offer considerable opportunities for growth and development.”

Under the terms of the deal, Lavazza will take on Mars Inc.’s coffee businesses in Germany, the UK, France, North America, and Japan, including associated production plants in the UK and U.S. Employing some 900 workers across its footprint, the Drinks business brought in some $350 million in revenue during 2017. 

“Mars Drinks has been an important part of our business for many years, and while it’s always hard to say goodbye to great brands, valued associates and friends, we believe now is the right time for a change,” Grant F. Reid, chief executive officer of Mars said in the release. “We are confident this decision will better enable long-term success for the Drinks business with Lavazza – a company that shares our values and has a dedicated focus on beverages – and will allow the business and its associates to continue to thrive.”

Lavazza expects to complete the purchase of the business by the end of this year pending regulatory approvals and other closing conditions. 

Last month, Powder & Bulk Solids reported that U.S. beverage firm Coca-Cola expanded its coffee-related offerings with the $5 billion acquisition of London-based international coffee brand Costa Limited. Kraft Heinz announced the close of its purchase of Vancouver, BC-based certified organic, Fairtrade coffee roaster Ethical Bean Coffee last week.

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