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Recession leaves bitter taste for Italian coffee makers

By Oliver Joy, CNN
August 16, 2013 -- Updated 0922 GMT (1722 HKT)
  • In 2012, consumers in Italy, Europe's second biggest importer of coffee, drank 5.6kg per person
  • Italians are choosing to buy their coffee on the shelves rather than ordering cappuccinos in the local cafes
  • Galindo believes the single-serve devices may change consumption patterns in Europe

(CNN) -- Italy's coffee industry is being hit by the debt crisis as consumers stay home and tap quick-fix machines for their caffeine kick.

Italians are increasingly buying their coffee on the shelves rather than ordering cappuccinos in the local cafes and bars, and the impact is reverberating through the industry.

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Mauricio Galindo, head of operations at the International Coffee Organization (ICO), told CNN family's budgets were being hit by the country's flailing economy.

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"People don't drink as many coffees outside because they're more expensive, a little espresso is 2 euro, 2.50," he said. "So they just buy to make it at home, and make it cheaper."

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One of the country's most famous brands is feeling the squeeze as coffee-drinking habits change. Lavazza boss Antonio Baravalle told CNN that "from a consumer point of view, we are facing a crisis in Italy because the market is losing 3% [to] 4%."

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Italy has been one of the worst hit countries in the eurozone's financial crisis. The country has had eight consecutive quarters of economic contraction and unemployment is over 12%. Coffee consumption in Italy has dropped from 5.9kg in 2008, as the crisis kicked up, to 5.6kg per person last year, according to the ICO.

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According to Galinda, people associate Italy with the espresso machine because it invented the style of coffee brewed under high pressure and with very hot temperatures. However, the Mediterranean country drinks less coffee than its reputation might suggest -- Finland consumption comes in at twice the level.

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The arrival of the capsule-based Nespresso machine has attracted coffee-lovers through the U.S. and the UK, Galinda noted. This move toward single-serve devices could change consumption patterns in Europe, he added.

"As these machines become more popular, as they penetrate Germany and France, this could mean that people overall consume more coffee," he told CNN.

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For Baravalle, the shift creates an opportunity outside the company's home market. Lavazza currently holds 50% of the coffee market in Italy, the eurozone's third-largest economy, but is looking beyond those borders for its growth.

"We want to create USA as a second market for us... our objective is to become a credible alternative to Nespresso," he told CNN.

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