Coca-Cola HBC is investing in Caffè Vergnano to expand its stronghold in the European coffee scene. 

Its wholly-owned subsidiary CC Beverages Holdings II reached an agreement to acquire a 30 percent minority equity shareholding in the premium Italian coffee company. 

The completed acquisition is scheduled for the second half of 2021 and is subject to customary closing conditions and regulatory approvals.

Moreover, Coca-Cola HBC and Caffè Vergnano will enter into an exclusive distribution agreement for Caffè Vergnano’s products in Coca-Cola HBC’s territories outside of Italy. The parties have agreed not to disclose financial details.

Popular premium coffee
Speaking with FoodIngredientsFirst, Prodromos Nikolaidis, Coca-Cola HBC group coffee director, shares what market trends are driving consumer demand for luxury coffee specifically.

“The coffee category has been evolving over a number of years, with coffee lovers seeking out specific beans and blends, origins, preparation methods, serves and types of milk to complete their coffee moment,” he explains. 

“This trend has undoubtedly been accelerated by the pandemic as people tried to recreate their on-the-go coffee experiences at home.”

According to Innova Market Insights data, coffee made up 48 percent of hot drinks NPD in Europe from April 2020 to March 2021. Tea followed close behind with 47 percent, with the Malt and Other Hot Beverages category bringing in 5 percent.

Respect for the family business
Caffè Vergnano is a family-owned Italian coffee company headquartered in Santena, Italy. It is one of the oldest coffee roasters in Italy with roots dating back to 1882. 

When asked about the challenges of fusing a global FMCG company like Coca-Cola HBC with a family-owned business, Nikolaidis responds: “We are respectful of the company’s 140-year history and the dedication and passion of the four generations that created such a rich and renowned coffee brand.”

“Throughout this process, it has become clear that we share the same vision and passion for coffee. We share the same conviction about the untapped potential of the company’s brands in our territories and beyond.” 

Caffè Vergnano’s portfolio includes traditional espresso in various blends, packages and formats such as beans, roast and ground coffee and single portioned pods. In 2020, the company sold approximately 7,000 tons of coffee in more than 90 countries. 

“As is customary in these types of transactions involving privately-held companies, we have entered into a shareholders’ agreement with members of the Vergnano family,” Nikolaidis details. 

Coca-Cola HBC will also be represented on the company’s board of directors and have customary minority decision-making and governance rights. 

Expanding the coffee portfolio
The Caffè Vergnano investment follows Coca-Cola HBC’s at-home Costa Coffee launch throughout Europe last year. Coca-Cola HBC affirms Caffè Vergnano will allow it to address “an even wider range of consumer tastes and segments.”

The full range of Costa Coffee products includes whole beans, roast and ground coffee, coffee pods, ready-to-drink coffee and self-serve barista-quality coffee via Costa Express machines. 

“We believe the two brands are highly complementary,” Nikolaidis highlights. “Caffè Vergnano can help us recruit those consumers loyal to the Italian coffee taste. Costa continues to be our mass premium global coffee proposition with broad consumer appeal across multiple platforms.”

Between April 2020 and March 2021, 10 percent of coffee launches in Europe were positioned as “Indulgent & Premium,” according to Innova Market Insights data.

This was ahead of Traditional (6 percent), Seasonal (4 percent) and Gluten-Free (3 percent), but still behind Organic (14 percent).