Giuseppe Lavazza: Coffee is a big responsibility

0:00This BBC podcast is supported by ads outside the UK. If journalism is the first draft of history, what happens if that draft is flawed? In 1999, four Russian apartment buildings were bombed, hundreds killed. But even now, we still don't know for sure who did it. It's a mystery that sparked chilling theories. I'm Helena Merriman, and in a new BBC series, I'm talking to the reporters who first covered this story. What did they miss the first time? The History Bureau Putin and the apartment bombs Listen on bbc.com or wherever you get your podcasts From the Winter Olympic and Paralympic Games To the European Athletics Championships The 2026 sporting calendar is packed full of big events Keep up with all the action with More Than The Score The podcast that goes beyond the score sheet Join expert BBC sports journalists every Monday to Friday For interviews with sports stars, big talking points and the stories behind the headlines.

1:07More Than The Score from the BBC World Service. Listen now. Search for More Than The Score wherever you get your BBC podcasts.

1:30world from all over the world. There have been so many disagreements between me and my family. Putting on a show, that is what it means to be Lady Gaga. Only the things that you can't solve with government and private sector is where you bring philanthropy in. There's no place in the world where women are equal. Every generation, every generation has to fight to maintain democracy. For this interview, I met Giuseppe Lavazza, chairman of the Lavazza Coffee Company at Lavazza's flagship store in central London in the UK. Many people around the world say they can't function without their morning cup of coffee.

2:12In fact, global coffee consumption has been steadily rising with around 2 billion cups of coffee consumed every day. This growth is driven by rising demand in emerging markets like China and India, as well as the popularity of speciality and cold coffee beverages. However, the industry itself is facing major challenges, including an increase in the cost of raw materials due to changing weather patterns and growing concerns over geopolitical instability impacting shipping routes. The coffee market, which was valued at approximately$495.5 billion in 2023, is a far cry from when the La Batza Coffee Company was first established nearly a century ago in Turin, Italy.

2:59Coffee has demonstrated to be very contemporary. It's an old commodity, very old. At the same time, its agility, its capability to adapt to new needs, to approach new consumers, is extraordinary. In the future, the world will need more and more coffee. By 2030, our provision is to have a consumption, daily consumption, of about 3.8 billion cups. So the large opportunities. Welcome to the interview from the BBC World Service with Giuseppe Lavazza.

3:36Prices of green coffee have continued to rise over the past four years, unfortunately. So a big rally for Arabica starts at the end of December 2020, and for Robusta, the other component, April 2021. But something totally unprecedented. Every quarter, coffee over the past four years reported a new record in terms of price. Maybe, we hope, the prices peaked at the beginning of 2025 between January and February, reaching incredible prices for Arabica was$4.20 per pound compared to an historical leverage of$1.20, for example, so very high. And Robusta,$5 ,700 per tonne, compared to a historical average of$1 ,700 per tonne.

4:39Now, for goodness, the prices have dropped a little bit, but it's still a quite fragile environment, because we don't know what is going to happen in the future, especially considering the tariff policy of Mr. Trump. It can affect many bigger coffee-producing countries, Brazil, Vietnam, Indonesia. So we don't know. The situation is very unsaid. The cause of these growing coffee prices mainly are four. First of all, weather-related causes, drought in Brazil, drought in Vietnam for many years, connected to El Niño, a meteorological phenomenon that really affected those countries for a long period of time.

5:20we had geopolitical issues, mainly the Suez Canal crisis. Many coffee arrived to Europe, for example, crossing Suez Canal and entering the Mediterranean, so it provoked a shift in cost of shipping, for example. European regulations, as the UDR, tariffs, we don't know what's going to happen, but of course the scenario is quite uncertain, and speculation, that's a part of this picture, and speculators and investors take advantage of this situation to try to gain a lot of money. Those four factors are the causes of this big increase in coffee prices. I mean, you mentioned speculators. Coffee is one of the most traded commodities in the world.

6:03It's always going to come under the spotlight in terms of how a speculator hedge fund can make money. What impact does that have on your business and how do you feel about those speculators? It's a big impact, of course, because there is a statistics correlation between the price of green coffee and the position the funds take on the market. So when they go longer, the price goes up, and when they go short, the price goes down. So it's an amplifier of volatility, no doubt of that. It puts under pressure, for example, our trade strategy, our procurement strategy. It exists, of course, but sometimes it's very, very hard.

6:47And what's happened over the past four years is a demonstration of that because many investors decided to put a lot of money in the coffee market, create a squeeze and pushing the prices very, very high. So it's quite a difficult situation because as roasters, as producers, we need a market much more stable, especially when you think about the relationship with our customers, retailers, for example, but also with our consumers. that, of course, are looking after the prices with a lot of concerns when they saw price of staples as coffee, and we can consider one of these, are moving high, especially in the context of high inflation, as we had, for example, experimented over the last three years in Europe and elsewhere.

7:37I mean, you could end up seeing coffee as a luxury as opposed to an essential product that people buy every day. Do you think there's going to be a tipping point at which that happens? Coffee remains an accessible product for goodness, of course. We saw over the last four years a lot of inelasticity when we're talking about price and volumes until a certain point. But when the prices go too far, the elasticity becomes something you can really touch. So volumes are diminishing. There is a reduction of consumption. There is a shift, for example, from coffee consume in cafes and coffee consume at home.

8:25Some consumers look after cheaper coffee, for example. There is a polarization in the market. So some dynamics, of course, are to be taken under consideration. But nevertheless, coffee remains something that people love. So despite high prices, people try to have a good cup of coffee or more during the day because it's a pleasure. It's not for life. It's really to give you a moment of break. And that is still important. Of course, price plays a role. I mean, you mentioned the trade tariffs and President Trump has obviously made very big moves in terms of where he wants trade to go and the trade policies for the US.

9:08what impact do you think that that's going to have on the industry and specifically on Novatsa? It could be very high. A tariff can introduce many distortions and can open the door to sort of tariff shopping, I mean triangulation between countries. For rosters it could be very tough because, for example, if tariffs on Brazil exports are confirmed, Brazil plays a relevant role in our business. It counts more than 40 % of the total production. So in a big country, with Vietnam, they are 55 % of the total production. And for Arabica, it's one of the components in Brazil, it's absolutely centric. So having such a burden on the shoulder of the Brazilian producer, that's not sustainable at all.

10:06Then what happens if America, for example, applies a tariff of 50 % towards Brazil and maybe 10 % towards Europe? So, for example, a European roaster can buy coffee from Brazil without a tariff, roast the coffee in Europe, and then move the coffee to the U.S., export to the U.S., paying 10%. And American roasters have to pay 50 % to import Brazilian coffee and sell this coffee to U.S. consumer. What does it mean? It means that maybe I don't see any consistency between the target of the Trump administration to safeguard, to back the local production and this kind of policy. Because at the end, American roster will penalize 100 % by this kind of action.

10:53And American coffee lovers will pay much more than the cup of coffee they used to buy every day. So the effort will be distortion, reduction of availability for certain big market, inflation, a lot of troubles into a category that has been very stressed by long-term pressure on raw material due to the cases I mentioned before.

11:21You're listening to the interview from the BBC World Service. People shaping our world from all over the world. If journalism is the first draft of history, what happens if that draft is flawed? In 1999, four Russian apartment buildings were bombed, hundreds killed. But even now, we still don't know for sure who did it. It's a mystery that sparked chilling theories. I'm Helena Merriman, and in a new BBC series, I'm talking to the reporters who first covered this story. What did they miss the first time? the History Bureau Putin and the Apartment Bombs listen on bbc.com or wherever you get your podcasts

12:27big talking points and the stories behind the headlines. More Than The Score from the BBC World Service. Listen now. Search for More Than The Score wherever you get your BBC podcasts.

12:45For this episode of The Interview, I'm speaking to Giuseppe Lovatza, chairman of the Lovatza Coffee Company. With an easy smile that radiates Italian warmth, Giuseppe Lovazza chatted about his deep love for coffee and the company that's been in his family for generations. Relaxed and genuine his eyes sparkled as he spoke about where the business is headed and how he's keeping his great-grandfather Luigi's legacy alive. Okay let's return to my conversation with Giuseppe Lovazza. Now moving on to the extreme weather patterns that we've been seeing that's going to have a massive impact on the growers and producers how can you as a company mitigate that how can you make sure that you can still provide what you need to your consumers weather is a key factor in the coffee business always it was because it's an agricultural product and whether it's so important in terms of the size of crops we can get from many countries, Brazil, Colombia, Vietnam, Central America, Africa.

13:59So it's something we have to look after very, very carefully. Climate change, of course, is ongoing, and we try to help many farmers to adapt to the new environment. and designing with them a lot of specific programs and projects. We are able to run through our foundation. We settled in 2004 when the market situation of green coffee was totally the opposite. At that time, the prices were very, very low. And we started to think about the program of cooperation, introduction on new agricultural techniques with many farmers to try to help them to improve first of all the productivity to improve their livelihood to give really some supports to many coffee communities to try to improve all the aspects social economical production of course quality of the coffee the training of the coffee last year we celebrated 20 university of our Foundation has set up a lot of relationships with many very important producing countries.

15:16And climate change, of course, is one of the main components of this project. There are many techniques to try to mitigate the effects of the climate change on coffee production without, of course, using new land, because it's mandatory to try to use the land available, no deforestation, nothing at all. Many companies in coffee business are very committed to this kind of target. So it's quite interesting work we do together. We shrink really the distance between us and the producer working on this special topic that can affect, of course, the production for the next years. Are we going to see more varieties of coffee being used going forward?

16:03We try to stress quite a lot the importance of the biodiversity in coffee. So we don't want to have just two colors, to make an example, black and white. We, as Lavazza, we are very passionate about coffee. We need many different kinds of coffees. Otherwise, it's impossible for us to create our blends, to create excitement in the consumer. So for us, the small production as well are very important as the large productions. biodiversity is absolutely relevant so we stress quite a lot the concept that we wanted to back production of different kind of coffee in many countries maybe also trying to find varieties that are very limited or near disappeared that's absolutely interesting because create a new narrative a new attention even from the consumer production wise that's very important so we really want to do that.

17:01Another big point is the productivity. Productivity is a key for the producer. The good news for the producer is in the future, the world will need more and more coffee. Nowadays, more or less, daily consumption of coffee is 2.6 billion cups. But by 2030, our provision is to have a daily consumption of about 3.8 billion cups. So the large opportunities for producers to sell more coffee. To do that, we need to increase the productivity of each single farm. Some countries with productivity is very high. For example, Brazil, it's highly mechanized, a lot of investments. The land allows, for example, to introduce precision agriculture techniques, and they're very good in that.

17:51But the other countries, for example, Vietnam as well, can elevate, increase the production quite a lot. Africa, for example, East Africa. a big opportunity, especially for young countries like Uganda. We know that the government think coffee can be a very strong level for development in the country. They have a lot of opportunity to improve productivity and, of course, to be a bigger player in the coffee business in the future. Now, of course, the environment is a very major issue. Everybody these days uses coffee pods, of which millions of them do end up in landfill. is that something that you are concerned about in terms of going forward and how the business is viewed and used?

18:37Oh yeah, very much. But for two reasons. First of all, in Europe, the EU Commission launched a new regulation called the PPWR, Packaging, Packaging Waste Regulation. And following, of course, the rules of this regulation, coffee caps are now considered packaging. so companies have to look after the waste capsules. It means that we have the duty of collecting or recycling all the capsules. It doesn't matter if they are aluminium or plastic, it doesn't matter. So there is a challenge because collecting capsules when I use in a household is not easy. is quite easy to divide coffee from the packaging material, but it's not easy to collect them.

19:29So think about how to do that, because, of course, it's our responsibility to be compliant with the regulation. But I think even without the regulation, it's our duty to be compliant with the expectation of our consumers that, for us, are more important than the regulation. Do you believe that regulation is a positive way forward with regards to the environment? Depends. For example, if we take the last European regulation about the Green Deal, I can say 50%. 50 % can be positive, 50 % can be very dangerous and disruptive for the business. Depends on the kind of position the lawmaker wants to take, respect the business.

20:16if they want to talk with the business and use the skills and experience of the business to try to solve a real problem as the deforestation that's very good because we can collaborate all together and to get to the target with all respect of the complexity of the supply chain otherwise if the approach is stopped down the risk of making mistake is very very high and because lawmakers I don't want to criticize too much but sometimes they're too superficial they don't know the complexity of our supply chain but with good talks I mean good conversation it's easy to solve a lot of troubles in the case of European Commission it was a little bit authoritarian the way they conduct the last think about regulation it's very dangerous for roasters, so for the European economy, but even for the coffee producing countries, sometimes they're not capable to apply the complexity of the legislation, because many things, lack of infrastructure, investments, the basis, for example, of UDR regulation is tracking the coffee, to be sure that the coffee is not sourced by an area that has been deforested or is deforested.

21:44That's fine. No one is against this. The opposite, the purpose is very noble. Many coffee industries, many countries are very active in reforestating areas, not deforestating areas. But the way the European Commission decided to follow, to track the coffee is simply not applicable. And so we are asking to have, first of all, postpone enforcement of the law and maybe to have the chance of talking with lawmakers to try to find a way to obtain the result in respect of course of the position of many countries. We're not talking about 2-3 countries but 30 countries around the world with many different situations.

22:30We're talking about countries in Central America, in South America in Africa in Asia Every country has different rules. It's difficult, of course, to embrace all of this in just one regulation. And the market sometimes is faster than lawmakers. So regulations are good, but sometimes they're not the best to give to the system the capability to be very innovative and to propose the bright solution to big issues. And so to finish, can you tell me what you think the future of coffee is going to be and also how the future of Lavazza fits into that? The future of coffee is, I'm optimistic, I'm an Italian guy, so it's a bright future.

23:24But because coffee has demonstrated to be very contemporary, it's an old commodity, very old. At the same time, his agility, his capability to adapt to new needs, to approach new consumers, is extraordinary. For example, in the United States, nowadays, a big trend between young consumers related to coffee is cold coffee. They love cold coffee. Everything is cold. Cold, cold, cold coffee. So that's demonstrated that coffee really is, it's quite agile. It's very good friends, very kind. I mean, it's very democratic products. It can approach it, and it's a global one at the same time. Japan, for example, big culture in coffee.

24:09Korea, another big culture in coffee. China is moving. And nowadays, many, many producing countries are discovering the pleasure of having a decent cup of coffee. Brazil many times it's a big market but Vietnam Indonesia Colombia and many other countries so the request of having more coffee is here on the table it's ongoing this very good news and another interesting aspect is much more cultural if you want you know people are quite passionate about food food is all around the world coffee is part of this excitement so the narrative back of a good cup of coffee, the kind that many producers now are using new technique to prepare varieties, to prepare new fragrances, to nuances, the flavours.

25:02It's great. Thank you for listening to the interview from the BBC World Service. You'll find more in-depth conversations on the interview wherever you get your BBC podcasts, including episodes with US President Donald Trump, the Colombian artist Doris Salcido, and Prince Harry. Until next time, bye for now.

25:37If journalism is the first draft of history, what happens if that draft is flawed? In 1999, four Russian apartment buildings were bombed, hundreds killed. But even now, we still don't know for sure who did it. It's a mystery that sparked chilling theories. I'm Helena Merriman, and in a new BBC series, I'm talking to the reporters who first covered this story. What did they miss the first time? The History Bureau, Putin and the apartment bombs. Listen on BBC.com or wherever you get your podcasts.

26:18The 26 sporting calendar is packed full of big events. Keep up with all the action with More Than The Score, the podcast that goes beyond the score sheet. Join expert BBC sports journalists every Monday to Friday for interviews with sports stars, big talking points and the stories behind the headlines. More Than The Score from the BBC World Service. Listen now, search for More Than The Score wherever you get your BBC podcasts. Thank you.