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Italian coffee company Massimo Zanetti Beverage Group has big plans to expand in Asia-Pacific, as chief operating officer Pascal Heritier explains to Jacopo Dettoni. 

The phenomenal growth of the Asian market is bringing into question even the dominance of the region's tea culture, with local consumers increasingly turning to coffee – and hence appearing on the radar of major coffee companies from all over the globe. One such coffee company is Italy's Massimo Zanetti Beverage Group, which is betting big on expanding its footprint in eastern and south-east Asia and strengthening the recognition of its main brand Segafredo.

“We are closing franchise deals with local partners to raise brand awareness in the region,” says Massimo Zanetti's chief operating officer, Pascal Heritier. “In Europe, the brand Segafredo is already established, but this is not the case in Asia. Therefore [franchise networks] are the most effective way to grow our brand.”

As millions of Asian households assume middle class status and get a chance to visit coffee-drinking countries in Europe and North America, the continent is becoming a fertile market for coffee companies hoping to win the favour of new generations of local consumers, who appear to be following in the footsteps of their Japanese peers (who partially switched to coffee decades ago). In China alone, Euromonitor International estimates that coffee consumption in Asia will grow at 18% per year between 2014 and 2019.

Heading east

Global players such as Starbucks have taken a lead in making the most of Asian youngsters’ ongoing switch to coffee: the Seattle-based group now has as many as 3300 outlets in China. Players such as Massimo Zanetti are jostling to be next in line.

The company, which is listed in Milan and has a current market capitalisation of about €240m, generated less than 10% of its overall revenues in the Asia-Pacific region in 2017, but it has closed an agreement with local partner Deli Boga Rasa to open 80 cafes across Indonesia. The group has also joined forces with Thai conglomerate Central Group to open as many as 75 cafes in Thailand, and is expanding its franchise network in airports across China.

“The Asia-Pacific region will remain a low share of the group’s revenues given our deep footprint in a huge market such as the US,” says Mr Heritier. “The important thing is that growth rates in [the Asia-Pacific region] will stay in double-digits. With regards to China, my ambition is to become the most important foreign brand for the roast and ground segment.”

Home grown

A number of countries in south-east Asia have themselves become major coffee producers, particularly Vietnam, which is now the world’s second largest producer after Brazil. Combined with the growing integration within the Association of South-east Asian Nations (Asean), Massimo Zanetti has pushed to establish roasting capacity on the ground in Vietnam and Thailand to make the most of the rules introduced under the Asean Free Trade Agreement, which enable it to sell its beans duty-free within the bloc. The group also has a facility belonging to subsidiary Boncafé in Singapore.

Cracking the Asian market has been the Holy Grail for globally minded companies throughout the 21st century, but persuading locals to switch long-held taste preferences is not easy. Some headway has been made by the major coffee names, and now the race is on for groups such as Massimo Zanetti to grab their share.

This article is sourced from fDi Magazine
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