Why is Lavazza’s expanding is limited in the USA compared to its growth in many parts of the world?

  1. Why is Lavazza’s expanding is limited in the USA compared to its growth in many parts of the world?

Luigi Lavazza S.p.A is an Italian company that is also known as LAVAZZA. It produces coffee goods. Luigi Lavazza established it in Turin in 1895, and it was initially operated out of a tiny grocery store on Via San Tommaso 10. The third and fourth generations of the Lavazza family are currently running the company. Currently, the company is running under the third and fourth Lavazza family generations. Since the company was introduced in the United States Market, it has made tremendous efforts, implemented various strategies and steps forward in an effort to grow and expand in the USA market. The company has been using market expansion, a growth strategy that helps the company to introduce its existing products and services to a new market/s. Over the years, Lavazza has used at least four growth strategies depending on its products’ approach. These include product development, market penetration, diversification, and market development.

Based on the above growth strategies, Luigi Lavazza S.p.A has made tremendous efforts in partnership with the different cafes and restaurants in the United States of America’s market to introduce its product and expand its market share, but unfortunately, this never worked out within the United States of America’s Market. In 2015, Lavazza took time to study the market trend and available opportunities in the USA’s market, which they can take advantage of. After intense market analysis and consideration of all available opportunities, Lavazza decided to focus on the household coffee market instead of its partnership with cafes and restaurants and the business-to-business segment. By focusing on the household coffee market, Lavazza was able to sell its products directly to its clients through local grocery chains like Costco Wholesale and Publix Super Markets. The move by Lavazza to carry its business through the household coffee market led to its success in the United States of America market.

  • Why can Lavazza not deal with the competition in the US market?

Despite the fact that the coffee market differs from nation to nation, its market is very competitive due to the vast number of suppliers and customers. Competitions can be described as the rivalry between companies providing similar goods or services in the customer market, like coffee in this case, with the sole aim of increasing market share, making a profit, and achieving revenue. Like other others, coffee competition in the US customer market is very high. Lavazza, one of the coffee-producing companies in the US, faces stiff competition from other popular companies like Dunkin, Stok, Kuering Dr. Peeper Inc., Folgers, and Starbucks. All these companies sell coffee products and coffee services such as specialty coffee, handcrafted coffee, and the café experience. Some of Lavazza’s competitors, although they sell ground coffee products, they occupy large space in the US customer market through large-scale retail distribution channels throughout the county. However, based on the revenue share, Lavazza’s stiff competitors in the United States customer market can be considered to be Starbucks and Folgers.

Lavazza has deployed several competition strategies to deal with this competition and achieve a competitive advantage. These strategies mainly focus on differentiating the company’s products from other competitors, lowering prices, and no-frills. Besides, Lavazza, in the US customer market, has persistently marketed its espresso blends to the US customers to increase its success. To strengthen its position in the US consumer market and in accordance with its worldwide strategy, Lavazza forged a collaboration with the 2015 US Open tennis competition. This partnership was extended through 2021. Despite the tremendous effort made by Lavazza to increase its competitiveness in the US customer market, there seemed to be a mismatch in Lavazza’s product-market fit. This is because;

  • The US customers preferred ground coffee and single-cup coffee, often preferred flavored coffee drinks, and tended to drink less concentrated forms of coffee in large quantities. This type of coffee could also be provided by Lavazza’s stiff competitors, Starbucks and Folgers.

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