VENETO’S BEST

Veneto, Italy 2020 | ECONOMY | VIP INTERVIEW

TBY talks to Paul Accornero, Chief Commercial Officer of De'Longhi Group, on coffee, acquisitions, and plans for the year ahead.

What are the latest developments of the company?

Our focus and expertise is in small domestic appliances. While West Europe will remain an important part of the Group's business, our main growth areas today are outside of West Europe, namely Central & Eastern Europe, and North America. The other area of targeted acceleration for the Group is Asia, particularly Greater China. Following development of the China market, the next likely step for us in Asia will be Southeast Asia in markets like Indonesia, Thailand, Vietnam, and the Philippines. However, the biggest growth opportunity markets for us globally in the near term are North America, Greater China, Central and East Europe, where there is a great deal of growth taking place and we have aggressive plans in place. West Europe remains very important for us, as it is the largest part of our business today. Coffee is our main growth category, primarily espresso coffee, both with fully automatic coffee machines as well as single serve capsule and manual pump espresso machines. Food preparation remains an important segment for the Group.

A few years ago, you acquired a minority stake in Swiss company Eversys. How has this influenced your presence in Europe?

We have a minority share in the company, and it is a natural extension of our business because we are a global market leader in espresso coffee for domestic use, and have started to look into the professional coffee category. We have a 40% stake in the company and have an option to increase this to 100% in the future. It was a relatively small company in the super automatic professional coffee category, and is now growing double digits. Eversys is bringing to the market new technology delivering an exceptional in cup coffee result, and modular machines with telemetry control, which is extremely useful in the professional business. Professional coffee makers are a natural extension and diversification of our business. We are focused on home consumption of coffee, however we know that whatever happens outside of homes in the professional world of coffee shops and coffee bars feeds the development and culture of people who are coffee drinkers, impacting home consumption. There are two trends developing in parallel, professional (out-of-home) and domestic (in-home). It makes sense to diversify and take part in the development and growth of the professional business, because it is growing very fast and supports the in-home coffee development; hence, it is a great opportunity for us. Diversification of our coffee offering is essential, both in terms of business development and expertise. We are the only company in the world that has an offer in every segment of the coffee category and are very well placed to continue to capitalize on the long term growth in the category. Our portfolio in the coffee category ranges from basic electric moka and drip coffee makers, to manual espresso machines; and from the capsule systems of either Nespresso or Dolce Gusto, to the premium fully automatic machines and professional space. This has been extremely important in building up our market shares because wherever we are and wherever we go, we have the right commercial proposition for consumers in that specific market.

Are you looking at any new acquisitions?

Expanding by acquisition is part of the Group's strategy, and we are looking for the right acquisition that can bring synergies and value. We are cash rich and we are in a great position to make the right acquisitions. Eversys is a move in that direction, though it is not meant to be the only one. We are also actively looking for expansion into new categories that are synergistic with what we are already doing. We are actively looking for the right acquisition opportunities in other domestic appliance categories adjacent to our existing core businesses in small domestic appliances that will allow us to accelerate and diversify our growth potential.

Are there some markets you are eyeing specifically for this?

We are looking globally for different opportunities. It would make sense to have an acquisition in the US or Asia to speed up our market penetration and increase our market shares, but we are active in all regions. We need to find the right acquisition that will bring additional value to the Group and we are ready, willing and able when the right opportunity is presented. Our main purpose is to bring value to our shareholders, so we want to find the right solution and target that will make a real contribution to not only our portfolio but also our global growth in terms of geographies and products.

Can you tell us about exploring new opportunities from the partnerships point of view?

Our partnership with Nestlé Group, particularly Nespresso and Dolce Gusto, is extremely important to us. It has been strategic and was driven from the beginning by Fabio de' Longhi himself. It has been important for us, not just from a sales point of view but also in terms of ancillary benefits that have come from working with a best-in-class company like Nestlé. The collaboration over more than a decade has been a great mutual relationship. We will likely explore other areas of business, as long as they do not conflict with anything that we are doing today and bring additional value.

How has the strong presence in Veneto influenced the company?

The company was founded in the 1970s by Giuseppe de' Longhi, and the de' Longhi family is still heavily involved in the management of the company. We are a multinational company and are listed on the Italian stock exchange, and we are also still strongly linked to the Veneto region and territory. We have significant production facilities here as well. We have globalized our business, and I was part of that process when I joined the company 11 years ago. Today we are very much a multinational company with strong business units outside of Italy and Europe, and have a global outlook to our next phase of business development. We are proud of our Italian heritage but do not just want to be a local Italian company. We are a global company, we play on the global stage, and we have global brands. The acquisition of Braun is a clear message in that direction as a well-known global brand. The major drivers for the De'Longhi brand are design and innovation, which are strongly represented in the heritage of the Veneto region and distinctively Italian. This has helped us significantly.

What is your outlook for the year ahead?

Our outlook is positive, and we are working on different aspects of our business to make sure we are setting ourselves up for the future. We need to look toward the next decade and beyond. We are currently in a phase of redesigning our business in terms of our customer base and commercial policy. This current period will likely not be a rapid growth phase but is an adjustment phase to ensure we are correctly positioned and prepared for growth acceleration in the future. We are building a solid platform for continued future success. There are years where you have to invest and to adjust strategy to match changing market needs and the future, and this is one of those periods. At the end of the story, we are leaders in businesses that account for 80% of our revenues. We are the global leader in domestic coffee makers. We are global leaders in food preparation (with the exception of the US and China), so we want to retain this leadership and do even better in the decades ahead. We are here for the long term and think about business in terms of long term success and finding sustainable competitive advantages. We are positioning ourselves to have a competitive edge both in terms of our commercial policy and our go-to-market strategy, and our product portfolio. We are ready to invest and have the financial resources to do so. Be it acquisitions or investments, we have the resources to be able to maintain our success into the future, so it is an exciting time.