Italian coffee chain Lavazza is set to increase its store network in China to 1000 by 2025 through scaling up its existing joint venture with fast-food operator Yum China.
The joint venture –in which Yum will be Lavazza’s exclusive distributor in Mainland China, will also receive an initial US$200 million funding from both companies for its future growth.
The expansion plan will see more Lavazza store openings in higher tier cities with different store formats. As of last month, Lavazza China operated 22 stores across Shanghai, Hangzhou, Beijing and Guangzhou. It aims to double the store number by the end of this year.
“The potential for coffee in China is vast; there is a lot of unexplored white space,” said Antonio Baravalle, CEO of Lavazza Group. “As the largest restaurant operator in China, Yum China is the best partner to further grow the Lavazza brand in this market given its deep understanding of local consumers and market dynamics.”
The joint venture will also market, sell, and distribute Lavazza’s retail products in Mainland China, including coffee beans, ground coffee and coffee capsules.
Lavazza entered China last year with Yum China, with stakes of 35 per cent and 65 per cent respectively. Lavazza’s first China store, its first international presence, was launched in Shanghai in April last year. The company said sales to its members accounted for about 50 per cent of the sales for the first half of this year.
“The recent progress of Lavazza cafes in China has been encouraging and reaffirms our belief that our partnership is well positioned to capture the significant coffee opportunity in China with accelerated store network development,” said Joey Wat, CEO of Yum China.