Italian coffee producer Lavazza is setting up a new plant in the Sri City special economic zone near the Tada region of Andhra Pradesh at a cost of euro 20 million (about Rs 120 crore).
Located about 60 km from Chennai, the plant, coming up in an area of 40,000 square metre, is scheduled to be completed by December 2011 and become fully operational from May 2012.
Starting with a production capacity of 1,100 tonnes in the first year, the production will go up to 1,400 tonnes in the second year and finally to 1,600 tonnes from the third year.
Announcing the launch of the new manufacturing facility here on Friday, Lavazza group vice president Giuseppe Lavazza said the company's "intention and dream is to make India our second largest market of reference following Italy." He was hopeful this could be achieved over the next five years.
Currently, Italy accounts for 60 per cent of the family-owned company's turnover of euro 1.13 billion. The next big contributor to its revenues is France. Its sales in India today is around 800 tonnes a year, valued at euro 20 million as against an estimated market size of 100,000 tonnes.
Lavazza entered the Indian market in 2007 by acquiring Barista Coffee Company Limited and Fresh & Honest Cafe Limited (FHCL), an Indian coffee vending and retailing company.
In the same year, it set up a 960-tonne per annum manufacturing unit in Chennai in a 5,000-sqm leased facility employing 80 persons. The lease period of this facility has expired and the unit will be now shifted to the new facility.
According to Lavazza development and acquisition manager Marco Lavazza, the new facility will be a modular structure comprising a production unit, warehouse, training centre, canteen and an office building. It will employ up to 150 persons and will be the hub for the Asia-Pacific region. Production will initially cover the Indian market and will subsequently be extended to other Asian markets.
At present, he said, Barista Lavazza had over 200 Espresso bars in over 30 locations in India, while FHCL had over 3,000 coffee vending machines installed across 16 branches in 22 cities.
Started in 1895 in a small grocery store in Turin, Lavazza now has its operations spread over 90 countries and is a leader in Italy with a 48 per cent share of the retail market. Annually, it sells 60,000 tonnes of coffee a year in the country of its origin.