COVER STORY Caffitaly
Destined to CAFFITALY CEO GIUSEPPE CASARETO ON UNTAPPED POTENTIAL AND WHY INNOVATION IS KEY TO CREATING THE BEST SINGLE-SERVE COFFEE IN THE WORLD.
G
iuseppe Casareto describes his introduction to Caffitaly Systems as a “roller coaster ride”. With an international career spanning almost 30 years working with high-profile consumer brands and companies including Duracell, Procter & Gamble, and the Bolton Group, Casareto took over the reigns as Caffitaly CEO in May 2020 and found himself facing more external challenges than he ever predicted. “It’s been an exciting yet challenging transition. It’s exciting because the potential for Caffitaly and the opportunity for growth is hug,” Casareto tells Global Coffee Report. “The company is unique because what we try to do is make the best coffee in the single serve arena. It’s an environment where a good majority of players are focused on producing a good product at a low price, but we want to focus on making something that is much better than everybody else’s and bring a lot of innovation that drives value. The biggest challenge in this context, is convincing the customer.” But that’s not all. Forced to stay grounded in Italy due to travel restrictions instead of introducing himself to customers and global suppliers, Casareto says the immediate challenge when COVID-19 struck was a loss of business for Caffitaly’s out-of-home customers. For some, like Caffitaly’s North-European customer, it meant closing stores and losing 40 per cent of revenue. For others that dabbled in at-home products, it meant their ecommerce and retail channels thrived. “We had this mix of positive and negative effect for customers that had business in both markets,” Casareto says. “We had to be extraordinarily flexible to change production plans. Our business in professional machines basically went to zero while consumer machine sales doubled. It was a time when we needed to reset and restart some of the components of our business model, like innovation and the supply chain, and rebuild the relationships we have with our customers. At the same time, we needed to adjust ourselves to a market that was changing very rapidly, and not necessarily all the time in a positive direction.” To add to the challenges in March 2021 the cost of raw materials such as coffee, polyethylene, and polypropylene started to rise as demand for the products surged. Even the cost of filters Caffitaly uses in its capsules increased by 40 per cent. But rather than putting the cost directly on customers at a time Casareto says the market was not ready for price increases, Caffitaly worked with customers on a one-on-one
10
G C R | J A N UA R Y / F E B R UARY 2022
LE basis to find solutions to recover the extra costs. Now, with the worst behind him, Casareto says Caffitaly is forging ahead with its plan for innovation and market growth. “In 2020 we stabilised the business from a revenue standpoint after three years of decline, and [in 2021] we started growing in double digits,” he says. The first half of 2021 saw Caffitaly experience 84 per cent growth in machine sales and more than 18 per cent growth in capsule volumes, with a turnover increase of more than 20 per cent equating to around €150 million on a yearly base (about US$169 million). By the end of 2021, Caffitaly will have produced 1.7 billion capsules, and estimates a further 1.6 billion capsules will be produced by the end of 2022. Roasting about two tonnes of coffee per day at each of its Capriate and Gaggio Montano factories in Italy, Casareto uses his own calculator to estimate that Caffitaly roasted approximately 14.5 billion kilograms of coffee in 2021. He says the revenue boom is a direct link to Caffitaly’s commitment to innovation.
