Sustainability Report 2018 - Lavazza
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Sustainability Report 2018
Sustainability Report 2018
Sustainability Report 2018
Index
8 16
Methodological Note THE LAVAZZA GROUP
1.1 Lavazza in 2018: A Year
of Recognition
1.2 Group Governance
1.3 “Goal Zero”
40 92
PEOPLE AT THE CORE ENVIRONMENTAL
2.1 Coffee-growing communities COMMITMENT
and the commitment of the 3.1 Lavazza’s Environmental
Lavazza Foundation Performances
2.2 Suppliers and Customers: 3.2 Continuous Improvement
Valuable Partnerships
2.3 The People of the Lavazza Group
122
Appendix
Lavazza and the Global Compact
2 LAVAZZA 3
Sustainability Report 2018
Alberto Lavazza, “Responsibility” for Lavazza is the by- of thought, hosting major international The year 2018 marked further mile- in Lavazza’s business have been recog- Antonio Baravalle,
Chairman word for the “engine of change”: the events in the field of economics, culture stones in the journey of expansion un- nised by stakeholders and civil society: Chief Executive Officer
sense of responsibility that we have al- and sustainability. dertaken by Lavazza in recent years: in 2018, for the first time and taking top
ways nurtured towards consumers and We are a family-run Company that has increasing globalisation of the market spot among Italian companies, Lavazza
colleagues, but also towards our planet believed in a project for more than 120 and the Company, accompanied by pro- entered the “2018 Global CR RepTrak”
and all the communities in which we years and that wants to perpetuate and gressive growth in the most dynamic ranking, a list of the Top 100 global
operate, drives us to innovate and con- develop it over time: it is for this rea- segments and in the emerging markets companies with the best CSR reputation,
stantly seek cutting-edge inspirations son that we are working to achieve ever for coffee. which reflects how public opinion per-
and solutions. greater integration of sustainability in We can quote a few significant figures: ceives the corporate responsibility of the
At Lavazza we combine a constant fo- the business and to disseminate prin- a 9.3% increase in consolidated revenue companies analysed. In 2018, Lavazza
cus on people with an analysis of world ciples for safeguarding the planet and in 2018 compared to 2017, a rise from also reconfirmed its endorsement of
development, so we can chart a course humankind. 17 to 27 billion cups of coffee served the United Nations Global Compact,
able to tackle the challenges of sustain- But a better future cannot be built worldwide and a workforce that grew undertaking to respect its fundamental
ability in a concrete manner, cultivating alone: in 2017, we decided to embrace from 2,500 in 2014 to around 4,000 in principles within the company’s own op-
dialogue with persons and active en- a process of collaboration with the ma- 2018. Last year two new companies erations.
gagement of local areas. jor bodies that are proposing to create also joined the Lavazza Group, further These important results bear witness to
2018 saw Lavazza continuing to con- a system built on the sustainability strengthening its direct operations in the Group’s ever greater engagement in
solidate and develop its own process of goals, endorsing the UN Agenda 2030 all the coffee segments, particularly the the journey to integrate sustainability
globalisation: so, it is increasingly im- and its 17 Sustainable Development Away-From-Home segment. themes.
portant for the Company to evolve tak- Goals and joining the Italian Alliance This important growth was always ac- The Sustainability Report, “A Goal in
ing account of the new areas in which for Sustainable Development and the companied by Lavazza’s continuing Every Cup”, is intended to be the instru-
it operates, benefiting from and enhanc- United Nations Global Compact. vocation for quality excellence and the ment for narrating the story of this jour-
ing their distinctive social and cultural During this two-year period we have consolidation and development of its ney.
features. conducted an in-depth analysis of the status as a responsible and sustaina-
Nuvola Lavazza, the new headquarters impact on the different Sustainable ble company. These values integrated
which opened last year, innovative and Development Goals and implemented
open to the world, is a fitting embodi- a programme to engage our stakehold-
ment of this spirit: that of a truly global ers and disseminate as far as possible
Company, rooted in the area where it knowledge of the Global Goals.
was born. In Nuvola we share our his- “A goal in every cup” is the title of
tory and our identity — through the Lavazza’s Sustainability Report, to recall
Lavazza Museum which has already together the final stages of our long cor-
attracted 25,000 visitors in just a few porate responsibility journey.
months — and we are open as a place
4 LAVAZZA 5
Sustainability Report 2018
Methodological Note
Document objectives Drafting principles Reporting scope and period
and reference standards
The Sustainability Report 2018 repre- The Lavazza Institutional Relations References to the selected GRI Standards Lavazza is present on five continents, in The figures provided in this Report 1
The subsidiaries
sents the tool that Lavazza uses for dis- & Sustainability Department has co- are provided in the final table on indicators. more than 90 countries worldwide, and refer to: included in the
closing the Company’s annual results ordinated the preparation of the Having endorsed the United Nations operates through both direct subsidiar- • financial years 2016, 2017 and 2018 scope of the
about Sustainability to its stakeholders. Sustainability Report 2018, gathering Global Compact, Lavazza has also opted ies and a broad network of distributors. with regard to Luigi Lavazza S.p.A. Sustainability
This year, the reporting scope has been contributions from the entire organisa- to include in its Sustainability Report the Lavazza’s industrial system consists of and its foreign subsidiaries includ- Report 2016
extended to additional Lavazza’s foreign tional structure of the Group’s compa- Communication on Progress (COP), the ten manufacturing plants: three in Italy ed in the scope of the Sustainability are: Lavazza
companies, with the goal of preparing, nies included in the reporting scope. contents of which have been enriched (Turin, Gattinara and Pozzilli); the Carte Report 20161; Deutschland GmbH,
in the coming years, a Report including This document has been drawn up ac- with a view to informing all internal and Noire plant in France and that of Kicking • financial years 2016 and 2017 with ref- Lavazza Kaffee
the whole Group. cording to the technical and methodo- external stakeholders about the activi- Horse Coffee in Canada; the Lavazza erence to foreign subsidiaries includ- GmbH, Lavazza
A detailed description of the subsid- logical reference provided by the Global ties undertaken and results achieved Professional plants (two in the United ed in the scope of the Sustainability Coffee UK Ltd,
iaries included in the scope of the Reporting Initiative Sustainability in implementing the Global Compact Kingdom and one in the United States); Report 2017 for the first time2; Lavazza Sweden
Sustainability Report 2018 is provided Reporting Standards (hereinafter “GRI principles. The section in the Appendix and two production hubs, one in Brazil • financial year 2018 only with re- AB, and Merrild
in the section “Reporting Scope and Standards”), issued by the Global “Lavazza and the Global Compact” pro- and one in India, which serve the local gard to the Indian subsidiary Fresh Kaffe Aps.
Period”. Reporting Initiative in 2016. In detail, vides further COP details. markets. and Honest Café Limited, included
according to the GRI 101 Standard: Each chapter of this Report contains The Lavazza Group workforce is com- for the first time in the scope of the 2
The subsidiaries
Foundation, paragraph 3, Lavazza has references to the UN Sustainable posed of about 4,000 people worldwide. Sustainability Report 2018. included in the
opted to prepare this document accord- Development Goals (SDGs) applicable to In Italy, Lavazza reaches its consumers Any exception is set out within the doc- scope of the
ing to the “GRI Referenced” approach, Lavazza. directly through operators such as re- ument and/or with dedicated footnotes. Sustainability
using a selected set of standards to re- tail chains and Ho.Re.Ca. points of sale. Report 2017, besides
port the information presented in this Abroad, Lavazza operates across differ- those listed for
Report. ent markets through its subsidiaries and 2016, are: Lavazza
The GRI indicators were selected con- a network of distributors specialising in Premium Coffees
sidering the importance of the various the Home and Away-From-Home chan- Corp., Lavazza
material topics to Lavazza. nels. Australia Pty
Lavazza caters to all consumption Ltd, Carte Noire
needs, offering its customers a wide and Sas, Carte Noire
diverse range of products. Operations Sas, and
Lavazza France.
8 LAVAZZA 9
Sustainability Report 2018
LUIGI LAVAZZA S.p.A. FOREIGN SUBSIDIARIES
Parent company, based in Turin of the Lavazza Group3, both commercial and manufacturing
Headquarters, Manufacturing Luigi Lavazza Deutschland GmbH Lavazza Kaffe GmbH
Innovation Center plants of Turin, a Frankfurt-based German commercial a Vienna-based Austrian commercial
and Sales Areas Gattinara subsidiary, part of the Lavazza Group subsidiary, part of the Lavazza Group
and Pozzilli since 1987 since 1988
Lavazza Coffee UK Ltd Lavazza Sweden AB, previously
a London-based British commercial Lavazza Nordics AB
subsidiary, part of the Lavazza Group a Stockholm-based Swedish
since 1990 commercial subsidiary, part
of the Lavazza Group since 2009
Merrild Kaffee Aps
a Fredericia-based Danish commercial Lavazza Premium Coffees Corp
subsidiary, part of the Lavazza Group a New York-based American
since 2015 commercial subsidiary part
of the Lavazza Group since 1989
Lavazza Australia Pty Ltd
a Melbourne-based Australian Carte Noire Sas
commercial subsidiary, part a Boulogne-based French commercial
of the Lavazza Group since 2015 subsidiary, part of the Lavazza Group
since 2016
Fresh and Honest Café LIMITED
a Chennai-based Indian manufacturing Lavazza France
subsidiary, part of the Lavazza Group a Boulogne-based French
since 2007 commercial subsidiary, part
of the Lavazza Group since 1982,
Carte Noire Operations Sas and Espresso Service Proximité S.A.
a French manufacturing subsidiary,
part of the Lavazza Group since 2016
3
Unlike the consolidated financial statements, the scope of this Report does not include: NIMS S.p.A., Kicking Horse Coffee
Co. Ltd, Lavazza Spagna S.L., Lavazza Do Brasil Ltda, Cofincaf S.p.A., Lea S.r.l., Lavazza Eventi S.r.l., Lavazza Netherlands
B.V., Coffice SA, Almada Comercio de Café Ltda, Lavazza Capital S.r.l., Merrild Baltics SIA., and Lavazza Professional, Lavazza
Argentina S.A., Lavazza Trading Shenzen Co Ltd, Lavazza Maroc Sarl, Immobiliare Innet srl.
10 LAVAZZA 11
Sustainability Report 2018
Lavazza’s stakeholders
and major communication tools
Stakeholder engagement SUPPLIERS
and materiality analysis SHAREHOLDERS AND • Regular meetings with suppliers PRESS AND DIGITAL MEDIA
TOP MANAGEMENT and on-site visits • Relations with local and
• Interviews • Shared plans for improvement international press
• Monthly management meetings • Sharing of the Supplier Code of • Social networks
• Specific meetings with Conduct and the Code of Ethics
Shareholders with reference
to sustainability topics
In accordance with GRI guidelines, • updated the materiality analysis on
Lavazza has defined the content of its the most significant sustainability INTERNATIONAL, HUMAN RESOURCES
Sustainability Report 2018 based on the topics for the Group. NATIONAL AND LOCAL • Training and performance man-
following reporting principles: In 2018, Lavazza: CUSTOMERS AND INSTITUTIONS agement programmes
• Stakeholder Inclusiveness; • conducted specific internal stake- CONSUMERS NON-GOVERNMENTAL
• Focus groups and group coaching
• Sustainability Context; holder engagement activity through • Welfare programme
• Materiality; interviews with top management and • Customer Service ORGANISATIONS • Sharing of the Employee Code of
• Completeness. shareholders; • Social networks • Participation in national and in- Conduct and the Code of Ethics
• continued with local community en- • Sales network as a listening, ternational organisations such as • Internal communications activities
In structuring the Report, Lavazza gagement initiatives; mediation and communication tool Comitato Italiano Caffè, Comitato centred on sustainability topics
therefore analysed its business (analysis • implemented the Goal Zero pro- Promozione Caffè, European Coffee
of Lavazza’s sustainability context) and gramme, consisting of various initia- Federation, Institute on Scientific
its stakeholders’ interests and expec- tives aimed at involving stakeholders Research on Coffee, World Coffee
tations. To identify the most relevant in the United Nations Global Goals, LOCAL COMMUNITIES Research, SAFE Platform.
topics eligible for inclusion in the 2018 detailed in the first chapter of this • Community engagement • Initiatives with the participation of
Report, the Company has: Report; initiatives non-governmental organisations
TRADE UNIONS AND
• identified its stakeholders, using the • conducted the Group-wide commu- like Save the Children and Oxfam.
list contained in Lavazza’s Code of nication campaign “2030: What are • Sharing of the Supplier Code of TRADE ASSOCIATIONS
Ethics as its primary source; WE doing?” aimed at getting employ- Conduct and the Code of Ethics • Regular briefings on the Group’s
• surveyed and assessed the expecta- ees engaged in issues relating to the situation
tions and topics of greater interest to Global Goals. COFFEE GROWERS • Negotiation meetings about cor-
its stakeholders through dedicated COMMUNITIES porate and production plant issues
listening and communication tools • Regular visits to communities of GOVERNANCE BODIES • Relationships and participation in
and specific stakeholder engagement coffee growers benefiting from • Organisation of regular meetings the activities of trade associations
initiatives; Lavazza Foundation’s projects • Ethics Committee
12 LAVAZZA 13
Sustainability Report 2018
Lavazza’s Materiality Matrix
In determining the structure and The graph shows the results of the up-
contents of its Sustainability Report, date analysis carried out: the degree of
Lavazza took into account not only the priority attributed to the topics accord-
topics included in the materiality matrix ing to an internal perspective (horizon-
presented in the previous edition of the tal axis) and external perspective (verti-
document, but also the principles of the cal axis) is highlighted within the matrix.
United Nations Global Compact. The relevant topics included in the
Accordingly, the following steps were materiality matrix are discussed in the
taken to update the materiality matrix: chapters of this Report and in the UN
• rationalisation and aggregation of Global Compact Communication on
the topics included in the 2017 mate- Progress.
riality matrix;
• inclusion among the material topics ASSURANCE
Materiality for Stakeholders
of “Human rights” and “Fight against A third-party audit firm has carried
bribery and corruption” in view of the out a limited audit on the Lavazza
importance of the principles of the Sustainability Report. The results of the
Global Compact to Lavazza; audit conducted are contained in the
• interviews with the top management Independent Auditors’ Report attached
and shareholders, as indicated above, at the end of this document.
who were asked to assign a priority to
the topics identified, assessing their
materiality to Lavazza and its stake-
holders.
Materiality for the Lavazza Group
Attention to local Environmental Central role of the Lavazza
communities performance Group’s people
Quality and attention Innovation Human rights
to customers
Growth, profitability Fight against bribery
Relations with suppliers and corporate values and corruption
14 LAVAZZA 15
Key figures
LAVAZZA REWARDED RELATED SDGs
32
WITH
nd
PLACE IN
2018 GLOBAL
CORPORATE
RESPONSIBILITY
REPTRAK
LEVEL
Lavazza in 2018
GLOBAL COMPACT
ADVANCED
REVENUES
9.3%
GROWTH OF
2
COMPARED
TO 2017
COMPANIES
ACQUIRED
Blue POD COFFEE CO.
MARS DRINKS
17Sustainability Report 2018
1.1
Lavazza in 2018:
a year of recognition
As in recent years, Lavazza continued to grow rapidly in 2018, expanding constantly
at the international level. Two new companies were added to the Lavazza Group: the
Australian Blue Pod Coffee Co. in the Office Coffee Service (OCS) sector and Mars
Drinks, the coffee business of Mars International. In continuity with the previous
acquisitions — Carte Noire and ESP in France, Merrild in Denmark, Kicking Horse
Coffee in Canada and Nims in Italy — this deal allowed Lavazza to further strengthen
its direct coverage of all segments of the coffee market, and particularly the Away-
From-Home channel.
In 2018, Lavazza also officially opened its new Headquarters, including a new muse-
um that recounts the Company’s history, the gourmet restaurant Condividere and La
Centrale events area.
The Company’s constant commitment, in the form of the significant investments
made in recent years, allowed it to garner a number of awards in 2018.
Brand Finance Soft Drinks 25 2018 named Lavazza the brand with the greatest in-
crease in its brand asset value (the economic value generated by its brand strategy),
up by 34% in 2018 on 2017. Lavazza also received the “Superbrand of the Year” and
“Superbrands Passion for Branding 2018” awards, which celebrate the brand’s ex-
cellence and the commitment of those who continue to invest in brand values, mak-
ing respect and sustainability the focus of its growth strategies.
18 LAVAZZA 19Sustainability Report 2018
Acquisitions in 2018
LAVAZZA ACQUIRED THE AUSTRALIAN LAVAZZA ACQUIRED MARS DRINKS
FIRM BLUE POD COFFEE CO.
In harmony with the Group’s inter- Thanks to the agreement signed at the
nationalisation strategy, Lavazza ac- end of the year, the Lavazza Group con-
quired 100% of Blue Pod Coffee Co., an tinued to pursue its international ex-
Australian company that specialises in pansion strategy in key markets such
distributing Lavazza espresso systems as North America, Germany, the UK and
(capsules and machines) for the Office France, further strengthening its posi-
Coffee Service sector. tion in the Office Coffee Service (OCS) Lavazza recognised
This deal confirms Australia’s impor-
tance as a key market, where Lavazza
and Vending channels, which provide
important growth and development op- in the 2018 Global CR RepTrak
will directly serve all segments of the portunities.
coffee market — both Home and Away- The business line acquired, which has Lavazza’s commitment to its strategic approach to sustainability was rewarded with 32nd
From-Home. been renamed Lavazza Professional, in- place — the highest spot of any Italian company — in 2018 Global CR RepTrak, the rank-
Lavazza has been present in Australia cludes the single-serve Flavia machines ings of the top 100 global companies in terms of corporate responsibility, which analyses
for over 30 years as the brand symbolic and the freestanding Klix vending ma- the public’s perception of corporate responsibility on the basis of more than 230,000
of quality Italian coffee, and in 2015 it chines — both leading brands in the individual ratings out of a total of 140 companies. The assessment is based on three of
began operating locally through its sub- OCS and Vending channels — beside the seven parameters considered in the Global RepTrak rankings, namely: Workplace,
sidiary Lavazza Australia Pty Ltd, based several proprietary brands. Governance and Citizenship.
in Melbourne. The results of this study, published by the Reputation Institute, indicate an important
turning point in the perception of corporate responsibility in public opinion. In addition
to a financial commitment, companies must also demonstrate that they are socially re-
sponsible and especially attentive to environmental issues. Lavazza was included in the
rankings for the first time in 2018, when it received important recognition for the Group’s
commitment to focusing on sustainability issues.
32 nd
AMONG THE TOP 100 GLOBAL
COMPANIES IN TERMS OF CSR
20 LAVAZZA 21Sustainability Report 2018
The main 2018 events
January June July August
• Australian Open in Melbourne – • Wimbledon - Lavazza is the official • US Open - Lavazza is the official cof-
Lavazza is the official coffee partner coffee of the Wimbledon tournament, fee partner of the fourth Grand Slam Inauguration of
INAUGURATION
of the Australian Open. where it operates two cafés. tournament.
the Paradiso Café
NUVOLA
• SIGEP (Rimini) – Lavazza participates
in the international event dedicat- OF THE NEW
ed to professionals in the ice cream, Lavazza inaugurates
artisanal confectionery, bakery and the Paradiso Café,
coffee industries.
March HEADQUARTERS September October located in the Giardini
complex of the
• Firma launch by Lavazza France – • Salone del Gusto - Lavazza is Official • World Trade Organization - Lavazza Biennale di Venezia.
Paris - Lavazza organises the launch Lavazza organises Partner to the 12th edition of the event presents its sustainability practic-
of Firma during the Office Coffee a one-day event Terra Madre Salone del Gusto 2018. es together with Save the Children
February Service Convention in Paris.
to introduce Nuvola • Launch of ¡Tierra! Bio - Lavazza lan- during the World Trade Organization
• Inauguration of the Q-Grader Room cia la nuova miscela Tierra Bio retail. Public Forum. November
• Gulfood - Dubai - Lavazza is present – Training Center - At its Training to the press, a day • The CSR and Social Innovation Fair - • World Investment Forum - Lavazza
at Gulfood, one of the world’s fore- Center, Lavazza inaugurates the new for employees and Lavazza takes part in various panels, participates to a session devoted
most hospitality fairs, with a stand “Q - Grader” Lavazza Coffee course their families and offering ¡Tierra! Colombia and setting to women in business at the World 2019 Calendar
dedicated to its Food Service range.
• The night before the Oscar - Lavazza
room dedicated to coffee profession-
als interested in obtaining official
an Open Day for up the travelling exhibit on the 2018
Lavazza Calendar.
Investment Forum.
• Millennials Ambassadors Forum launch
is present in Los Angeles with its certification as coffee-tasters from the City of Turin. HRC - The Lavazza events area hosts
products. SCA – Specialty Coffee Association. the Millennials Ambassadors Forum, “Good to Earth”
inspired by the principles of the United
Nations Sustainable Development • 2019 Calendar launch - Lavazza
Goals. launches its 2019 Calendar, “Good to
Earth”, featuring photographs by Ami
April May Vitale.
Inauguration of • Coffee Sapiens - Lavazza presents
• London Coffee Festival - Lavazza is
present at the London Coffee Festival
• Seeds and Chips: Lavazza partic-
ipates in the international event
• Sustainable Development Festival:
“Goal 4 – Quality education” - Condividere December
the volume “Coffee Sapiens”, creat-
ed by Lavazza in collaboration with
with a stand offering its ¡Tierra! range, dedicated to food and innovation, The Lavazza events area hosts the Elbullifoundation.
focusing on the ¡Tierra! Colombia blend. presenting Coffee&Climate together presentation of the street-art pro- The restaurant Lavazza acquires
• Salone del Mobile and Tiny launch with the coffee growers participating ject “TOwards 2030. What Are You
– Milan - Lavazza introduces its new in this project in Honduras. Doing?” and the award ceremony for
Condividere
MARS
machine, Tiny, along with a limited • ISSpresso: “The future starts here” the competition “Lavazza and Youth by Lavazza
edition version. exhibition - A mock-up of ISSpresso for SDGs”. is inaugurated.
• Salone del Libro — Turin - Lavazza is is displayed at Victoria and Albert • Roland Garros - Lavazza is the offi-
present at the Salone del Libro event, Museum. cial coffee of the Roland Garros tour-
DRINKS
where it presents the Lavazza volume • Milano Coffee Festival - Lavazza at- nament held in Paris.
entitled “Nuvola Lavazza. Cultura di tends the Milano Coffee Festival, a
impresa e trasformazioni della città” coffee-themed event, where it sets
(“Lavazza Nuvola: Business Culture up a stand offering its ¡Tierra! Bio
and Urban Transformation”). product.
22 LAVAZZA 23Sustainability Report 2018
Coffee Sapiens:
understanding for innovation
Coffee Sapiens is a project undertaken by Lavazza in collabora-
tion with ElBulliFoundation, a foundation formed in 2013 based
on an idea by Ferran Adrià with the aim of promoting innovation
and experimentation in the gastronomic field.
The manual seeks to provide a comprehensive overview of cof-
fee, with a focus on the restaurant industry, and is intended for
professionals interested in a well-rounded grasp of the subject,
as well as the many coffee enthusiasts and the curious.
Coffee Sapiens analyses coffee history, consumption, produc-
tion, industry and entrepreneurship. The volume features the
“Sapiens” multidisciplinary methodology to analysis, based on
classification and systematic analysis aimed at comparing and
disseminating every single information known about coffee, in
order to study its evolution in cultures worldwide, the habits and
customs of various peoples and the constant technological in-
novation in this area.
A new flavour profile
with a prized blend:
¡Tierra! Colombia
In 2018, Lavazza launched this prized blend of washed Arabica as its interpretation of
Colombian coffee.
Like all the blends in the Lavazza ¡Tierra! range, it also tells a true sustainability story
in every cup: ¡Tierra! Colombia is made of coffee from the Meta area, a coffee-growing
region located at the foot of the eastern Andes, where coffee was not grown for an ex-
tended period as a result of the armed conflict. Since 2013, with the end of the conflict,
farmers’ families can receive from the government land previously used for illegal crops,
with the aim of reviving the coffee plantations. The projects supported by the Lavazza
Foundation have helped over one hundred Colombian farmers’ families to restore coffee
plantations after the period of guerilla conflict, creating sustainable working conditions,
improving coffee quality and raising productivity through the application of sustainable
growing standards.
24 LAVAZZA 25Sustainability Report 2018
Lavazza at the 2018 Salone del Gusto:
the world of taste at Nuvola
Lavazza was Official Partner to the 12th edition of Terra Madre Salone del Gusto 2018, an
event held in Turin from 20 to 24 September with a thematic focus on #foodforchange.
Evolving tastes, in all of their ramifications in culinary trends, food image and sustaina-
bility: these were the subjects examined and explored from various perspectives during
the debates, meetings and exhibits held at Lavazza’s Nuvola Headquarters.
Among them was a follow-up event on the project supported by the Lavazza Foundation
in Ecuador together with the organisation Cospe.
#foodforchange
26 LAVAZZA 27Sustainability Report 2018
1.2
Board of Directors
CHAIRMAN VICE CHAIRMEN CHIEF EXECUTIVE OFFICER
Group governance Alberto Lavazza Giuseppe e Marco Lavazza Antonio Baravalle
and financial performance
CORPORATE DEPARTMENTS
• Program Management Office
• Global Public Relation & Events
• Institutional Relation
In Lavazza, sound family governance provides effective support to an industrial ap- DIRECTORS & Sustainability
proach aimed at creating value not only in the short-term, but also over a longer pe- Antonella Lavazza Gabriele Galateri di Genola • Coffee Machines Development
riod. This method allows the management team, delegated by the owners to define Francesca Lavazza Robert Kunze-Concewitz & Production
growth and development strategies, to plan medium- and long-term actions to con- Manuela Lavazza Antonio Marcegaglia • Food, Packaging & System R&D
tinue to grow significantly as a global player in the sector. Lavazza has a Corporate Pietro Boroli • Marketing
Governance policy setting out the guidelines to be adopted at Group level. The cor- • Business Unit Sales
porate governance model adopted by the Parent Company is a traditional one and • Operations
features a Board of Directors, chaired by Alberto Lavazza, and a Board of Statutory • Finance
Auditors, chaired by Gianluca Ferrero. The Board of Directors is vested with full pow- • Human Resources and Property
ers to set strategic policy to ensure that the Group is managed properly and efficient- & Facility
ly. In addition to the Chairman, Board members include Vice Chairmen Giuseppe and • Legal & Corporate Affairs
Marco Lavazza, Chief Executive Officer Antonio Baravalle and Directors Antonella • Quality
Lavazza, Francesca Lavazza, Manuela Lavazza, Pietro Boroli, Gabriele Galateri di • Purchasing
Genola, Robert Kunze-Concewitz and Antonio Marcegaglia. The Board of Statutory
Auditors is responsible for overseeing compliance with the law and the Articles of
Association, respect for correct administration principles and, in particular, adequacy
of the internal control system. The Group’s subsidiaries operate under the manage-
ment and coordination of the Parent Company, Luigi Lavazza S.p.A.
Board of Statutory Auditors Supervisory Board Internal Audit
Gianluca Ferrero
Angelo Giliardi
Lucio Paquini
28 LAVAZZA 29Sustainability Report 2018
Internal control and risk management system
Lavazza’s internal control and risk man- ance with Lavazza’s Organisational, With regard to the initiatives related
agement system consists of tools, rules Management and Control Model as to Decree No. 231, a specific training
and internal procedures and organisa- per Legislative Decree No. 231/2001, programme was designed for the sales
tional structures that allow the Group’s as well as to keep it up to date; force, to be held in 2019, whereas var-
activities to be managed in a way that is • Internal Audit: Department report- ious privacy initiatives were undertak-
consistent with the Company’s strategic ing directly to the Board of Directors, en in order to ensure compliance with
and operating objectives. delegated to implement an effective the GDPR: in addition to designation
The internal control system is organised Internal Control System through au- of a Group Data Protection Officer, the
on three levels: dits of system completeness, efficacy Group’s privacy organisation was set up,
• first level: consisting of line controls, and efficiency; identifying privacy liaison officers from
designed to ensure that operations • Risk Management function: Function, among the individuals with the greatest
are conducted properly; they are car- created at the end of 2016, belonging involvement in data processing. After
ried out by the operating and busi- to the Finance Department, responsi- having prepared the register of data
ness structures; ble for risk management and assess- processing for Group companies, specif-
• second level: consisting of risk and ment. ic privacy training was provided, in the
compliance controls, which aim to form of three online modules in which
ensure, amongst other things, that In 2018, the Compliance Function was 1,573 employees participated for a total
the risk management process is car- also created within the Legal and of 717 hours.
ried out correctly and that business Corporate Affairs Department in order
operations are compliant with laws to ensure the regulatory compliance
and regulations; of business activities and strengthen
• third level: consisting of internal company culture in compliance matters
audit controls carried out by the through training activities.
Internal Audit Department and The main initiatives managed in 2018
aimed at periodically assessing the by the Compliance Function involved
completeness, adequacy, functional- training in accordance with Legislative
ity (in terms of efficiency and efficacy) Decree No. 231/2001, the creation of
and reliability of the organisational a specific antitrust programme based
structure of all other internal control on the guidelines issued by the Italian
system components. Competition Authority in 2018 and the
adoption of specific measures relating
The main business Functions and bodies to Regulation (EU) No. 2016/679 on the
responsible for the control activities are: protection of personal data (GDPR).
• the Supervisory Body, vested with
autonomous powers of initiative SPECIFIC PRIVACY
717
and control, delegated to oversee TRAINING
the implementation of and compli-
1573
HOURS
EMPLOYEES
30 LAVAZZA 31Sustainability Report 2018
Risk Management at Lavazza
As part of a more general development Since the launch of the model, the ap-
path embarked on by the Lavazza Group, proach adopted has focused on the risks
in 2017 a structured risk management capable of jeopardising the achievement
system was set up, based primarily on of the Company’s strategic objectives,
three elements: as adapted in the Group’s Strategic
• the creation of a Risk Management Plan, and the active involvement of the
function within the Finance top management in identifying, ana-
Department; lysing and steering the main risks for
• the implementation of a model for the business.
managing financial risks connected
with green coffee procurement, and At the operational level, an annual risk
the resultant gradual application of analysis is planned, together with peri-
a hedge derivatives trading strategy; odic monitoring of the evolution of the
• the setting up of an Enterprise Risk risk exposure and the progress of miti-
Management (ERM) system aimed at gation measures. The Risk Management
providing a comprehensive and uni- Function periodically reports the results
form view of all corporate risks and of these activities to the top manage-
facilitating the spreading of a risk ment and Board of Directors.
culture within the organisation.
Lavazza’s ERM Model is a tool that the
Company’s management and top man-
agers can use to identify and assess
the risk factors and opportunities in-
herent in company decisions in support
and reinforcement of the Group’s deci-
sion-making processes and forecasting
abilities.
32 LAVAZZA 33Sustainability Report 2018
Operating and Financial 2018 was a year of solid growth char- EBIT amounted to €110.7 million, up
Performance of the Group1 acterised by increased operating prof- by 2.0% compared to €108.5 million for
itability, ongoing strengthening of the 2017, with EBIT margin of 5.9%.
Group’s brands and wide expansion both Net profit amounted to €87.9 million,
in Italy and in foreign markets, particu- up 12.9% compared to €77.9 million for
larly in France, North America, Eastern 2017.
Europe and the United Kingdom. Net working capital amounted to
Lavazza continued to invest in product €283 million, down €107 million from
innovation and, thanks to the acquisi- €390 million at 31 December 2017. The
€ thousand 2018 Ratio 2017 2 Ratio 1
The figures tions of the Australian company Blue change was attributable to the following
presented in this Pod and the drinks business of Mars Inc. components:
section refer to in the vending sector, the Company fur- • lesser inventories attributable to
Revenue 1,870,003 100% 1,710,324 100%
the entire Group ther strengthened its direct operations pre-existing companies (€22 million)
EBIT 110,705 6% 108,501 6% and not just to the in all coffee segments. • trade receivables, down by €35 mil-
companies within Consolidated revenue amounted to lion, with respect to the pre-existing
EBITDA 197,328 11% 185,798 11%
the reporting €1.87 billion, up 9.3% from €1.71 bil- scope, due to the improvement in
Adjusted EBITDA 206,466 11% 189,501 11% scope of the 2018 lion for the previous year. The growth collection times.
Profit for the year 87,932 5% 77,915 5% Sustainability was attributable both to the companies • Increase in operating liabilities by
Report. acquired in 2017 (Nims, Kicking Horse €17 million.
and Esp) and the strong performance Net fixed assets amounted to €1,970
CAPEX 100,674 99,173
2
The Lavazza of pre-existing businesses, particularly million, up by €590 million from €1,380
Group has applied in Italy, France, North America, Eastern million at 31 December 2017, primarily
Net financial position (15,020) (503,010)
international Europe and the United Kingdom. due to the acquisition of the Mars Drinks
Equity attributable to the group 2,264,519 2,269,734 accounting In Italy — which accounts for approx- business, as a result of the recognition
standards (IFRSs) imately 36% of total revenues — the of provisional goodwill of €527 million.
in preparing the Lavazza Group maintained its leading The property lease for the Nuvola head-
Headcount 3,836 3,085 operating and position in all channels, owing to the ex- quarters was concluded, resulting in an
financial position pansion of its commercial range in the increase of €34 million.
information single-serve segment, which remained Net financial position amounted to
presented in the most dynamic one of the retail mar- €15.0 million, compared with €503.0
its Financial ket, and its improved commercial cover- million in 2017, due to the acquisitions
CONSOLIDATED undertaken in 2018, offset by the sig-
Statements for age in the Away-From-Home sector.
+9.3%
NET REVENUES the year ended 31 The Lavazza Group’s EBITDA was €197.3 nificant cash generated by operating
December 2018. million, up by 6.2% compared to €185.8 activity.
The figures for million for the previous year; EBITDA
2017 were restated margin was 10.6%.
in accordance Adjusted EBITDA was €206.5 million
with IFRSs for (+9% compared to €189.5 million for
+12.9%
PROFIT comparability 2017) before one-off acquisition costs.
purposes.
34 LAVAZZA 35Sustainability Report 2018
1.3
“Goal Zero”
In 2017, Lavazza decided to take up
the challenge issued by the United
Nations by pursuing and promoting
the Sustainable Development Goals set “2030: What Are You Doing?”
out in the 2030 Agenda for Sustainable
Development: the UN Global Goals.
The goals in question are addressed to The 2018 Lavazza Calendar called “2030: What Are You Doing?”, focusing on Sustainable
the business community and ask every- Development Goals, marked the beginning of a spate of initiatives aimed at promoting
one to do their part in creating a sus- “Goal Zero”. The Calendar told the stories of 17 people who promote sustainability in
tainable future from an environmental their daily lives by engaging into small or big-scale sustainability initiatives, with the aim
and social standpoint. of persuading everyone to do their part in achieving the Global Goals.
In addition to conducting a thorough The great success achieved by the Lavazza Calendar, which features photography by
analysis of its impacts on the various the artist Platon, a photographer committed to social sustainability projects, resulted
Goals, Lavazza sought to implement a in the creation of a travelling exhibition that made its way to various cities around the
stakeholder engagement programme world. The photos for the Calendar “2030: What Are You Doing?” have been on display at
with the aim of raising the greatest pos- organisations like the International Labour Organization, the Italian Stock Exchange, the
sible awareness of the Global Goals and United Nations Conference on Trade and Development and the Organisation for Economic
the messages that they seek to convey. Cooperation and Development. The exhibition has also been hosted by University cam-
This engagement programme, which puses or Newspaper HQs like that of La Stampa.
extended to various categories of stake- In Turin, Milan, Perugia, Geneva, Paris, Hamburg and New York, Lavazza had the op-
holders throughout 2018, is known as portunity to present the Global Goals and the crucial contributions to the project by
Goal Zero. thousands of individuals.
Goal Zero is based on the conviction
that we all can contribute, in our daily
lives, to pursuing sustainable develop-
ment, but in order to do so we all must
be informed and aware of the messages
that the Sustainable Development Goals
seek to convey.
36 LAVAZZA 37Sustainability Report 2018
Generation 2030 and the
“Lavazza and Youth for SDGs” contest
During the Sustainable Development Festival, Lavazza hosted the celebration of Goal
During the year, the Company also im- 4, “Ensure inclusive and equitable quality education and promote lifelong learning
plemented an integrated communi- opportunities for all”.
cations plan dedicated to the 17 Goals, The event was attended by hundreds of participants, including students, members
with the aim of engaging stakeholders of the local community, institutions and professionals from the sustainability sector,
via various channels: an internal com- and focused on two issues: inclusive and equitable quality education as a force for
munications plan was created to reach integration and development, and sustainable development education as essential
all Lavazza Group employees enti- to a widespread shift in mentality in favour of sustainability and adaptation of the
tled “2030: What Are WE Doing?” — of educational system to the challenges and opportunities offered by today’s world.
which more will be said in the following The focus of the event was on young people, which Lavazza sought to engage direct-
chapter — in addition to a Global Goals ly through its contest “Lavazza and Youth for SDGs”, dedicated to Italian university
Contest dedicated to university students students committed to studying and promoting the Sustainable Development Goals.
and an engagement plan focusing on In collaboration with the Network of Universities for Sustainable Development, the
Lavazza suppliers, aimed at establishing students were invited to participate in the contest by proposing innovative ideas to
transparent dialogue with them on mu- be implemented for the benefit of the coffee-producing communities supported by
tual expectations regarding the working the Lavazza Foundation. Each working team submitted an analysis of the impact of
relationship. In addition, art was used as its proposal on the Global Goals and the various interconnections between them.
a medium for communicating with the One requirement for forming a working group was a range of different academic
local communities in the places where backgrounds: each group consisted of students enrolled in various undergraduate
Lavazza operates: the “TOward 2030” programmes, with the aim of obtaining contributions from each member and thus of
project — which will be discussed in ensuring the interdisciplinary nature of the projects.
detail in the following chapter — is one Over 80 students were involved and two juries were formed: one consisting of indus-
example of this. try experts asked to assess the feasibility of the projects, and another of an institu-
tional nature representing the Company.
Moreover, Lavazza also participated ac- The working team awarded first place was a group of students from the University
tively in the Sustainable Development of Bari who presented a project aimed at teaching coffee-growing communities how
Festival organised by the Italian to grow mushrooms using coffee waste. The students were given the chance to visit
Sustainable Development Alliance, in- a coffee-growing community in Tanzania, in order to study and assess how to imple-
volving the organisation of a national ment the project proposal.
event entitled “Generation 2030”. Goal The team from Turin Polytechnic, which was awarded second place with a project
Zero is based on the conviction that en- focusing on hygiene and sanitation involving fertilisers for coffee-growing soil, was
gaging as many people as possible on rewarded with participation in a Summer School programme on the Sustainable
sustainability issues represents a way of Development Goals. The third group, enrolled in Tor Vergata University of Rome,
multiplying the success of the initiatives, proposed a project involving a hydroponic system for growing coffee. These students
and reflects the ambition of reaching all won a stay in Turin and it was given them the opportunity to vist the Lavazza’s Nuvola
individuals involved in this challenge. Headquarters and its production facilities.
80
17
GOALS
STUDENTS
38 LAVAZZA 39Key figures
RELATED SDGs
67
BENEFICIARIES OF THE
TRAINING PROGRAM
Coffee-growing Communities,
Suppliers, Customers and
People of the Lavazza Group IN 6 COUNTRIES
Lavazza Foundation
94,000
MORE THAN
DIRECT BENEFICIARIES
24 17
PROJECTS COUNTRIES
GOOD AGRICULTURAL PRACTICES
and climate change adaptation
SOCIAL DEVELOPMENT
and access to technology
Engagement
of women and youth
41Sustainability Report 2018
2.1
Coffee-growing communities
and the commitment
of the Lavazza Foundation
Coffee is a product of the land, and like the land it is threatened by the ongoing
changes in our climate. The current climatic instability is menacing the supply of
high-quality coffee. If we fail to take action to stem this phenomenon, millions of
hectares risk vanishing in the span of a few decades, and millions of coffee growers
risk losing their livelihoods and thus being forced to migrate.
It is not only Earth which provides us with coffee, but also about 25 million farmers
in over 30 countries. Lavazza wants to stand by them in combating the effects of
climate change, promoting good agricultural practices and supporting a sustainable
social development.
42 LAVAZZA 43Sustainability Report 2018
¡Tierra!: the project that marked
the start of our commitment
In 2002, Lavazza’s focus on and commit- The main tools used to achieve these
ment to coffee growing countries took goals are:
the concrete form of the first sustaina- • the spread of sound agricultural
bility project entirely conceived and de- practices that foster coffee quality
veloped by the Company — ¡Tierra!. This and respect for the environment;
project was intended to promote sound • support for coffee-growers to help
agricultural practices, protect the envi- them build and manage their own
ronment and support the economic and organisations, in the form of associ-
social development of coffee-growing ations, cooperatives and companies.
communities. Organised growers can thus gain access
The first beneficiaries were small to broader markets, obtain services use-
communities of caficultores in Peru, ful to improving production and enjoy International Coffee Partners
Honduras and Colombia. In the follow- better access to credit and networks for
ing years, the ¡Tierra! project was spread marketing their products.
across other coffee growing areas in In addition, the Lavazza Foundation’s Since 2001, Lavazza has been actively participating in International Coffee Partners
India, Brazil, Tanzania, Ethiopia and projects also aim to: (ICP), an organisation that brings together eight European coffee companies commit-
Vietnam. • promote gender equality within fam- ted to sustainability projects in coffee-producing countries: Franck, Joh. Johannson
In 2004, in order to coordinate, manage ilies and communities; Kaffe AS, Lavazza, AB Anders Löfberg, Neumann Kaffee Gruppe, Paulig Group, Tchibo,
and effectively implement economic, • help young people realise their and Delta Cafés Group, which joined ICP in 2018.
social and environmental sustaina- full potential through training pro- Its mission is to launch, develop and monitor projects that spread agricultural best
bility projects in coffee growing coun- grammes that motivate them not to practices among small coffee growers, while fostering their direct involvement, so
tries, the Company established the abandon coffee-growing lands and that they take charge of improving their working and living conditions.
non-profit Giuseppe and Pericle Lavazza to become coffee entrepreneurs in- The projects are based on the PPP (public-private partnership) approach, and in-
Foundation. Ever since, the Foundation stead; volve international organisations, NGOs and national institutions, as well as private
has been promoting and financing a • promote the diversification of prod- entities.
wide range of sustainability projects ucts in order to reduce risks and fa- This approach is shared by the Lavazza Foundation, which has many years of experi-
in coffee-producing countries, in some cilitate greater food production; ence with maximising the results of development projects through strategic partner-
cases on its own and in others through • support reforestation; ships formed with public or private partners on a pre-competitive basis.
public and private partnerships. • spread farming techniques that ena- In fact, a synergistic collaboration that pursues the economic, social and environ-
The Foundation has five directors: ble growers to respond effectively to mental sustainability of coffee production based on the pooling of skills, resources
Antonella and Giuseppe Lavazza, the effects of climate change. and expertise can benefit the entire industry. What is more, such collaboration gives
Professor Giacomo Büchi, Professor • introduce technologies to support rise to a leverage effect that yields profoundly meaningful results.
Arnaldo Bagnasco and Professor coffee-growing techniques. From 2001 to the present, ICP projects have involved over 79,000 coffee-growing
Giovanni Zanetti, President of the Another distinctive element of the families in 12 countries around the world.
79,000
Foundation. The Foundation’s Secretary Foundation’s projects is that they envis-
is Mario Cerutti, Lavazza’s Chief age on-site activities to be implement-
Sustainability Officer. ed by local stakeholders. This ensures
The projects supported by the Lavazza a direct engagement of coffee-growing
12
Foundation are primarily intended communities and the development of COFFEE-GROWING FAMILIES
to increase coffee yields and quality, trusted relationships that lead to the
while also promoting entrepreneurship achievement of the expected results,
HELPED IN
among coffee growers and improving which are therefore sustainable in the
their living conditions. long term. COUNTRIES
44 LAVAZZA 45Sustainability Report 2018
Coffee and Climate: coffee threatened
by climate change
Climate change poses a real threat to coffee: it results in lower product quality and
gradually reduces the areas suited for growing coffee.
In 2010, Lavazza became a founding member of Coffee&Climate, an initiative that
aims to study the effects of climate change on coffee and provide small growers the
technical tools they need to respond effectively to this challenge.
From 2010 to 2015, approximately 4,000 coffee-growers benefited from the technical
support necessary to increase the resilience of their production systems. The pilot
projects were implemented in Vietnam, Tanzania, Trifinio (an area on the border be-
tween Guatemala, Salvador and Honduras) and Brazil.
To spread and ensure access to the knowledge gained, Coffee&Climate has also pre-
pared a technical manual for coffee growers that is available online in various lan-
guages.
The second phase of the initiative, which will be completed by the end of 2019, in-
volves an expansion of the number of projects to encompass up to 80,000 growers.
80,000
Objective for 2019
BENEFICIARIES
A new commitment to scientific
research: participation
in World Coffee Research
In 2018, bearing witness to ongoing investment aimed at
strengthening the commitment to coffee-growing countries, the
Lavazza Foundation joined World Coffee Research, a non-profit
organisation committed to research on protecting and preserv-
ing coffee, with a particular focus on the growing phase.
World Coffee Research carries out its projects in 21 countries in
partnership with public and private institutions, with the goal of
keeping coffee quality high, increasing plantation productivity
and promoting independence among growers.
46 LAVAZZA 47Sustainability Report 2018
ASIA
2018 results
INDIA VIETNAM
1000 days to smile Innovation to fight
(1000 Days – Save The Children) climate change
AMERICA
Close to the youth living INDONESIA
GUATEMALA CUBA in the slums Together for the Community
Coffee to revive Strengthening training (New Horizons)
for a quality coffee
TRIFINIO (GUATEMALA, A great project for small
EL SALVADOR, HONDURAS) COLOMBIA coffee-growers
Together for a new dawn Technology, as well as land (¡Tierra!)
of coffee
ECUADOR
DOMINICAN REPUBLIC The strenght is the production
AND HAITI chain
The roots of change
PERU
The new coffee territories
BRAZIL
Learning in order to grow
94,000
MORE THAN
DIRECT BENEFICIARIES
17 24
COUNTRIES PROJECTS
AFRICA
UGANDA
Cultivating better to live better
ETHIOPIA
Coffee learning by doing
(The Kalungu Cherries - Sucafina)
3
TANZANIA
The culture of coffee for The endeavour of becoming
the culture of the family an enterprise
(International Coffee Partners)
GHANA
SCOPES OF ¡TIERRA! SOCIAL NATURE The importance of partnerships
ACTIVITY FOCUS PRESERVATION for the coffee production chain
48 LAVAZZA 49Sustainability Report 2018
What our partners say ALO PARTNERS NEUMANN STIFTUNG OXFAM ITALIA ENGIM INTERNAZIONALE
“Every small action of ours implies a “Our partnership with Lavazza is “It is exciting for us to know that in in the region to their knees), in addition “For us the partnership with Lavazza
consequence, at a human, social, eco- longterm! And this already explains the some countries growing coffee also to bringing clean water to many fam- means the opportunity to promote,
nomic or environmental level. Being a value that our both organizations see in means protecting the environment, ilies stricken by severe humanitarian through every espresso, Italian excel-
Lavazza partner means fully adhering their cooperation. Jointly, we are aware reducing the risk of disastrous hydro- emergencies. Our constant, productive lence in Albania, a country where the
to a responsible attitude that firmly of the complexity of aspects that need geological events, promoting women’s exchanges are already laying the foun- coffee culture is strong and radicated.
pursues the well-being of people and, to be addressed in order to be able to rights, supporting youth employment dation for ambitious new challenges for Moreover, it is an opportunity to get our
therefore, of our planet.” offer impact-oriented support for meet- and ensuring basic community services. Oxfam Italy’s mission, to make company workers, coming from disadvantaged
ing the needs of coffee farmers and their If growing coffee means reducing ine- policies more socially and environmen- backgrounds, trained by the profession-
families. Teaming up with the members quality, fighting poverty and contribut- tally sustainable and to expand our als coming from the Training Center
of coffee communities and providing ing to more sustainable development, common contribution to sustainable de- in Turin. Tradition, quality and sustaina-
support at the different levels on their we fully intend to continue to expand velopment goals. For us, the spirit of the bility are a choice we make everyday at
development pathway towards better our collaboration with Lavazza. The re- partnership with Lavazza is essentially KeBuono: we are proud we can make it
perspective in life requires coopera- sulting synergy has already propelled us that together we can do much more together with Lavazza.”
tion over years. We highly appreciate to achieve significant results, such as a than we could alone.”
Lavazza’s commitment to contribute to decisive contribution in the Dominican
needed change processes within coffee Republic and Haiti to reducing coffee
families and coffee communities and to rust (a fungal disease that in recent
help further developing approaches in years has brought small coffee-growers
our projects based on joint learning.”
50 LAVAZZA 51You can also read
