The Long Voyage:

Italian Coffee's Route to U.S. Acceptance

by Bruce Milletto

I was first introduced to the specialty coffee industry in 1988 while I was the owner of an Italian import company called Sotto Voce International Marketing. At that time, specialty coffee was barely emerging as a commodity in the United States, and only a handful of enlightened consumers were going out of their way to search for the distinctive morning cup that specialty coffee offered. I made many trips to Italy and easily made contact with companies that produced Italian food and beverages. Soon, I was doing business with dozens of companies that produced olive oil, pasta and ceramics. During my visits, I was always amazed at the quality of Italian coffee and the care baristas took in preparing it. But it was two years before I made it part of my own business.

Curiosity led me to a large roaster in central Italy. This roaster had thought about what it might take to bring his coffee to the American market, but one of the problems he faced was converting the kilo-sized bags in which he packaged his coffee to the American standard pound-and-a-half-sized bags. Even though there were difficulties, I began to wonder why more Italian coffee wasn't available back in the states. What problems were these companies facing in introducing their product to the American consumer?

I left Italy with samples of wonderful coffee and tested the waters with various specialty stores in the States, seeing if they had any interest in giving shelf space to yet another brand of coffee. I also approached large chains in an attempt to convince them they should carry this extraordinary coffee from the homeland of espresso. My small-scale experiment yielded shocking results: Pasta, wine, mineral water and other unique Italian products were often welcomed with open arms, and companies placed orders for container loads. Coffee, on the other hand, when presented to a potential buyer, usually hit a brick wall. The one concern I heard over and over again was "freshness."

Even though there was far less education and awareness about coffee at that time, almost every buyer I approached asked how long it would take for coffee to get from the roaster, to the dock, to the ship and to their door. Unless coffee was air freighted on a small pallet, which was cost-prohibitive, it was apparent that it could take many months before coffee roasted in Italy could be placed on American retailers' shelves.

Roadblocks to Exporting
All of the Italian coffee companies I spoke to for this article said freshness was not an issue when importing coffee to the United States. With today's high-tech systems, coffees that are packaged and sealed properly can have a shelf life of up to 18 months. It can take two or three months for imported coffees to reach the United States, which still leaves many months before the coffee reaches its expiration date. In the United States today, the coffee you buy from large U.S. roasters may have been roasted four to six months ago. If this coffee is delivered to a retail store and a pound is used in a matter of hours after opening, staling should not be a problem. If that same coffee sits for days in the grinder, it will quickly lose many of the attributes required to produce a great cup.

Still, freshness and consumer awareness of roast dates create a significant marketing challenge for coffee roasted in Italy, or in any other country where it must be transported long distance. Marketing also is a gigantic commitment, especially if you are combating a preconceived flaw-even an unfounded one-in your product. Even without this problem, medium-to-large Italian roasters spend enormous amounts of marketing dollars to introduce a brand in the United States. An insider in one of the largest roasteries in Italy told me that the marketing budget for one year alone, just in New York City, is well over $1 million.

Exporting obstacles for Italian coffee roasters can be compared to developments in the beer industry. For years, people equated good beer with European brews, as seen with the success of Heineken in the United States in the 1980s. However, over the past 20 years, many Americans have come to believe that the best beer they can buy is tapped right out of the keg at the local microbrewery. Consumers can see the fermentation tanks behind a glass wall, where they can watch the brewmaster test the beer. They know it's fresh.

In the same time span, American wines have gained respect worldwide and market share in the United States, and not just California vintages. In many regions of the country, wine drinkers can savor delicious varietals crafted from grapes grown a few miles from home. Similarly, many new American coffee converts believe that the highest-quality coffee is roasted locally-or maybe as far away as a neighboring state. American roasters have encouraged this belief by educating their customers about how fresh their coffee is. By marketing their coffees as fresh to the local consumer and quickly shipping their beans across the country to others, they have created the impression that only beans "warm from the roaster" can produce a fine cup. Larry Karper, North American sales and marketing coordinator of Procaffe USA, a company that imports six espresso blends under the Caffe Bristot brand, disagrees with this contention, saying beans that fresh are too fresh. Espresso, he says, needs to mature at least 30 days before it reaches its true potential.

The Art of the Roast
While freshness is important, an exaggerated emphasis on the roast date diverts attention from an equally important factor: the art of the roast. The best Italian roasters have perfected their techniques over many years in a culture that demands perfection from its coffee. They have developed a near-alchemical ability to coax incredibly complex and balanced flavors from their beans.

Clearly, many American roasters produce great coffee, but overemphasis on freshness has affected efforts to market fine Italian coffee to American consumers. Luca DiPietro, vice president of Danesi Caffe USA, has confronted the freshness issue by offering taste tests to potential customers. These tests can prove that even though a coffee may have been roasted 12 weeks ago, it is still as fresh as many of its American counterparts, and of the utmost quality. Another way to answer the freshness question is to import large amounts of coffee frequently. Ammirati Imports, a New York-based importer of Lavazza coffee, imports a 40-foot container of coffee every 10 days, and at any given time has access to more than 77,000 pounds of coffee from either the Ammirati or Lavazza corporate warehouses.

Lack of Consumer Awareness
Another problem facing Italian coffee companies in the U.S. market is the lack of consumer awareness about the origin of espresso. While pasta and wine have been closely identified with Italy for well over 100 years, many Americans are unaware of the influence Italy has on their caffe latte. In other words, the romance of Italy has not extended to their morning cup. In addition, many American coffee companies have done a great job of promoting origin coffees, and today consumers know coffee beans come from Guatemala, Kenya and Indonesia. However, many aren't aware that the process for making espresso and the culture of specialty coffee were born in Italy.

This brings up another question heard from U.S. customers: "Coffee isn't grown in Italy, so why should we buy Italian coffee?" Italian coffee companies overcome this obstacle by stressing their commitment to quality, tradition, years of experience as master roasters and dedication to the "art" of authentic Italian espresso. Catchphrases used by Lavazza illustrate this marketing strategy: "a century in a cup" and "a world of experience." Danesi Caffe uses the slogan, "For more than 100 years, Danesi has meant coffee with passion, dedication and excellence." Danesi's Web site states: "Danesi Caffè means history, tradition and quality." Many U.S. roasters have only been in business for five or 10 years-not long enough to make these claims.

From a U.S. retailer's view, selling a traditional Italian espresso blend may be a challenge requiring some consumer education. There are two things to consider when deciding whether or not to use an Italian espresso blend. The first is availability. What happens if your coffee supplier is between shipments from Italy and you need coffee now? You won't be able to have it sent overnight, like you could with a domestic roaster. However, in most major markets this is not a problem because retailers are dealing with an importer that can deliver coffee on a weekly basis. The second consideration is the public's familiarity with the flavor profile. Italian espresso blends have been crafted by roasters with the intent of being used for straight shots, and in five-ounce cappuccinos. Their American counterparts generally have crafted their blends to stand out when combined with a large quantity of milk. Also, many Italian blends contain some robusta beans, while most American blends are comprised of 100 percent Arabica. For these reasons, Italian and American espressos just taste different. The question becomes: Which one will your customer be more familiar with, and which one will they prefer? It's not unlike comparing two Chardonnays-one aged in French oak, one aged in American oak. Both wines might be delicious, but you may end up preferring the one that possesses the flavor characteristics with which you are most familiar.

Developing Blends to Suit American Tastes
Ammirati Imports has been selling Lavazza in the United States since 1998, and has watched its sales grow between eight percent and 35 percent each year. "Lavazza has been by far the most successful Italian coffee company in the U.S. market," says T.J. Tarateta, co-owner and general manager of Ammirati Imports, because they offer a full line of products, including espresso, filter coffee, pods and even Rainforest Alliance-certified coffee that appeals to the American audience.

According to Tarateta, Lavazza was the first to enter the U.S. market with filter coffee. This coffee is Gran Filtro, and Ammirati sells 60 tons of it per year in the United States. It is packaged for ease of use; customers can choose from whole-bean, eight-ounce pre-ground and two-and-a-quarter-ounce fractional packages.

Lavazza has not changed its blends for the American market but has added new blends to suit American tastes. For some, Gran Filtro is too sophisticated and delicate, so Lavazza developed Gran Filtro Dark, a coffee with a darker roast more in line with the tastes of a particular sector of the American market.

Roadblocks to Exporting: Part 2
Another stumbling point for Italian coffee companies in the United States may be price per pound. One way to make the higher price more palatable is to market the qualities of the bean and blend. While coffees from Segafredo Zanetti cost more than their American counterparts, they're still a good buy, says the company's U.S. sales and marketing manager Oscar Contesini, who claims that because of the composition of the blend of the beans, it takes less coffee to produce a perfect shot. In other words, with Segafredo coffee, he says, you can get more shots per pound, which offsets the difference in price.

One way to strengthen an Italian brand in the United States is to buy an American coffee company, which is exactly what the Bologna-based Segafredo Zanetti Group did on December 5, 2005, when it purchased the U.S. retail coffee brands of Sara Lee Corporation, which included Chock Full o'Nuts, Hills Bros., MJB and Chase & Sanborn. "It doesn't happen every day that an Italian-based company buys an American company," says Contesini, who sees the acquisition as giving the company a powerful foothold in the U.S. market. According to the company Web site, "The addition of the U.S. organization will further strengthen the company's expertise in the cultivation, trading, roasting and distribution of coffee and continue its mission to bring coffee, espresso, coffee shots, quality and service to the world." Sara Lee's coffee manufacturing facility in Suffolk, Va., was also included in the deal, as were 103 Chock Full o'Nuts coffeehouses.

One of the biggest reasons Italian coffee companies fail in the United States, says Tarateta, is because they don't provide technical service. Selling coffee is unlike selling any other product, he says, because it is intrinsically tied to a device that has to deliver the beverage. And espresso machines have a tendency to break down. To be successful in the United States, he concludes, you have to provide service for the machine that makes your coffee.

Larry Karper of Procaffe USA agrees that servicing equipment is essential for success. His company, the two-and-a-half-year-old U.S. subsidiary of Procaffe SpA of Belluno, Italy, sells coffee to a network of distributors, all of whom have been thoroughly trained by Procaffe to service their customer's equipment to ensure it is in top working order to bring out the best characteristics of their coffees.

U.S. Subsidiaries
Having a visible U.S. presence is critical to success, says Danesi's DiPietra. Many Italian companies have tried to bring their coffee to the United States via importers who may or may not be able to sell it. For some of these companies, only one or two containers of their marvelous coffee ever made it to the United States. For those who have been more successful, the next step was to open a U.S. subsidiary. In 1998, Danesi opened an office in New York. Prior to that, it sold its coffee to importers. Opening a subsidiary allows Danesi to protect its brand and monitor quality standards with more control over distribution and ongoing training programs. But opening a subsidiary can be very expensive, and competition from American roasters is fierce. It also can be difficult to find the right people to run the operation-people who understand both the U.S. and the Italian markets.

Creating a Recognizable Brand
The biggest challenge faced by Italian coffee roasters in the United States is creating a recognizable brand, says Procaffe's Karper. Breaking into the psyche of American culture takes time, he says, but for those companies willing to put in the effort to educate American distributors and consumers, the reward is an increase in market share.

Some Italian coffee companies have extended their brand image in the United States by opening cafés. Illy Caffe and Lavazza Café are two examples. According to Tarateta, Lavazza cafés have been particularly helpful in building market share and creating brand awareness for Lavazza coffee in middle America. Segafredo is unique in that it offers franchises. At present, you can find a Segafredo franchise in Miami (where it was voted the city's best coffeehouse two years running), two in San Francisco and one in Las Vegas. In 2006, Segafredo plans to franchise two more cafés in Portland, Ore., and in Houston.

Finding the right niche in the American market is crucial to the success of Italian coffee. Because many cafés in the burgeoning U.S. specialty coffee market serve Seattle-style coffee, Italian coffee companies have looked to upscale hotels, restaurants, bars and cruise ships to crack the American market.

Creative marketing also is an important element of success for Italian companies in the United States. Many companies make point-of-sale items, ceramic cups and accessories available to their distributors and customers. These items reinforce their brand and the rich tradition of Italian coffee. Illy Caffe is one such company. In addition to its distinctive logo cups, the company offers signed and numbered limited-edition cup collections designed by famous and emerging artists, including Jeff Koons and James Rosenquist.

U.S. Market Still Growing
So why is the U.S. market so appealing to Italian coffee roasters? According to DiPietra, it's the large number of middle-class Americans who purchase products perceived as high end, including specialty coffee. Also, compared to the market in Italy, which has plateaued, the U.S market is growing at a phenomenal rate. According to the National Coffee Association, 60 percent of the total U.S. adult population drinks gourmet coffee, which means the potential market numbers approximately 130 million people-a very large market indeed. Overcoming the inherent roadblocks and adjusting to cultural differences and expectations should ensure that sales of Italian coffee will grow right alongside those of American roasters in the ever-increasing demand for specialty coffee in the United States.

Bruce Milletto is the President of Bellissimo Coffee InfoGroup and Founder of the American Barista & Coffee School.

Reprinted from Fresh Cup Magazine