Like a lot of industries the coffee and espresso machine markets saw pandemic booms. Now that is apparently being followed by a caffeinated hangover.
De’Longhi, which sells consumer products such as the well-regarded Stilosa Espresso Machine for home, is the latest coffee machine maker to see a sales decline. Per World Coffee Portal, Switzerland-based De’Longhi’s revenues for the latest quarter fell 18% to $658 million USD (€602.4 million) for Q1 2023.
The drop in sales was particularly harsh in the North American market where sales dropped by 28% to $105 million (€96 million).
Keep in mind that, as De’Longhi management points out, the 2023 y/y numbers are in comparison to “extraordinary growth” in the previous two years — as Covid forced many to figure out home coffee and barista solutions, hence driving a mini-boom in sales.
“Looking ahead to the start of 2023, despite results that have been impacted by an unfavorable macroeconomic context, with a prudent behavior of consumers and distributors, we are satisfied with how the Group has been able to react to the numerous challenges and difficulties. To date, our Group can count on revenues and margins that remain well beyond pre-pandemic levels, thanks to organic growth, investments and acquisitions finalized in recent years: revenues for the quarter are now 60% above those of 2019,” said Fabio De’Longhi, CEO of De’Longhi.
MORE: De’Longhi models such as the ECP3420 continue to sell well, receive strong reviews for aspiring at-home baristas
Temporary Blip or Something for Coffee and Espresso Machine Brands to Worry About?
That there’s a fall-off post-pandemic is not surprising. Brands that became iconic during lock-downs such as Zoom and Peloton have also seen massive revenue declines — again, relative y/y numbers being compared to sky-high pandemic results which leads to poor looking percentages.
De’Longhi is not alone here. Other major players in the at-home coffee market have or will likely face similar headwinds including Jura, Gaggia, and Breville to name but a few.
In my estimation I expect this to be a temporary anomaly. A blip. Once things shake out with respect to a balance between workers returning to the office and working from home, and the overall global supply chain returning to some semblancy of normal I predict revenues will establish previous rhythms.
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In the U.S. that would mean a return to an estimated 5.1% CAGR for 2022-2023 (Grand View Research).
Looking at segmentation the leading product type continues to be filtered/brew coffee, followed by capsule and pod-based machines (Keurig, Nespresso), traditional semi-automatic espresso machines (Gaggia, ECM/Profitec, Rocket Espresso, Bezzera, Rancilio) and the emerging semi-automated machines for home and office (Jura, Philips/Saeco, Miele).
