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issue: December 2009 APPLIANCE Magazine

European Report: On Location in Berlin at Appliances at IFA 2009
Expanded Online: Saeco and Philips Discuss Post-Acquisition Brand Strategy

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by Paul Roggema, Europe correspondent

Coffee was everywhere this year at IFA. And in the coffee community the recent takeover of Italian coffeemaker OEM Saeco by Philips was the talk of the day.

Saeco still had a separate exhibit space at the show but presented itself as part of the “Philips Group,” a label not widely used before.

It’s a dramatic change for a company with family roots. “Saeco is the inventor of the automatic coffee maker. We are the leading espresso maker in the world,” Mr. Söntke Visser, Managing Director, Saeco Germany, said at IFA. He explained that the company was originally a family business, but has been owned by a investment firm for several years. “But after meeting the Philips people, most of our staff are very excited to be a part of a high-tech company. We started with an integration team; however, the core Coffee Competence Center will be in Italy.”

Among the Saeco product launches at IFA was the Xelsis line of fully automatic, bean-to-cup coffeemakers. Unique features include a color LCD screen with large illuminated touch buttons for basic functions. Also new were personalization functions allowing separate settings for up to six users. “The new design is simplified, from plastic to metal, and in more basic shapes, for the international markets,” Visser said.

“As we are redesigning Philips into a leading company in health and well-being, coffee is clearly a product in the latter category as it is very important in social connections,” Vidya Sagar Gannamari, Philips’ product manager—beverages told APPLIANCE. But Philips knew it had no strong position in the premium espresso maker market, aside from selling a few espresso makers manufactured by De’longhi. Philips was ready to take action to get a strong position in this market.

“Now you have to realize that the espresso market is quite difficult as there are many patents covering most of the product spectrum, held by a small number of companies,” said Gannamari. “Still, Philips is the perfect mother for an espresso maker who is ready for globalization: we are ready and willing to bring new espresso products to the global market.

“In brand strategy all options are open,” he added. “We know that the Italian reputation for coffee is very strong; but the current Philips models, based on redesigned De’longhi hardware, already sell very well in Germany too. Saeco currently manufactures in Italy and Romania (in this product category European manufacturing is important).”

Also important, he says, is the cooperative relationship between Saeco and Lavazzo in the capsule coffeemaker market, and he said this successful relationship “will surely be continued.” Saeco’s Gaggia brand, strong in Italy and the UK, will be a part of future strategy as well.

“I do agree that reliability of the BTC machines is the big issue,” he added. “Small stones in the beans wreck the grinder, and overall complexity is high. We agree that this needs improvement.”


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