The boutiques and restaurants lining Monmouth Street in central London’s Covent Garden neighborhood stand empty on a recent Wednesday morning, except for the 11-person line that stretches out of the Monmouth Coffee Company cafe.
“In the last few years, I’ve replaced bad coffee with good coffee,” said Holly Woodford, a 35-year-old sports consultant, as she sipped a 2.60 pound ($4) cappuccino at one of the restaurant’s farmhouse-style tables.
At her home in Ideford, 2 1/2 hours southwest of the city, Woodford said she brews her own gourmet cappuccinos, using $14 bags of Monmouth’s single-origin coffee beans and a $400 De’Longhi (DLG) bar-pump espresso maker.
Such enthusiasm has helped make Giuseppe De’Longhi, founder and chairman of De’Longhi SpA, a billionaire. Shares in the Treviso, Italy-based company, Europe’s third-largest coffee-machine manufacturer by retail volume, have risen more than 250 percent since the end of 2007, pushing De’Longhi’s net worth to at least $2 billion, according to the Bloomberg Billionaires Index. He owns 67 percent of the company, and has never appeared on an international wealth ranking.
Company shares declined 1.6 percent to 11.51 euros in trading at 12:30 p.m. in Milan.
Growing global demand for high-end caffeine products has created a decade-long bull market for coffee companies, and boosted sales of home machines to $6.7 billion in 2012, a 47 percent increase from 2007, according to London-based researcher Euromonitor International.
“Drinking good coffee has become a lifestyle choice,” said David Veal, executive director of Speciality Coffee Association of Europe, an Essex, England-based trade association. “People who enjoy a good cup of coffee want to take that experience into the home, and that’s where companies like De’Longhi come in.”
The company began selling coffee makers in 1990. It now offers more than 150 models, with prices ranging from below $200 to more than $3,000. The Primadonna Exclusive model, which sells for $3,240 on De’Longhi’s website, includes two cup warmers and a color touch-screen.
Such higher-priced models, along with the Nespresso-branded pod capsule devices, have helped boost De’Longhi’s coffee-machine business to 597 million euros ($767 million), 39 percent of total revenue in 2012, up from 10 percent in 2002.
Other kitchen appliances -- food processors, kettles and toasters -- contributed 37 percent of De’Longhi’s revenue, according to a March 2013 company presentation, up from 34 percent in 2002. The balance came from home heating and cooling systems, as well as ironing and cleaning products.
De’Longhi, who is in his 70s, holds his shares in the company through Luxembourg-based De’Longhi Soparfi SA, an investment company he controls through Long E Trust, an entity based in the U.K. crown dependency of Jersey, according to the company’s 2001 initial public offering prospectus.
He has collected 250 million euros in dividends since the company was listed on the Milan stock exchange in July 2001. He sold about 12 million shares, or 8 percent of the share capital, for 114 million euros in November 2012.
Representatives for De’Longhi didn’t respond to calls and e-mails seeking comment.
The De’Longhi family opened a workshop selling wood-burning stoves in 1902 in Treviso, a town 20 miles north of Venice that is the birthplace of prosecco sparkling wine and home to fashion company Benetton Group SpA.
By the 1950s, the business had added a factory to make heating parts, where De’Longhi started working when he was in his twenties. He began selling the first De’Longhi consumer appliances in 1973, and incorporated his own company, G. de’Longhi SAS, which specialized in free-standing oil-filled electric radiators.
He created De’Longhi SpA in 1978, expanding its product line in the 1980s to include home appliances such as Pinguino portable air conditioners and Friggimeglio rotating deep fryers.
De’Longhi spun off its industrial heating division into publicly traded Delclima (DLC) in January 2012, after a protracted price war with competitors in low-cost markets such as China. In the first quarter of 2013, Delclima reported net income of $1.3 million on $94 million in revenue, a margin of less than 2 percent. De’Longhi’s net income was $25 million on $423 million in revenue, a margin of 6 percent.
“It was a bold decision to switch from what was an increasingly crowded air treatment segment,” said Lorenza Della Santa, a senior consumer appliance analyst at Euromonitor. “They focused on an area where they could lead, as an Italian manufacturer, making Italian-style coffee machines and producing Italian-style coffee.”
The company generated 64 percent of its 2012 revenue from Europe, according to its annual report.
“Coffee makers have been the standout area within small kitchen appliances across Europe over the last few years with growth in both value and volume,” Anthony Williams, an analyst at global market researcher GfK SE (GFK), said in an e-mail.
At the same time the Italian manufacturer is looking for opportunities to expand in emerging markets. Fabio De’Longhi, Giuseppe’s son and the company’s chief executive officer, said on a May 2013 earnings call that he expects coffee machines to remain “major drivers” for growth.
“Coffee is an aspirational product, it’s something a lot of people identify with,” the Financial Times quoted him as saying in a January 2013 interview. “There are probably 50 million coffee machines sold a year now and there’s every chance this could double in the next 10 years, with De’Longhi taking a big share of the new opportunities.”
To contact the reporter on this story: Tom Metcalf in London at firstname.lastname@example.org
To contact the editor responsible for this story: Matthew G. Miller at email@example.com