LMSC If they want to place Lelit in high street stores, how might Breville-Lelit want to play it?
Another question will be, would Breville keep Lelit’s current after sales business model?
Do you think they would be planning to go into High Street stores, though? I suppose it depends on the definition of “High Street store”. Personally, I see espresso machines as a bit of a niche (pun unintended) market, so …. John Lewis, yeah maybe, but Argos? A bit too specialist, too low-volume? I’d think they’re better marketed through specialists that actually understand the product they’re selling, because by and large, it’s a pretty knowledgeable customer buying them.
As for after-sales business model, I hope the reason for buying Lelit is that they’re successful as-is, and if so, monkeying with their formula is a recipe for messing up what they bought it for. I’d also hope the terms of the deal include whoever in the current ownership is the driving force behind it stays on, in an executive role, at least part-time. That certainly is a model that works, if done right. A friend of mine recently sold his medium-sized but very successful company to a multi-national, but part of the deal is staying on for several years in a management role. He agreed, in large part because he trousers a big chunk of cash, but also because he offloads a large chunk of the stress and pressure, and gets a good salary to boot. The multi-national get a good addition to their portfolio, but get to keep the person driiving the ethos, the bit that actually made it a success in the frst place. The very worst thing they could do is replace someone like that, someone with the entrepreneurial flair, with a corporate suit with the business soul of a tax accountant.
Breville will mess with the ‘soul’ of a company like Lelit at their peril. By all means bring their finance clout, and sure, there may be aspects they can streamline, but if they mess with the customer-facing bits too much, they risk killing the golden goose.
