Italy's Moka Pot Poses a Question to South Korea [Weekend Money]

Moka-pot maker diversified as capsule coffee gained ground, piling up debt
Italian manufacturing hits the limits of family management

South Korea has 670,000 SMEs with no successors
Private equity excluded from tax breaks for succession M&A

"Gurgle... hiss, hiss."

On Italian mornings, a similar sound can be heard in homes across the country. It is the sound of water boiling in the bottom chamber of a moka pot and pushing coffee upward under steam pressure.

Italy and coffee are inseparable: many of the terms on cafe menus, including espresso, cappuccino and macchiato, are Italian. The moka pot is a symbol of that love. But the company that made it took on a new owner last year, weighed down by debt. Its story involves the challenges of succession and professional management in Italian manufacturing, and resonates with the concerns of South Korean small and medium-sized enterprises struggling to find successors.

Bialetti, which invented the moka pot in 1933, had net debt of 115 million euros at the end of 2024, roughly equivalent to a year's worth of revenue. The company was acquired in 2025 by Hong Kong investment firm NUO Capital, whose investors include Hong Kong's Pao family and descendants of the Hermès family.

Bialetti sought growth beyond the moka pot, piled up debt...and ended up in private equity hands

The moka pot, Bialetti's flagship product and icon.

Bialetti began as an aluminum workshop in 1919 and introduced the moka pot in 1933. After the war, the founder's son Renato turned it into a mass-market product that found its way into kitchens across Italy. Bialetti was the moka pot, and the moka pot was Bialetti. When the company listed on the Milan stock exchange in 2007, it reportedly held a 74% share of Italy's moka pot market.

But new competitors emerged. As convenient capsule coffee made inroads into the home market and sales declined, Bialetti looked for growth beyond the moka pot. It acquired cookware and small-appliance companies, secured factories in Türkiye and Romania, opened its own stores and entered the capsule coffee business. The expansion was financed with debt, but the low-margin businesses did not sell as well as the moka pot. Debt mounted, and the company had to seek a new owner.

Bialetti began withdrawing from the low-margin cookware business in 2019. The 2025 acquisition by NUO Capital was used to repay existing debt that was nearing maturity, and part of a factory that had produced cookware was converted into a coffee-roasting facility.

Having begun to focus on its core business, Bialetti is reintroducing the moka pot to younger generations. The once-silver pot now comes in Barbie pink, and the company has also released collaborations with Dolce & Gabbana and Netflix's "Bridgerton" and "Stranger Things." Revenue rose 11% last year to 166 million euros, and 2.5 million of the roughly 4.5 million moka pots sold were purchased overseas.

Good at inventing, but not at scaling up...in a country where 95% of businesses have fewer than 10 employees

Moka Pots Available in a Variety of Colors

Bialetti's chairman, Giuseppe Morici, appointed by NUO Capital, sees the company’s challenges as part of a broader issue. In an interview with the Financial Times (FT), he said, "Every 25 years or so, Italy comes up with a brilliant invention, but it fails to build companies capable of taking it to the world." Italy is known for many products, from pizza and furniture to coffee, he said, but "it has never really conquered the global market."

Data from the Organisation for Economic Co-operation and Development (OECD), cited by the FT, show that nearly 95% of Italian businesses have fewer than 10 employees, while just 0.1% have 250 or more. Small and micro businesses account for more than 62% of employment, a higher share than in France and Germany, where the figure is about 40%. Italian companies that grow into medium-sized or large businesses can match or outperform their French and German counterparts in productivity and exports, but relatively few make it to that stage.

Scholars interviewed by the FT said that the family-business model that helped Italy become Europe's second-largest manufacturing country after the war has reached its limits as the global economy has changed. According to Andrea Colli, a professor at Bocconi University, industrial-district businesses that have survived mostly have overseas operations and external managers. Alfredo De Massis, a professor at IMD Business School, said, "It's hard to scale up if decisions are made around the Sunday lunch table." In Italy, funding is also centered on bank loans and family wealth, with only 3.9% coming from stock-market financing.

Morici, however, said that "access to capital is not a fundamental constraint, since family wealth and banks have provided funding for a long time." He identified governance as the real problem. European companies have succeeded by adopting professional management structures while allowing families to retain control, he said. Germany's Miele has grown to more than 5 billion euros in revenue and over 20,000 employees while remaining under the control of its two founding families. Italy's Ferrero and Barilla have also become global companies through generational transitions.

670,000 South Korean SMEs have no successor...the path to selling is open, but major buyers are left out

The crisis Bialetti faced and the pressures shaking Italian manufacturing echo the challenges facing South Korean SMEs. In Italy, companies have remained small because families find it difficult to relinquish control. In South Korea, by contrast, the pool of people willing to take over businesses is shrinking.

A 2024 survey by the Ministry of SMEs and Startups found that the average age of SME business owners was 55, with 33.3% aged 60 or older. In manufacturing, the share of CEOs aged 60 or older rose from 14.1% in 2012 to 44.8% in 2024. Of the approximately 2.36 million SMEs led by CEOs aged 60 or older, an estimated 28.6%, or about 675,000, have no successor. More than 56,000 of these are in manufacturing, and 83% are located outside Seoul.

In December last year, the government said it would broaden support beyond family succession to include mergers and acquisitions (M&A), such as company sales, the recruitment of professional managers and succession by employees. This year's tax reform proposal includes a "third-party business succession tax incentive." If a controlling shareholder aged 60 or older who has run an SME or mid-sized company with revenue of less than 500 billion won for at least 20 years transfers the company to a third party, they will receive a 20% reduction in capital gains tax. The buyer will receive a 10% reduction in income tax and corporate tax, capped at 500 million won per year, for five years. The measure will be available for a limited three-year period starting in 2028. Eligible buyers must be a company or businessperson with at least 10 years of experience in the same industry, or an employee who has worked for the company for at least five years. Private equity funds, however, are excluded from the list of eligible buyers.

Investment banking (IB) industry insiders say the exclusion is disappointing. "Private equity funds have a range of advantages, including designing financial structures suited to each company's circumstances, creating value through additional M&A and making decisions quickly," an industry source said. "With succession and business continuity becoming issues for South Korean industry as a whole, it's disappointing that a viable option is not being considered because of negative perceptions of the private equity industry."

In practice, private equity funds are a popular choice among SMEs. According to an analysis by Samil PwC of M&A deals from 2021 to 2023, private equity funds were the buyers in 310 deals, or 64%, involving owners of mid-sized and small businesses. Private equity funds were also the most preferred counterparties when owners sold their companies, chosen in 48% of cases. Competitors in the same industry often lack the capacity to acquire a business because they face similar succession challenges, while employees who agree to take over usually lack the necessary funds.

Samil PwC said, "The three key objectives behind mid-sized and small business owners' consideration of M&A are growth, succession and realizing returns." It added, "Private equity funds play a flexible and strategic role at the heart of this process. In particular, partnering with PE can be an effective solution for mid-sized and small business owners, enabling them to achieve growth, succession and asset realization at the same time."

This content was produced with the assistance of AI translation services.