Italy’s Illycaffe targets retail coffee market in US expansion

The Trieste-based firm has already changed its strategy, boosting at-home sales to 50% of the total

Men sit at an Illycaffe inside a shopping mall that has reopened, as the Covid-19 restrictions are eased, in Beirut. Reuters

Illycaffe, one of Italy’s largest coffee roasters, is changing its strategy to focus on boosting retail sales as it expands in the US.

The company, best known for premium coffee sold mainly in hotels, restaurants and cafes, will target consumers at home as the pandemic locked down cities from New York to Los Angeles, according to Chairman Andrea Illy.

The Trieste-based firm has already changed its strategy, boosting at-home sales to 50 per cent of the total, up from 40 per cent before the coronavirus hit.

Illy is looking to expand in the US after selling a minority stake to private equity group Rhone Capital, opening up capital for the family-owned roaster for the first time since 1933. The company is going through a generational change, with shares and voting rights being passed on to the fourth generation of the Illy family.

“It’s not so much about equity as it’s about strategy ... and we consider Rhone a strategic partner,” Mr Illy said.

“We really hope to fully benefit from their network of relations and expertise in the US market to accelerate growth.”

The company intends to grow in the US by investing more in digital marketing and tapping its partnership with online retailer Amazon.com.

The company is also looking at increasing its portfolio and the number of retail points where its coffee is sold. That’s all on top of the traditional subscription services Illy already offers through its own e-commerce channels.

Most of the growth will happen organically, Mr Illy said. While he said he doesn’t currently see opportunity to expand via acquisitions, he doesn’t rule it out either as its new American partners may open doors to fresh opportunities.

He declined to comment on the exact size of the stake but said it wasn’t “far off” the level of about 20 per cent reported by Italian newspapers.

“I don’t see at the moment, but I may be underestimating some opportunities that I don’t know of,” he said.

“This will be part of the possible synergies and benefits of having an American partner like Rhone. It might open up some opportunities we don’t see at the moment.”