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Illycaffè Open To New Investors But Family Will Keep Control: CEO

By Dayeeta Das
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Illycaffè Open To New Investors But Family Will Keep Control: CEO

Premium coffee maker Illycaffè may bring new investors on board in the medium term, but the founding family wants to keep control of the business, CEO Massimiliano Pogliani has said.

The Italian company, which was founded 86 years by Francesco Illy, has rebuffed overtures from bigger rivals looking to buy the brand, its Chairman Andrea Illy said last year.

In October 2018, Illycaffè signed a licensing deal with conglomerate JAB Holding to produce and sell Illy-branded coffee pods that work in rival Nestlé's Nespresso machines.

But the Illys stopped short of giving JAB - the holding company of Germany's Reimann family and owner of other coffee companies including Jacob Douwe Egberts and Keurig Dr. Pepper - a stake in the group.

'Illycaffè Is Not Up For Sale'

"Illycaffè is not up for sale," Pogliani said when asked whether JAB could become a shareholder in future, adding the Reimanns would probably not be satisfied with a minority stake.

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The Illy family, however, could bring in investors to speed up a plan laid out in 2016 to double revenue in 10 years, Pogliani added.

"If an acceleration is needed a new partner could be let in," Pogliani said, adding current shareholders would have a final say on such a decision and would prefer investors with a long-term horizon.

Illycaffè has no plans to grow through acquisitions, he said.

"The family wants to keep control of the business," he said, speaking at an event to present the new Nespresso-compatible coffee pods produced with JAB.

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Starting from April, JAB will sell the Illy-branded pods through its distribution network in European countries like France, Germany and Spain. Illycaffè will sell Nespresso-compatible pods in Italy, adding the new product to its own capsule system.

Fastest-Growing Business

Capsules are the fastest-growing business in the coffee sector, Pogliani said, adding sales of Illy pods were rising at a double-digit rate.

The medium-sized company is Italy's third-biggest coffee maker with sales of around 500 million euros ($568.15 million).

Larger rival Lavazza introduced Nespresso-compatible pods in 2017 as the standard created by Nestle became the most popular in Europe, forcing other coffee companies to embrace it.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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