Italy’s Illycaffe sets five year target for U.S. expansion
Italy’s Illycaffe could reach its goal of opening 200 cafes in the United States within five years as part of a broader drive to expand its business outside its home market, Andrea Illy, the chairman of the premium coffee maker said.
The project – which would mark a significant expansion overseas for the Italian roaster – is conditional on finding an ally with deep knowledge of the U.S. market, sound experience in the high-end retail sector and no previous engagement in the coffee business, the entrepreneur said.
The group announced last week that it had picked Goldman Sachs as an adviser to find a partner for its retail expansion in a strategic market where it faces giants including Starbucks (SBUX.O). The group, which made its name as a coffee roaster, currently operates 23 cafes in North America, part of a network of nearly 220 illy-branded outlets outside Italy.
“Our target is reaching 200 illy-branded cafes in the United States,” Andrea Illy, the grand-son of founder Francesco Illy, said. “With an operating partner we can get there in five years at the latest,” he said.
The Illy family is considering the sale of a minority stake in the group for the first time in its 86-year history as a way to cement the planned partnership, he said.
“To align our goals with the ones of the prospective partner, we are ready to offer it a minority stake in illycaffe or, if it prefers, in our U.S. subsidiary,” Illy said.
The roaster, which is well-know around the world for its top-quality coffee blend made by nine varieties of Arabica beans, has always considered its independence a top priority.
Illy said that although the group was considering taking on board an investor from outside the founding family, it did not want to team up with a direct competitor.
“We don’t want to sign a partnership with one of our rivals in the coffee sector,” Illy said.
That would exclude as potential partners JAB holding, with which Illycaffe signed a licensing deal to produce and sell Nestle-compatible NESN.N coffee pods.
For Illycaffe, the U.S. market accounts for sales of nearly 100 million euros out of a total 483 million euros last year.
Massimo Della Ragione, co-head of Investment Banking for Goldman Sachs in Italy, said he was confident the bank would present a shortlist of potential partners for illycaffe by year-end.