Illy looking for partner to expand bar network

Illycaffè is looking to expand by opening more of its own coffee bars. To that end, the Italian coffee manufacturer is looking for a partner with retail experience. This could spell good news for Nestlé or Douwe Egberts, both of which have had their eye on their Italian competitor for some time.

Faster expansion for coffee bars

After some rather indignant reactions to rumours of a takeover, the Illy family has changed course: they have now opened themselves up to outside influences, as the company would like to expand into retail with the help of a strategic partner. For the first time in its history spanning 86 years, the board has considered selling a minority interest, CEO Andrea Illy told Reuters.

The premium coffee brand is especially interested in opening more of its own coffee bars, both in the domestic market of Italy and abroad. The biggest potential lies in the United States, Illy believes. Today, Illycaffè owns 219 of its own bars outside of Italy, 23 of which are located in North America. All in all, the Italians have been quite conservative in their approach to expansion so far, opening about twenty outlets per year. Now, Andrea Illy feels it is time to speed things up – if the company can find the right companion, that is. This ‘fellow traveller’ would have to be highly experienced in retail and preferably also in the American market.

Willing to open up capital

“We are bombarded with proposals from investors and banks”, the CEO told Reuters. “If the right partner shows up we could even open up our capital to let them get a return on their investment.” In other words, a partner could buy his way in, even if Illy is only talking about a small portion.

The Italian is still playing hard to get, refusing to consider private equity players and competitors. That would close the door for Nestlé and Douwe Egberts owner JAB, both of which have expressed interest in acquiring Illy last year. The CEO refused their advances however, calling them inappropriate.

 In 2018, Illycaffè generated a turnover of 83 million euros, a 5 % increase, not counting currency effects. Corrected profits increased by 10.7 %, reaching 75.3 million euros.