Coffee company Illy has hired Roland Berger to manage an expansion strategy as it aims to grow further into the premium hospitality industry, as well as move into the home coffee product range. To finance its expansion the firm has opted against an IPO that would contradict its long term strategy, instead opting to raise the required capital through the sale of €70 million in bonds, with the potential for a further €70 million if required.
Illy is a coffee company that was founded in Italy in 1933. The business has remained in the hands of the family of its founder Francesco Illy developing the modern espresso machine. Today, in the third generation of the Illy family, the business is a producer of a wide range of coffee and coffee related products and services. The family business has expanded its activity into 140 countries around the world, where it serves up its nine Arabica blended beans coffee. The company employs more than 800 and had a gross revenue of €373.9 million in 2013.
The company has, in its almost 100 years, grown to become a worldwide name in coffee. However, competition in the coffee market and recent consolidations have seen the company seek out professional advice about securing its long term strategy of staying a family business and joining the prestigious Henokiens Association. The current leaders of the company, President and CEO Andrea Illy, his brother and Vice President Riccardo Illy, and his sister Anna Illy, hired Roland Berger to help them formulate and implement the strategy required to reach their long term goal.
The goal in the short and medium term for the business is to further its market position, with the business looking to expand its market share in the premium hospitality industry as well as moving into the home coffee product range, which has historically been dominated by Nestlé’s Nespresso branded products. As it stands, the business has revenues of €391 million, up 4.5% on 2013. With its medium term strategic plan, the business is seeking to double that revenue to more than €600 million over the coming decade and opening 600 new sales points around the world.
To finance its expansion and long term strategy, Roland Berger is tasked with developing a number of strategic moves Illy could use to gain access to the capital required for further expanding its coffee business. Rumours about the possibility of an IPO, which would have scuttled the family owned businesses long term plan, have been put to rest. Instead, the business raised €70 million through the sale of bonds, with the option of selling €70 million more if expansion plans require. “We are a family business and we have two things to protect. One is the dream of the founder to offer the greatest coffee in the world and the other is our family name. This requires a long-term vision and cannot be achieved with quarterly results,” says Andrea Illy.