Illy hires Roland Berger to manage expansion plans

19 August 2015 Consultancy.uk

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.

Illy hires Roland Berger to manage expansion plans

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.

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Women remain underrepresented in UK's hospitality industry leadership

12 April 2019 Consultancy.uk

Female engagement at the top level of the UK hospitality industry is still lagging, with the vast majority of decision-making roles continue to be held by men. Only 7% of the industry’s FTSE 350 CEOs are women; however, the pay gap in hospitality and leisure is far better than in other industries, at a median of approximately 7%.

The hospitality, travel and leisure (HTL) sector is one of the UK’s largest employers, with 3.2 million people working in its segments. Despite a poor 2018 in terms of tightening consumer spending, the industry is still one of the top sectors in terms of economic activity, hitting £130 billion last year – besting the UK’s automotive, pharmaceutical and aeronautical sectors’ combined activities.

While the industry is one of the country’s largest employers, it still faces considerable issues around diversity at the top. New analysis from PwC has explored the matter, as well what initiatives the industry has engaged to open up its top ranks to a more diverse background.

Female representation at board level for UK companies and HTLs

According to a survey of CEOs, Chairs or HR Directors of over 100 of the most significant leisure businesses across the UK, the hospitality industry has a relatively male-dominated top level. This lags behind the FTSE 100, where companies have female board level representation at 32.2%. Meanwhile, the figure for the combined executive committee and direct reports stands at 28%. This is well above FTSE 250 levels, where female board level representation stands at 22.4% and executive committee & direct reports stand at 27.8%.

For the hospitality industry as a whole, board level representation came in at 23.6%, with FTSE 350 for the industry performing slightly better at 25.1%, while non-listed companies performed considerably worse at 18.2%. The firm notes that the figures hide that while some companies are making strides to improve equality, others are not moving forward – with the positive result reflecting more often the good work of some, while others are not taking the issue seriously in their agenda setting.

Blind spot

The study states, however, that while the overall numbers are relatively strong, the industry has a number of acute weaknesses. These include CEO numbers, with only 7% of HTL FTSE 350 companies helmed by women and 11% of non-listed companies led by female CEOs. Meanwhile, female chairs at FTSE 350 companies for the sector stand at zero. In terms of wider diversity representation, only 1 in 33 leaders at industry companies is from a BAME background.

Pay gap for HTL and hospitality

The report noted discrepancies between FTSE 100 companies and FTSE 250 in terms of improving the number of women at executive level. The majority have met the Hampton-Alexander Review target of 33% women at board level, up from around 25% in 2016. However, the remaining ~40% are not on target, and are unlikely to meet the target by 2020. A similar trend is noted when it comes to executive committee and direct reporting numbers.

Jon Terry, Diversity & Inclusion Consulting Leader at PwC, said, "To make real progress in diversity and inclusion, businesses need to elevate it onto the CEO’s agenda and align diversity & inclusion strategy to the fundamentals of the business."

Tracking progress FTSE 250 level

However, one area where hospitality travel and leisure companies are outperforming other companies in the wider UK economy, is the mean and median pay gap between men and women. PwC found that the median of the wider UK economy comes is approximately 14% – with upper quartile companies noted for a gap of low 20%, and lower quartile companies noted for differences of around 2%.

The median pay gap for HTL comes in at well below 7%, with the median close to parity. There are considerable differences, however, with hospitality at 7%, while travel comes in considerably higher, at 22%. The latter figure reflects fewer women in higher paid pilot and technical positions within the industry.