Starbucks breaks into the Italian market with an unprecedented commercial and image operation. Shortly before, the agreement with Nestlé, followed in turn by the deal between Coca-Cola and the historic English brand Costa. But in a sector, that of coffee, which has never been so lively and full of innovations, the response of Illy, the historic Made in Italy brand, will not be long in coming. Riccardo Illy, president of the holding company that controls a small agri-food empire, anticipates it to FIRSTonline, on the occasion of The European House Ambrosetti Forum in Cernobbio: in addition to coffee, tea, chocolate, wine and jams: "With Agrimontana jams we have made a dream come true of my grandfather, who had fruit tree plantations in Istria, but after the war Istria became Yugoslav territory”. Next steps: internationalization and listing on the Stock Exchange. But not for the coffee.
President Illy, Starbucks has recently signed an agreement with Nestlé for the distribution of its products and has just landed in Italy with a megastore in Milan; in the meantime Coca Cola has also entered the risk of coffee by acquiring the Costa brand. What is happening in the coffee market and how will Illy respond?
“The competitive scenario is changing in a sector, that of coffee, which has been essentially static for several decades. We will obviously have to react and we are already getting organised, but I can't say more".
However, you don't just deal with coffee: you are president of the holding company that owns a small agri-food empire: from tea to chocolate, from wine to jam. They are all "return" businesses, because Illy was not born only as a coffee company.
“Yes, the company sold tea and chocolate when it was founded. Agriculture in general is back, because we had farmland. As far as fruit is concerned, we have, so to speak, made a dream of my grandfather come true, who had fruit tree plantations in Istria in the 30s. After the war, Istria passed to Yugoslavia and therefore was never able to start that activity”.
How does this so-to-speak minor activity grow, which you define as the "sisters" of coffee? Will Illy forever remain a brand associated with coffee or can a different future be imagined?
“Illy will always be synonymous with coffee, in fact we have diversified with independent brands, which have kept their name. I am convinced that in today's market each brand must represent a single product: in the minds of consumers there is no space to superimpose products, they would lose their recognition. As for the results of Domori chocolates, Dammann tea, Mastrojanni wine and Agrimontana jams, they were good in 2017 and in 2018 we expect them to be even better, with general growth and also for each individual brand".
Are other acquisitions planned, again in the agri-food sector?
“Yes, the goal is always to grow, to think in terms of development and expansion. And, of course, always in the agri-food sector. We also want to make the brands we already own grow as much as possible: Illy Caffè is present in 145 countries around the world, and we would like to bring the other companies into global operation as well, which for now have a smaller market".
Of all the countries where you are present, i.e. practically all over the world, which are the markets where Illy Caffè is most popular?
“Besides Italy, I would say the USA and Greece. We arrived in Greece about twenty years ago and found a very open market, practically a highway. At the time, only freeze-dried coffee was served in the Hellenic country and we arrived with all the products that we also sell in Italy, for bars but also in supermarkets for domestic use, enjoying great success. It is the country where we have the highest market share”.
Is the Stock Exchange a Hypothesis?
“Not for Illy Caffè, but for the other brands, yes. We are about to launch a ten-year project which between 2020 and 2030 will bring all the minor companies to the stock exchange. It is an innovative path: by 2020 we will create a sub-holding, with a financial partner who will provide resources and know-how to make them grow and make them ready for listing. The money that the companies will then derive from the market will be used to subsequently liquidate the financial partner".
Do we already know who could be the financial partner and the first company to land on the stock market?
“The financial partner will be decided by 2020, while the first company listed on the Paris Stock Exchange as a French brand should be Dammann. We expect it to be ready for the stock market in 4-5 years. Besides Illy Caffè, Damman is the company with the highest turnover, 34 million a year. The smallest is instead the Mastrojanni winery, which currently earns two million but which through acquisitions we would like to bring to a turnover of at least 5 million, already sufficient for a market such as AIM Italia in Piazza Affari”.
Let's go beyond the Illy group: how do you judge the current state of industrial policies in Italy?
“Some interventions by the previous government, such as Industry 4.0, have produced excellent results. In the new executive, on the other hand, I see a lack of sensitivity for economic issues and in particular for industrial ones. Indeed, in the statements of some exponents of the majority I notice a clear anti-industrial attitude, and this is worrying”.
What measures would you suggest, as an entrepreneur and former politician?
“Industry 4.0 needs to be refinanced and also developed, to follow the technological changes that have already taken place since it was approved. Technology runs very fast and imposes updated and articulated measures. It is important that all measures are erga omnes, i.e. useful for all businesses, and not just for some sectors, as was the case in the past. Simplification is also fundamental. Simplifying is very difficult, but I'm relaunching an old proposal of mine: abolish ten laws for each new one made and prepare ten consolidated texts on the most important economic subjects, from work to taxation, to environmental sustainability. In collaboration with ten public universities”.
Simplification would also help to increase foreign investment, which instead seems to be slowing down more and more. As an entrepreneur, do you really have the feeling that Italy is becoming an increasingly less attractive country?
“Not yet, but we are under observation. The international markets have not yet understood the real intentions of the new government, the budget maneuver will be decisive”.
Dignity Decree: passed or rejected?
“It was just a small tweak, but a bad one for business. It won't do any harm, but it's definitely going in the wrong direction."
And what do you think about the flat tax?
“First of all, it is unconstitutional. It could be made constitutional with a complicated system of compensations, which however would penalize the issue of simplification. Secondly, the rich would benefit most of all. Does the government say they will spend more, boosting consumption? I don't believe in it, rather savings or the purchase of real estate will increase. Finally, it is a totally inconsistent measure with the basic income. How do you redistribute from the rich to the poor, if you decide to take less from the rich?”.
Mah ..