In a Bloomberg Businessweek European Leadership Forum interview, Andrea Illy, chairman and CEO of Illy Caffè, discusses the company’s multi‑generational family heritage, its scientific and quality‑driven approach, and its position in the global coffee market. He explains how Illy’s focus on chemistry and intellectual property has produced a single‑blend product that aims to be the best coffee in the world. Illy competes in a niche gourmet segment, differentiating itself from mass‑market chains like Starbucks and Nespresso through a unique blend, consistent taste, and an emphasis on beauty and experience. The brand is globally present in over 140 countries across hospitality, retail, office, and on‑the‑go channels, notably through a joint venture with Coca‑Cola (Ilco Coffee International) that sells the ready‑to‑drink Illyissimo. Illy targets coffee connoisseurs, cultural travelers, and elite foodies. Growth opportunities lie in emerging markets (BRICS) and mature markets driven by higher quality demand and health benefits linked to antioxidants such as chlorogenic acids and melanoidins. Illy’s revenues are about €300 million, ranking around 14‑15 worldwide, with sales split roughly 50/50 between Italy and the rest of the world. The company remains privately owned, self‑financing, and not for sale, and it proved resilient during the 2008‑09 financial crisis, with coffee consumption staying stable despite retail challenges.
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TranscriptAuto-generated · 12 min
In the great coffee wars of today, who has the better chance of winning? The big chains or the sprightly independents? I'm joined here in London at the Bloomberg Businessweek European Leadership Forum by Andrea Illy. He is the chairman and CEO of Illy Coffee. Welcome to INSEAD Knowledge. So there really is a person behind the Illy name?
There are— there is a whole family. Not only myself, but first of all, the founder, my grandfather Francesco, who founded the company 77 years ago. My father, who was a great innovator as well. And now myself, along with my brother and sisters, my mother, and the future generation also entering in the company. I'm a second-generation chemist. My father was a chemist as well. We are making a lot of research in the coffee industry. We are number 3 worldwide in terms of intellectual property rights.
Really?
And out of 8 radical innovations in the, in the sector, 3 came out of Illy. So we invest a lot. This is why chemistry is a good discipline, or was at least a good discipline for me, in order to have a better understanding
Did you go into chemistry because your father?
Yes. No, because of the company. Because they— since my grandfather created the company, he founded it, his vision was to do the best coffee in the world and sell it in the entire world. So if you talk about quality in coffee, which is a very complex product because you— You have all the agronomical aspects, which, like, very much like in wine and majority of other agricultural products, puts together the genetic characteristics of the plant, the cultivar, along with the ecological niche of the terroir. And this is a unique blend that will be well understood in order to get the best beans. This is only the very first step, which requires a lot of biology and agronomy to understand. The second step is about all the industrial process, the roasting and the packaging, which is another black box. Mm-hmm. Because, for instance, in coffee, the green coffee, there are only the aroma precursors, only 200 aroma precursors of the final coffee flavors, which are more than 1,000. And have nothing to do with the aroma precursors. So you have during roasted— roasting a total transformation of the coffee from the raw to the finished product, which is very unique.
Are there any plans to go public to get more money to grow the company?
Not if it is not necessary. That means that Illy Caffè has a self-financing, developing business model because the very first priority is to be able to source the high-quality beans we are looking for. In order to do that, we need to train and educate the coffee grower how to constantly raise the quality level, and this is a long process.
How do you compete in this market that's full of companies like Starbucks or Nespresso, full of gimmicks and different flavors?
We are definitely in a market niche. We contributed to create this niche of gourmet coffee. As a matter of fact, My father was the first to really have this obsession for quality and literally shaping the company around this concept of quality. And we were alone in this commoditized coffee world for many, many decades. And then suddenly some competition started in the so-called gourmet coffee industry, espresso, now portioned system, and so on.
Whom do you consider your competition?
We are in an area of uniqueness. Marketers used to say until 10 years ago that either you differentiate or you die. Now, either you are unique or you die. So the, the really, the job of the strategies is to find the positioning and the business model which is unique in the market. Otherwise, if you have a the bad honor to compete with one of the specific of your competitors, you only lose value instead of creating. So our job is to delight the consumer all over the world with the best quality we can create from the nature, enhancing it with the best technology, and also with the search of beauty in all, in everything we do, in order to create a more experiential And an authentic experience. And we do this with only one blend. We are the sole roaster in the world having only one product. So one brand, one taste.
What makes your coffee unique?
First of all, the fact that it is unique, that it is a blend which gives us more complexity from the organoleptic standpoint, flavor and taste. More balance and more consistency. The fact that this blend has been shaped and designed in order to be the best coffee in the world, this is at least, this is our effort. It's not my job to, to say whether it is true or not, if it is your perception. But our effort is to do the best coffee in the world, definitely, and unique.
Who are your target customers?
Coffee connoisseurs, coffee lovers, all people which— who have a stay— pleasure and love for beauty and for quality usually are elite people with a— foodies, global citizens, international travelers with quite a strong interest for culture and arts.
Now, you— your brand is available internationally.
Absolutely. Illy is a global brand. It is present in more than 140 countries in 4 channels: in the hospitality, bar, cafes, restaurants, and hotels; at home through both the retail also and online; And also in the offices, the workplace, and finally on the go, thanks to the joint ventures that we have with Coca-Cola Company, where we are distributing the Illyissimo ready-to-drink coffee, which is the same blend ready to drink.
Do you have other partnerships? Anything else in mind?
No, this is the main partnership that Illy has with the Coca-Cola Company. It is a joint venture. Named Ilco Coffee International, based in Milan. And this joint venture was set up 3 years ago in order to produce and sell globally the Illyissimo, which is the product made with the Illy blend ready to drink. This is packaged in coffee, so pure coffee packages, or cappuccino and latte, so milk-based coffee recipes.
And this, I imagine, is a revenue producer for you.
It's an investment, of course, because it's the startup of the business. So it will be a very positive revenue-generating business.
What about attracting new customers as well? Do you think you're getting new customers?
It is very interesting from this standpoint because this product is not only creating a new consumption occasion, which is mainly on the go, but also outdoor activities. So, on the go every day, on commuting in the urban life, and the outdoor activities mainly for the weekend, which is— are occasions where the coffee is not proximal.
Where do you see growth opportunities for your brand? I'm speaking geographically, in terms of sector, demographically.
Growth opportunities are, first of all, in the emerging countries, consuming countries— Asia, South America like Brazil, China, India, Russia. So the famous BRICS are definitely contributing to the overall coffee consumption. I expect also that could be bigger growth opportunity also in the mature coffee countries for 2 reasons. Better quality. Better quality means more pleasure and also less caffeine, because the better the quality, the less the caffeine. So people can drink more cups per day. But also the very positive impact of coffee on human health, which is There is more and more scientific consensus about the many positive aspects.
What kinds of positive aspects?
Recent discovery made clear that coffee is a terrific contributor in terms of antioxidants, thanks to 2 main categories of molecules, which are the so-called chlorogenic acids, which coffee is very rich with, and also the so-called melanoidins, which are these product are responsible for the brown color of coffee. These are very powerful antioxidants combined together. And they contribute to up to 60%, 70% of the total antioxidant intake in the, let's say, Western countries' diet.
How has the recession impacted your business?
There was initially, between 2008 and 2009, more retail problems with the trade. Due to destocking or this kind of problems, turmoil due to the financial crisis, but the coffee consumption remained pretty much stable. It is true that the International Coffee Organization declares a -0.5% consumption versus the year before. It's maybe true, Also because due to some out-of-home consumption reduction in the beginning of 2009.
I know you're a private company, but can you give me some idea of where Illy fits in size-wise, revenues, sales?
Illy Caffè's revenues are around €300 million, which is quite small proportionally to the, the size of the coffee sector, but in terms of ranking, worldwide ranking, I think we are around number 14 or 15 in the global ranking. So that means that— and the sales are more or less 50/50 Italy and the rest of the world.
So Italy is your primary customer?
Italy is the primary customer.
Has anyone Tried to buy Illy, made you an offer, knocked on the door and said, here's a check.
Oh, they try all the time. It's not they didn't try, but we are not for sale and everybody knows that. We are really protecting the heritage and the name of the brand and of the company.
Andrea Illy, thank you very much for being with us on Inside Knowledge.
