Italian premium coffee group illycaffè plans to open its first mainland outlet in Beijing in time for the Olympic Games in August next year, according to chairman and chief executive Andrea Illy. Interview to Mr. Illy talking about the Asian coffee market scenario. (See also Il Sole 24 Ore July 7th).
Italian premium coffee group illycaffè plans to open its first mainland outlet in Beijing in time for the Olympic Games in August next year, according to chairman and chief executive Andrea Illy.
"Of course the Beijing Olympics is a world-class event and China is the world's most populated country. We would like to be there," said Mr Illy, a grandson of the company's founder.
The Beijing plan follows Friday's launch of a joint venture with mainland fast-food chain Café de Coral Holdings to set up 30 shops in Hong Kong and Macau in the next five years.
Mr Illy said Café de Coral, which would have 70 per cent of the venture, was a good partner but he was not sure it they would team up for the mainland market.
Illy has been selling its own blended coffee to upmarket restaurants and hotels since 1933. In 2003, it launched the "espressamente illy" coffee shop globally by issuing licences and now has 150 outlets in 19 countries.
In Asia, it has a presence in Japan, and last week also signed an agreement to set up in South Korea.
"In Italy, we have one coffee bar for every 400 citizens. There is very strong coffee consumption culture and I believe the same trend will develop here in Asia where it only started about 10 years ago. Some metropolitan cities like Hong Kong are ready for premium cafe bars," Mr Illy said.
He is not worried about competition from Starbucks - the US chain operated by Maxim's in Hong Kong, or the homegrown Pacific Coffee. He said they were coffee retailers, while illycaffè was a coffee specialist, offering more coffee products - from the recent launch of coffee shops to its core business of selling coffee to hotels such as the Mandarin Oriental and Grand Hyatt and to restaurant chains. It also offers coffee-making machines and trains coffee farmers on how to improve their methods.
Illy founded the University of Coffee in its hometown of Trieste to train farmers and coffee shop managers worldwide and conduct research. More than 1,000 farmers do the course every year with the incentive that illycaffè will pay a 30 per cent premium for their beans if they pass the course and go on to improve their product.
"We are not just selling a cup of coffee. We have a mission to preserve all aspects of the heritage of the coffee culture," Mr Illy said.
"We do not just focus on bottom lines. We want farmers to have a good living and produce a good product, so that consumers can enjoy a good cup of coffee."
The high standards mean a high price - illy coffee is at least 50 per cent more expensive than mass market brands. But that has not deterred customers, with the company making a profit of {euro}10.6 million (HK$112.9 million) last year. Mr Illy expected the group's turnover to reach US$370 million this year.
Mr Illy, who joined the company in 1990, said there were no plans to take the company public.
"We want to ensure the growers earn a fair profit and we want to spend a lot on the training and research. If we are a listed company, we may be forced to keep an eye on profits and may not be totally free to do whatever we like," he said.