illy cafe in China - food tech news in Asia

illy caffe S.p.A, the Italian coffee company has agreed to sell a 20% stake to the global private equity firm Rhone Capital for 200 million Euros (US$ 238 million). Under the partnership with Rhone Capital, illy caffe leads the company into its next phase of international growth.

illy caffe was founded in 1933 in Italy by Francesco Illy (inventor of the modern espresso machine). Today the brand is led by the family’s third generation. illy’s revenue was 521 million Euros (US$619 million) in 2019, of which online sales increased by double digits year-on-year and the brand’s presence has been spread to more than 140 countries around the world.

illy entered the Chinese market almost at the same time as Starbucks. However, compared with other coffee chains, such as Starbucks and Costa, illy seems to be not so popular in China. The main reason is that illy is actually an industrial brand and mainly focuses on the B2B market, providing coffee-making materials including coffee beans, coffee powder, and coffee machines for high-end hotels, catering brands, and coffee shops. By the end of 2018, illy had only 170 coffee shops in more than 30 countries around the world.

However, with the rapid development of China’s coffee market and the change of consumers’ consumption habits, 87-year-old illy has already started its transformation, gradually focusing on the B2C market in China. The offline concept store in China was opened in Shanghai in 2019, compared with a simple offline coffee shop, it is more like an internet-famous shop with coffee culture. At present, illy has 6 coffee shops located in Beijing, Shanghai, Hangzhou, and other cities in China. The real transition from the B2B market to the B2C market depends largely on the e-commerce platform. illy has nearly 430,000 followers on its Tmall flagship store.

In our previous news, we have mentioned that Canadian coffee giant Tim Hortons raised a new round of funding in China for further expansion. China has always been a market that illy attaches importance to. “The growth of Chinese coffee market benefits from the millennials. illy will also continue investing in the Chinese market, bring authentic Italian coffee culture to China, and provide Chinese consumers with traditional-Italian style taste, discovery, and social communication,” said Mr. Andrea illy (the chairman of illy caffe) in a latest interview.

illy cafe in China - food tech news in Asia
illy Cafe was focusing in China on the B2B segment; the huge increase in coffee consumption in China, made the brand change its strategy and start focusing on the consumers’ market as well.
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