The owners of illycafe want to grow its non-coffee business and are looking to bring in a partner such as a private equity fund by the end of 2019, offering to sell up to 40 percent of the non-coffee business, reports Reuters. Riccardo Illy left the main coffee business two years ago to lead a diversification into wine, tea, and chocolate, which would help reduce the family's reliance on the highly competitive coffee business.
Illy believes that with some acquisitions and "a lot of luck," the non-coffee business could reach the level of illycafe, which has annual sales of nearly $530 million. Illy has been in talks with private equity funds and investment banks, and received interest from Italy, Britain, and France. However, he must first incorporate the non-coffee business into a single subsidiary. The restructuring would take effect in June 2019.
As for non-coffee growth plans, the Illy group plans to start with its France-based tea brand, Dammann Freres, which could be listed within two to three years in Paris. The Italian chocolate business Domori would follow next. Combined, the two brands accounted for 80 percent of Illy's total non-coffee sales in 2017. Illy is also in final-stage talks to acquire a foreign truffle producer, which has sales equal to about half of the Domori chocolate business. He then plans to reinvest cash flows from tea and chocolate into wine, with a focus on high-end Italian wines. The company is looking for a winery or vineyards to be acquired in 2019, according to the report. Full Story
Related: Illy Teams With Mondelez; Illycaffee Approached for Acquisition by JAB, Nestle.
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