Illycaffè chief is a stickler for high standards with no time for Fairtrade – and he'll retrain any barista who doesn't measure up.
Andrea Illy is a perfectionist, and not just about the premium Italian coffee his family have been producing for three generations. We’ve barely had time to scan the menu at Locanda Locatelli, a Michelin-starred Italian restaurant in Marylebone, London, and he already has a list of issues to raise with Giorgio Locatelli, the owner and head chef.
At the top of the list is its promotion on Ferrari sparkling wine. “If you want to get a price deal, you go to McDonald’s, you don’t come here,” says the 47-year-old chief executive of Illycaffè. “A price deal on a luxury product is a contradiction.”
If he had his way, Illycaffè, which supplies coffee to the world’s best bars and restaurants, would never offer any promotions. “This is a very delicate point. If it was up to me there would be zero. But there are commercial people and they need to make deals.”
Illycaffè only offers promotions to loyal customers or those buying in big volumes, he says. “But pure price reduction is damaging to the brand.”
Illy doesn’t care if his competitors undercut him on price. He says Illycaffè, which also sells ground coffee in supermarkets and ready-to-drink coffee in partnership with Coca-Cola, is selling more than just coffee. “It is a sensorial experience,” he says.
“The consumer is really prepared to pay a premium for a good product,” he says. “Many of our customers charge more for a high-quality product like Illy.”
If consumers do not want to pay Illy’s prices, which can be twice as high as own-label coffee, they’re probably not in shops where he wants to sell his coffee. His strategy is to seek out only the “best places” where his “brand is presented in the best possible way”.
If restaurants and bars don’t match up to his exacting standards he won’t let them sell Illy. He says he’s “not authorised” to name names of establishments he’s turned down, but “oh yes” he turns a lot of places down.
“Typically, they’re fast food chains; they are not in our range,” he says. “It’s principle.”
Restaurants can also lose the right to sell Illy if their baristas do not serve espressos in the “Illy way” — the method formulated by his grandfather Francesco Illy when he founded the company in the 1933.
He says preparation is half the battle when it comes to Illy coffee’s renowned flavour, and a badly made coffee can severely undermine the brand. “Unfortunately if the preparation is wrong it can become difficult. Preparation contributes 50% of the taste, even if the preparation is marginally wrong it can alter the taste,” he says.
If a restaurant makes consistently bad coffee, Illy will send staff for remedial training at the company’s university of coffee, which has trained more than 6,000 people ranging from coffee growers in Africa to baristas in Mayfair.
“We would train them, and we would retrain them. We would also help them get the right equipment if they don’t have it,” he says. “But if we see that there is no commitment we would definitely stop serving them.”
Again, he won’t name any restaurants that have been stripped of their Illy contract, nor will he say how regularly it happens.
Illy, a chemist who began working for the family firm as a tester in the quality control department, prefers to talk about the three core principles that he says ensure Illy coffee is the best in the world. He relaxes considerably as he begins a 20-minute spiel describing Illy coffee’s journey from bean to espresso cup.
The company has a team of 14 agronomists who scour the world for farms that produce the best beans. Illy says he is looking for “coffee heavens” that have the most favourable agricultural conditions to grow the best coffee but also “the human factor of people willing to invest in quality”. The company uses Arabica beans from 40 different coffee-producing regions in 17 countries. Illy personally visits at least two farms a year.
In order to ensure Illy gets the best beans the company pays a 30% premium above the market price. In return, the farmer has to meet Illy’s agricultural, environmental and social standards. It’s a similar principle to Fairtrade, but Illy is at war with the Fairtrade Foundation, which he says forces up the price of standard coffee which isn’t good enough to warrant a premium price.
“Our doctrine is that we will pay more for better quality [because] we will be able to charge the customer more,” he says. “[Fairtrade] is about paying a higher price for the same goods. That is against the laws of supply and demand.”
Illy, who has worked in the family firm his whole life, says consumers pay more for Fairtrade because they “want to feel good”. “It’s about solidarity not quality. Why not give to the Red Cross?”
He says Fairtrade, which requires farmers to pay thousands of pounds to become certified, is a “fad” that will die out and will not solve any of the problems faced by growers. He says farmers complain there is too much Fairtrade coffee on the market, which makes it hard for them to find buyers.
Illy concedes that farmers collect a very small portion of the price consumers pay for their coffee, but says Fairtrade is not the way to address the imbalance. After what seems like an interminably long pause he says farmers collect “20% or less” of the price Illy’s bulk customers pay for their coffee. He says farmers get less than 5% of the £5.89 consumers pay for a 250g tub of Illycaffe espresso mix in supermarkets. And the grower will get just a fraction of 1% from your £1.50 espresso fix .
The low prices achieved by the farmer comes despite the coffee price more than trebling from 80p a pound to £2.50 over the last few years. Illy says the increase is down to speculators betting on the price and disrupting the market. Farmers have seen their income increase by only 10-15%, he says.
As the waiter comes over to take our dessert order Illy suddenly becomes transfixed by his champagne flute. “You see why they need to do price deals?” he says holding up his glass that has got a distinct kink in the stem. “I will report it,” he says getting out his iPhone to take a picture of the offending glass.
Minutes later Locatelli himself appears at our table and Illy rattles off his niggles about the wine in rapid-fire Italian. Apparently the Ferrari 2005, which has been reduced from £120 to £60 a bottle, is on offer because British customers don’t consider ordering sparkling wines that aren’t champagne. The explanation doesn’t satisfy Illy, who says he would rather offer customers a free sample to drum up interest rather than slash the price.
Next up is Locatelli’s toughest test: it’s time for the espressos. “Fantastic,” Illy declares as he orders another.
Born 2 September 1964
Family Married with three daughters
Education Liceo Scientifico, Trieste; degree in chemistry, University of Trieste; masters, SDA Bocconi, Milan. Author of two books on the science of how to make the best coffee.
Career He joined Illy’s quality control department in 1990, and took over the CEO role from his father in 1994
Hobbies Hiking, biking, sailing, skiing: “I like spending time in the open air, whatever involves nature”
Lives Trieste, with a holiday home in the mountains for skiing and hiking