Italian coffee maker Illycaff eyes expansion in US

MILAN Reuters -- Italian premium coffee maker Illycaff, reported a 16% increase in operating profit last year despite cost inflation, wants to expand in the United States, already its second biggest market after Italy.

The Chief Executive Cristina Scocchia told Reuters that they wanted to grow further, with another double digit increase. North America is responsible for a fifth of the Italian group's revenues and reported a 27% increase in sales last year.

Scocchia said in a telephone interview that they wanted to increase brand awareness, make distribution more widespread and reach more consumers.

Scocchia did not rule out an acquisition if an opportunity arises in North America, but the growth in North America is expected to be organic. She said the company was looking at growing in the Chinese market, where it sells its products mainly online.

The Illycaffe CEO said the family-owned group was still planning to go public by the year 2026. In 2021, the Illy family sold a 20% stake in the business to private equity firm Rhone Capital.

Scocchia, who previously worked as CEO of the cosmetics company Kiko and head of L'Oreal Italy, was named Chief Executive at the beginning of 2022 with a mandate to take the company public.

Illycaff reported a 14% increase in revenues to 568 million euros $615 million last year. Operating profit went up to 71.4 million euros despite a 43 million euro increase in costs, which is mainly linked to increased prices for raw coffee beans, energy and logistics.

Illycaffe increased prices by around 3% last year, and another 3% increase is planned for 2023 to partially offset the higher costs.

Inflation weighed on the shopping cart, leading families to reduce purchases of premium quality products, but we still closed the year with the highest result in the last 10 years, Scocchia said.

Scocchia expects to see an increase in revenues and profitability this year, but sales growth could be slower than last year.

The group plans to invest 270 million euro in investments by the year 2026, with 120 million euro earmarked for expansion of its plant in Trieste in northeast Italy, which will double its production capacity.