Illycaffè was founded in 1933 in Trieste by Francesco Illy.
While illycaffè originated in Italy, its presence has expanded to many countries around the world, including South Africa. Illy's journey in South Africa reflects the company’s global expansion and commitment to offering exceptional coffee experiences.
Illy’s introduction to the South African market likely took place in response to the country’s growing interest in coffee culture and the demand for premium coffee products.
South Africa’s evolving coffee scene, characterised by a burgeoning coffee culture, the rise of Specialty coffee shops, and a discerning clientele, provided fertile ground for Illy to establish a presence. Over the years, Illy has likely formed partnerships with local distributors, coffee shops, and hospitality establishments in South Africa to make its coffee products available to a broader audience. Illy has partnered with SPAR to distribute affordable, ready-to-drink coffee.
Today, it is led by the third generation of the family. Andrea Illy is the Chairman, and Cristina Scocchia is the CEO. Anna Rossi Illy, Ernesto’s wife (the founder’s son passed away in 2008), is honorary Chairman. Anna Illy jr continues her father’s work and handles relations with coffee growers. Andrea Illy is the CEO of the global premium coffee company that bears his family’s name.
As one might expect, he is passionate about coffee – its science, its health benefits, its taste, and its beauty. Illy also has a dream that someday soon, the coffee market might be transformed into something approaching the market for wine.
Where connoisseurs discuss the fine points of various origin coffees and blends, where customers are willing to pay a premium for the finest examples of the coffee-making art, and where the growers, roasters and baristas will be compensated fairly for the expertise they contribute to every cup.
Unfortunately, the current coffee market differs from such an ideal. Coffee growers in most parts of the globe work at a bare subsistence level.
One bad harvest (made all the more likely by the ravages of climate change) or a sudden decline in the commodity price of coffee can drop them below subsistence to hunger. Even in good times, growers have little incentive to improve their operation – they have minor contact with the roasters or customers and no knowledge of how their crops get translated into the cup. This disadvantages not only the grower but also the consumer – coffee sourced from good quality beans is hard to find.
Illy believes that the solution to the sad state of affairs is to initiate a “virtuous circle” that draws the grower, the roaster, the barista, and the customer together. Growers with better knowledge of the market will work to improve their crops or experiment with new varieties.
Roasters and preparers will educate their customers as to the qualities of various beans, roasts, and preparations. Customers, in turn, will be willing to pay more for the best beans, and that premium will be sent back up the chain to pay for even more quality and variety. And so on.
Certainly, there have been some positive signs. Indeed, many observers argued that a “third wave” of transformation in the coffee market was already starting. (The first wave is said to have occurred when Maxwell House and Folgers made coffee a mass commodity, and the second wave was when Starbucks initiated a move to quality and higher prices.) Specialty coffee roasters had worked to build cafes and brands around origin-based beans sold directly to the roasters without reference to the commodity prices of coffee. With these third-wave roasters, every coffee came with a story of its origins, and growers could count on occasionally eye-popping premiums for their beans.
As yet, Specialty coffee represented a small slice of the overall market, and there were other signs that it might not ever grow beyond a small circle. New trends like coffee-based drinks and single-portion coffee in pods (e.g. K-cups, Nespresso) shifted more of the value-added towards roasters without a premium for growers. A consolidation was taking place among mass roasters that were even sweeping up third-wave roasters in its wake.
Observers argued that this could lead to greater uniformity with even less emphasis on origin-based, direct-traded coffee.
Illy hopes that someone would come up with an innovation that would solidify the beginnings of the third wave and help reshape the market. Such a change would not necessarily have to involve Illycaffè; Andrea Illy believes as the world’s premium brand, an increased emphasis on quality in the market would only help his company. The most important thing was to make the coffee supply chain more equitable and coffee better-tasting.
Explain how the skills analysis matrix can be applied to address the challenges and opportunities in the coffee market, as described in the scenario, by answering the questions below.
a) Identify the key stakeholders in the scenario.
b) Identify the skill set possessed by at least three stakeholders in the scenario.
c) Which example of a skills gap was identified in the case study?
d) How does illycaffè aim to use the skills matrix to build collaboration in the organisation?
a) The key stakeholders in the scenario include coffee growers, roasters, baristas, customers, and companies like Illycaffè.
b)
i) The skill set possessed by coffee growers may include agricultural knowledge, crop management skills, and knowledge of market trends.
ii) Roasters may possess skills in coffee roasting, blending, quality control, and customer education.
iii) Baristas may have skills in coffee preparation, customer service, and knowledge of different coffee varieties and brewing methods.
c) An example of a skills gap identified in the case study is the lack of communication and coordination between coffee growers, roasters, and customers. Growers may not have sufficient knowledge of the coffee market to improve their operations, while roasters and customers may not have a direct connection with the growers to understand the quality and origins of the coffee beans.
d) Illycaffè aims to use the skills matrix to build collaboration in the organisation by facilitating communication and knowledge-sharing between different stakeholders in the coffee supply chain. By identifying the skill sets of each stakeholder group, Illycaffè can create training programs, workshops, or partnerships that help bridge the gaps in skills and promote a more equitable and quality-driven coffee market. This collaboration can lead to a virtuous circle where growers, roasters, baristas, and customers work together to improve the quality and value of coffee products.