Read the case study below and answer the questions that follow. You might need to do some additional reading (e.g. about Illycaffè, South Africa Coffee Market, Specialty coffee shops, and SPAR.
Case Study: Illycaffè by Francesco Illy.
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..In the context of South Africa's evolving coffee culture, how can illycaffè leverage Information Technology to meet the discerning clientele's expectations and also use Information Technology to contribute to maintaining the company's competitive advantage in the premium coffee market?..Write me an answer for 10 marks
In the context of South Africa's evolving coffee culture, Illycaffè can leverage Information Technology (IT) in various ways to meet the discerning clientele's expectations and maintain its competitive advantage in the premium coffee market.
Firstly, Illy can use IT to enhance customer experience through a mobile app or online platform. The app could allow customers to place orders, customize their coffee preferences, and earn loyalty points for rewards. This personalized approach can help Illy build stronger relationships with customers and cater to their specific needs.
Secondly, IT can be used for supply chain management to ensure the efficient delivery of premium coffee products to various outlets and customers. By implementing a robust inventory management system, Illy can track the movement of its products, monitor stock levels, and streamline the distribution process. This will help in maintaining the quality and freshness of their coffee products.
Additionally, Illy can use IT for marketing and customer engagement initiatives. Through social media platforms, email campaigns, and targeted online advertisements, Illy can promote its premium coffee offerings, share information about their sustainability practices, and engage with customers in meaningful ways. This will help in building brand awareness and loyalty among South African consumers.
Furthermore, IT can be instrumental in collecting and analyzing data related to customer preferences, market trends, and competitor activities. By leveraging data analytics tools, Illy can gain valuable insights that can inform their product development, pricing strategies, and marketing campaigns. This data-driven approach will enable Illy to make informed decisions and stay ahead of the competition in the premium coffee market.
In conclusion, by harnessing the power of Information Technology, Illycaffè can enhance customer experience, optimize its supply chain, strengthen its marketing efforts, and make data-driven decisions to maintain its competitive advantage in the premium coffee market in South Africa.