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illycaffé blazes the trail into China

From the March 2016 issue.

Italian roaster illycaffé was one of the first companies to spot the potential of China, and after 15 years there it is reaping the rewards.

Gordon Chang

While just about every coffee company in the world dreams of breaking into the Chinese market in order to be well positioned as 300 million middle class Chinese people begin to embrace coffee culture, there is at least one company that is already there.

Italian roaster illycaffé has been in China for 15 years, in that time establishing itself as a clear market leader in the gourmet roast and ground coffee market.

Now commanding 30 per cent of the imported roast and ground coffee segment in China, illycaffé is the trailblazer that many of its European competitors are now seeking to emulate.

But, as with any trailblazer, the path that illycaffé had to tread to secure its place in the Chinese coffee market was not a simple one, and required the company to make many a bold move along the way.

Taiwanese businessman Gordon Chang has been a key figure in illycaffé’s journey to the top of the Chinese market.

Chang began his relationship with illycaffé more than 20 years ago, when he first brought the Italian brand into the Taiwanese market in 1992.

At the time Chang says the coffee market in Taiwan was largely influenced by Japanese coffee culture. But, with the backing of illycaffé, Chang set about introducing Taiwanese coffee drinkers to the pleasures of Italian espresso culture.

The market was hugely receptive, and by the time American coffee giant Starbucks opened their first store in Taiwan in 1998, Italian coffee culture had firmly taken root, giving rise to a strong and sophisticated coffee market.

“You can find small coffee shops where the owner himself is the barista, and making coffee by syphon, and you can also find modern coffee shops which provide Italian coffee – espresso, cappuccino,” says Chang, who is now General Manager of illycaffé China. “In the 1990s, Taiwan and Japan were probably the most coffee-savvy countries in Asia.”

Spurred on by the success in Taiwan, in 2001 Chang turned his attention westwards with the idea of bringing illycaffé to mainland China.

While the Chinese market is still young and developing, at that time the whole concept of espresso culture was virtually unknown to the Chinese consumer.

“At that time, coffee in China meant instant coffee, and the most popular type were the three-in-one products which contain coffee, sugar and whitener,” Chang tells GCR Mag. “It was a challenge to introduce Italian coffee culture as well as espresso to this tea drinking country.”

However, China was in the midst of an exceptional phase of transformation that was characterised by rapid economic growth along with the growth of disposable incomes of millions of Chinese who were joining the country’s expanding middle class. And with this economic change also came a change in lifestyles and in consumption habits, leading many affluent Chinese to embrace coffee culture.

illy products

“Even though instant coffee still accounts for about 80 per cent of coffee consumption in China, there is also a trend of people who are searching for quality of life and better coffee,” Chang says. “The growth of the Chinese coffee market has increased by 15 per cent over the past 10 years and we do see that positive growth continuing.”

With a long and celebrated history as an innovator in the coffee industry, illycaffé is perhaps most famous for its signature blend of nine varieties of Arabica coffee selected from the best harvests in the world. These are chosen for their exceptional qualities and combined to make the perfect harmony.

For more than 80 years, the quantities and proportions of each part of the blend have been calibrated every day to guarantee the same quality and ensure that every single cup is consistent with the illycaffé promise.

As interest in coffee has grown around the world, illycaffé has launched its Monoarabica range, separating its nine single-origin coffees from the illy blend to highlight the unique flavours and aromas that encapsulate the culture and character of each specific origin.

With Chinese consumers embracing different ways of preparing coffee, illycaffé has launched drip-on coffee, an easy-to-carry single serving for drip coffee preparation.

“With 80 per cent of the population drinking instant coffee, drip-on coffee is a perfect way to introduce fresh ground coffee for coffee lovers,” Chang says.

Along with the introduction of new products, illycaffé is taking its products to the market through a number of channels.

The company works with more than 1000 clients in China in the hotel, café, and restaurant segments.

In addition to this, the company’s Italian-style café franchise Illy Caffe has three outlets across the country, and there are another nine illycaffé retail outlets providing full range of illy products – beans, ground coffee, and capsule machines.

With China now also being the largest digital market in the world, illycaffé has set its sights on conquering the e-commerce space with the launch of its online store firmly focused on the Chinese market.

And in order to continue to grow the appreciation of Italian espresso culture in China, illycaffé has launched its coffee universities – Università del Caffè – in three locations across China (Shanghai, Xiamen, and Guangzhou).

The Università del Caffè’s coursework for hospitality professionals encompasses intensive, hands-on training on coffee preparation and menu development, the latest in coffee bar management and marketing, and practical ways to enhance the customer experience. And for coffee lovers, the university offers a curriculum developed expressly for consumers that spans coffee history, basic chemistry and biology, and an appreciation for the taste and aroma of fine, premium-quality coffee.

According to Chang, while the Chinese market still has a long way until it has fully embraced Italian coffee culture, it is well and truly on its way.

“In recent years, both the production and consumption of coffee in China have been growing at double-digit rates,” Chang says. “Coffee is no longer a novelty but an essential feature of China’s urban landscape. We do see  apositive future for coffee in China, and hope to see coffee culture blooming everywhere.” GCR

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