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illycaffè revenue down 14 per cent in 2020, still profitable thanks to huge rises in home consumption and ecommerce

illycaffè Rhône Capital

Italian coffee roaster illycaffè has announced consolidated revenues of €446.5 million (about US$536.5 million) for 2020, a decrease of 14 per cent compared to the prior year due to the COVID-19 pandemic.

Business composition in 2020 thus shifted towards home consumption channels, which accounted for 56 per cent of total revenue, versus 40 per cent in 2019.

This significant growth was seen in both portioned coffee systems, which include Iperespresso capsules, compatible capsules and the ESE compostable paper pods (the latter supported by the launch of two new coffee machines), and the ground coffee and coffee bean sectors.

A growth in home consumption (21 per cent) and e-commerce (39 per cent) mitigated much of the impact of the COVID-19 pandemic on the foodservice industry.

“We faced the pandemic with solid fundamentals, a clear vision of the value of our brand, and a strong commitment to the digitalisation of our business,” says Massimiliano Pogliani, CEO of illycaffè.

“While our 2020 results were inhibited by limited out-of-home consumption, they confirm the strength of our brand, the efficacy of the actions we implemented to mitigate the impact of the pandemic, and our ability to respond to changing consumer needs.”

In particular, illycaffé experienced 30 per cent sales growth in Italian supermarkets thanks to the strong performance of compatible aluminium capsules, with a market growth of 10 per cent. Fifty per cent of online consumers were new clients acquired in 2020.

Adjusted earnings before interest, taxes, depreciation, and amortisation equalled €57.7 million, with a net profit of €5 million.

This result takes into account the continuation of the multiple initiatives already launched in support of strategic development areas (sustainability and digital transformation first and foremost), the implementation of a number of actions to ensure the safe continuation of production and the health of our employees, and donations related to the pandemic (including one that allowed Trieste’s Cattinara Hospital to open a new COVID-19 ward) through which illycaffè wanted to show its solidarity with the local population.

Business trends in the various markets closely mirrored the evolution of the pandemic, with the United States among the hardest-hit areas and Asia already in an advanced recovery phase, with South Korea in particular showing significant growth.

Together with all other out-of-home sectors, the illy Caffè network – including both those directly operated and those in franchising – was hit by the closures caused by COVID-19. At the end of 2020, there were 225 single-brand illy retail outlets, including 186 illy Caffè (of which 16 are directly operated) and 39 illy Shop (of which 11 are under direct management).

In November 2020, illycaffè announced its selection of Rhône Capital, a global private equity firm focused on investments in businesses with a pan-European, North American or transatlantic presence, as an equity investor and strategic partner. Rhône was chosen due to its ability to help illycaffè with its international expansion, especially in the United States, as well as its investment experience and capabilities to drive illycaffè’s growth strategy.

The company earned B Corp international certification at the beginning of 2021, meaning the company meets the highest standards for social and environmental performance, transparency and responsibility.

“Our ceaseless commitment to sustainability, which has always been one of illycaffè’s core and founding values, was further boosted by obtaining B Corp certification, another milestone in our path towards continuous improvement,” Pogliani says.

“We look to the future with optimism. As the international vaccine campaign speeds up and the pandemic is gradually brought under control, consumers and companies will return to a new normal, with further opportunities for growth.”

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