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Illycaffe'. Trieste targets China with capsules

Partnership with Hangzhou Onechance Tech wants to triple Chinese business

"China remains a virgin country for us: we are present with a subsidiary but for us it is the biggest unexplored opportunity". This was said by Illy Caffè ceo Cristina Scocchia, according to whom the Asian country is one of the target markets to be boosted as much as possible. So much so that the Trieste-based group, without wasting too much time, has allied with Hangzhou Onechance Tech (Chancemate), an 800 million capitalization group listed on the Shenzen Stock Exchange.

"This is an exclusive distribution agreement thanks to which we will strengthen our presence in the home and online channels -Scocchia explained, reported by La Repubblica-. The goal is to triple our business in China by 2026. We will become the standard bearers of espresso coffee in a boundless market".

The challenge is a big one, since the Chinese are used to drinking tea. "We have chosen to flank traditional espresso coffee with a hot water-soluble coffee capsule that is closer to the taste of the Chinese consumer -the ceo stresses-. In essence, Illycaffè is going to conquer China with the instant-open soluble coffee capsule-a strategy the Trieste-based company has applied for every market it has tried to penetrate, starting in the United States with cold brew and cans.

Now, the plan is to expand by opening new outlets to strengthen in areas where the brand is not yet widespread. "We have 176 outlets between stores and direct management and franchises, and we aim to double that by opening another 150 franchises by 2026", Scocchia stresses.

"While China -Scocchia adds- is for so many sectors the main market, for coffee it is not so because the vast majority of Chinese drink tea so it is a market all to conquer and grow. We have put a first foot in the door with a subsidiary. We grew well last year and we are growing again this year albeit with more difficulty because the Chinese economy is recovering with more difficulty. However, this year we decided to invest on a strengthening of the branch".

For the Chinese subsidiary, market strategies are being defined in order to enter the country channel by channel. "We want to dedicate 2023 to rethinking the ecommerce channel, which is a very important channel in China for the coffee market as well -Scocchia continues-. In a couple of months we will announce the business model we want to use and then we will move on to reason channel by channel to all the go to market".

Illycafè closed the first half of 2023 with consolidated revenues up 5% over 2022, with a particularly positive result in the United States (+16%) growing in all main distribution channels and despite an unfavorable exchange rate impact.

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EFA News - European Food Agency
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