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"Meloni's government is made up of inexperienced people who are new to power"

Andrea Illy traveled from Trieste, the headquarters of Illycafè (sales 2021: 500 million euros), to Rome to present one of its coffee producers with the "Ernesto Illy" prize.

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"Meloni's government is made up of inexperienced people who are new to power"

Andrea Illy traveled from Trieste, the headquarters of Illycafè (sales 2021: 500 million euros), to Rome to present one of its coffee producers with the "Ernesto Illy" prize. An honor for the best-tasting coffee bean that was produced sustainably. The 58-year-old is the head of the board of directors of the family company, which was founded in 1933.

From 1994 to 2016 he was the third generation CEO. In the afternoon before the award ceremony, WELT meets him for an interview. Illy wears a silver pin in the shape of an espresso cup in her buttonhole. His main concern is to tell about the ecological transformation he is currently leading his company through.

WORLD: Mr. Illy, how can it be that an espresso in a café in Italy costs a maximum of 1.30 euros while it is twice as expensive in Germany?

Andrea Illy: That's because there's too much competition in Italy. There are 130,000 bars here…

WORLD: … as the Italians call their cafés.

Illy: That's one per 400 inhabitants and a tendency to compete on price rather than quality. Therefore the price remains low. But you address a serious problem, because the low price often means that the best raw materials are not bought and the workers are sometimes not paid appropriately. That's why I'm calling for the cup price to be increased.

WORLD: So do the Italians drink coffee that is of poorer quality than the Germans?

Illy: No, I don't think so. Here, more value is often placed on the preparation than on the quality of the beans. The crema of the espresso is particularly important in Italy. However, it can also be produced with the less valuable Robusta coffee varieties. That is why Italy imports more Robusta coffee than other countries, including Germany. That should change.

WORLD: We are now talking about espresso in the bar so naturally. It was less than two years ago that all cafes and restaurants in Italy were closed because of the corona virus. This has meant a huge loss of revenue for you.

Illy: Before the Corona pandemic, 60 percent of our business consisted of sales to business customers, bars and restaurants. The rest were private households. When Covid broke out, the relationship reversed. Fortunately, we had just launched a new capsule and started a new communication strategy. In addition, our online shop was well prepared. In this way we were able to cushion the losses as far as possible. Today we're at 50/50 and growing back into double digits.

WORLD: Despite the Ukraine war and its negative effects on the economy?

Illy: Over the past three years, we've seen price increases like never before in the company's history. The price of transportation, packaging, energy and even coffee beans from Brazil has skyrocketed. We've compensated for that by raising prices a little while lowering costs and yield a bit. Nevertheless, we will make more profit in 2022 than the 19 million euros in 2019.

WORLD: But you are still a long way from your goal of doubling your sales to 900 million euros by 2027. At the same time, you want to be CO₂-neutral by the company's 100th anniversary in 2033. Can growth and consideration for the environment be combined at all?

Illy: It's about making the transition. From the old model we live with today, where the economy and society continue to exploit natural resources as if they were infinite. This is unsustainable and creates waste and pollution. That is why we need to make a transition to the One Health approach.

WORLD: A concept that the World Health Organization is also promoting and that wants to change the economy in such a way that it takes into account the health of plants, people and animals.

Illy: The turning point comprises three chapters. The shift from fossil fuels to renewable energy, from conventional agriculture to regenerative agriculture, and from the linear economy to a circular economy where everything is recycled.

WORLD: And is that how you orient your growth?

Illy: Yes. Our main production facility in Trieste is already emission-free today because we only use renewable energies. We take a circular approach to packaging because our cans are made of metal, which can be easily separated and infinitely recycled. At the same time, we support our coffee producers to practice regenerative agriculture by paying them above average and educating them about regenerating their soil through organic carbon enrichment and the importance of biodiversity. We believe that we can ensure sustainable development even with sales acceleration.

WORLD: You already have a strong brand, as the “Most Loved Brands” ranking 2022 revealed. Illy took second place there worldwide. How do you manage to make your relatively small business so relevant and popular?

Illy: I like to say that we have a mission, a passion and an obsession. The mission is to be there for our customers. Our passion is for the beautiful, the good and the well-made, i.e. everything that distinguishes "Made in Italy". And the obsession is with quality. We are always committed to these three aspects and are very consistent in doing so. Because our story is always the same, the look remains the same and that's why sooner or later you get a taste for Illy and stick with it.

WORLD: Speaking of “Made in Italy”. The new Italian government led by right-wing nationalist Giorgia Meloni has renamed the Ministry for Economic Development "Ministero del Made in Italy". Is that populism or are you, as an entrepreneur, happy about this signal?

Illy: All governments, no matter which shade, have always focused on the topic "Made in Italy". We are Europe's second largest exporter because we have products that have a high level of quality, beauty and goodness that makes them attractive to international consumers. This is a competitive advantage, especially in the high-end segment. However, like all economies, Italy is also dependent on foreign direct investment. It remains to be seen whether the new government is open to tightening them.

WORLD: A lack of direct investment is not Italy's only problem. Do you think Meloni's government can provide answers to the many difficulties?

Illy: Italy's risk profile has recently increased due to the three crises Corona, climate and war, and also because we have too high government debt and too little productivity growth. All of this is reflected in the social risks. Inequality, unemployment and the big problem of uncontrolled immigration. So this situation can only be managed with great wisdom and not alone. The concept of European Union solidarity is central to Italy's resilience.

WORLD: So far, Meloni has not put solidarity in the EU first. On the contrary.

Illy: That's exactly what it's about. There is a risk that a sovereignist or nationalist policy will damage cooperation and collaboration with the EU and isolate Italy. I'm less worried about that today though. Because some events make the world seem a little calmer today than it was three or four months ago. The outcome of the G20 summit, for example, and the results of the US midterm elections and the election in Brazil. The entire risk profile now depends on the war. If we slowly move towards a solution there and the government remains relatively moderate, we can manage the risk well. If not, we could have problems.

WORLD: But Meloni just caused a diplomatic scandal with France. Moderate politics looks different.

Illy: Yes, but this crisis will pass. That was youthful recklessness. Your government is made up of inexperienced people who are new to power. But hopefully they learn quickly. And then I think that in a year we will have forgotten all that.

"Everything on shares" is the daily stock exchange shot from the WELT business editorial team. Every morning from 7 a.m. with our financial journalists. For stock market experts and beginners. Subscribe to the podcast on Spotify, Apple Podcast, Amazon Music and Deezer. Or directly via RSS feed.

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