Italy’s Illy Coffee said to attract JAB, Nestle interest

Illy is one of the biggest independent coffee roasters left in a business consolidating around Nestle, JAB and Starbucks

By BLOOMBERG

MILAN • Italian coffee maker Illy caffe SpA has attracted interest from suitors including JAB Holding Co and Nestle SA, but the family owners have so far rebuffed approaches, according to people familiar with the matter.

JAB, which has built a coffee empire through a series of acquisitions, is interested in acquiring all of the Triestebased coffee roaster, according to the people, who asked not to be named as the details aren’t public. Nestle approached Illy some months ago and was told the family was unwilling to sell for the time being, the people said. Representatives for JAB and Nestle declined to comment.

“We have regular contacts with those companies, as with almost all other companies in the sector, to discuss non-competitive matters such as coffee and health, adaptation to climate change and market standards,” Illy chairman Andrea Illy said in a statement.

“Every hypothesis of corporate agreements has been deemed inappropriate.”

Illy, founded in 1933 by Francesco Illy and known for high-end espresso sold in silver- and-red cans, is led by the third generation of the same family. The business reported about €460 million (RM2.18 billion) in sales for 2016, up 5.3% from a year earlier, and operates in 140 countries.

The Italian company is one of the biggest independent coffee roasters left in a business consolidating around three big players: Nestle, JAB and Starbucks Corp.

JAB owns brands and retailers including Peet’s, Stumptown and Caribou and paid about £1.5 billion (RM8.09 billion) for sandwich-and-coffee chain Pret A Manger in May, people familiar with the matter have said. The investment company, backed by the billionaire Reimann family, is also raising about €5 billion from investors, people familiar said last month.

Nestle is also expanding its coffee brands under CEO Mark Schneider as its Nespresso division wrestles with the loss of patent protection on its capsules.

Nespresso lost share in Western Europe’s US$7.9 billion (RM31.94 billion) coffee-capsules market almost every year since 2009, according to Euromonitor.

Smaller brands like L’Or Espresso and Lavazza have gained.

The Swiss food giant agreed in May to spend US$7.2 billion for the right to market Starbucks products.

Illy Group, the holding company that controls the coffee brand, is seeking a financial partner for its other activities by 2019 and may decide on an initial public offering of the chocolate and tea units, chairman Riccardo Illy said in an interview with Italian daily La Repubblica on Monday.