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Andrea Illy: adapting a family business to a multinational world
JULY 20, 2019 | | Financial Times | by Rachel Sanderson.

*The coffee group chairman argues his style of capitalism is good for business, workers and the consumer*

Andrea Illy, third generation heir of the Illycaffè dynasty, last year struck an alliance with investment group JAB Holdings to produce and distribute Illy coffee capsules...he makes it clear that he does not intend to sell the closely held family company..... “It is a very simple principle about preserving our freedom,” he says of his and his family’s decision, one....Freedom is a word that comes up frequently in conversation with Mr Illy.....who espouses a sort of pick-and-mix version of capitalism, resolutely refusing to focus only on sales and profits. Illy argues his style of capitalism is not charity but good business.......Illy has paid its growers on average 30% more over market value for decades in order to maintain its supply of top Arabica beans. “....The company is rooted in the border city of Trieste....which is also ingrained in the nature of the family......globalisation and increasing competition in the coffee sector has forced Illy to adapt. Staying closely held does not work any more. Co-opetition is his new mantra."“It is like the way to adapt in the savannah. If you do not want to be prey to the big lion, you live in a tree.”"

Part of that adaptation has been the deal with JAB, which allowed Illy coffee capsules to be produced and distributed in supermarkets globally, something that Illy could not do alone......The global coffee industry has become increasingly like the beer tie-ups of the 1990s, with big groups such as JAB and Nestlé snapping up smaller companies. Illy has risked being squeezed between these behemoths and the microroasters emerging as the hip caffeine hit for millennials and Gen Z.....Bigger groups have circled Illy for years. Mr Illy says the family chose JAB because it had the technology he wanted and accepted a licensing agreement rather than an equity one.....To build its global presence, Mr Illy is now looking for a retail partner in the US to help launch Illy coffee bars in the world’s largest coffee market. He says he could even sell a slice of equity. But he is very specific who it would be to: a private financial investor, not an industrial group.....there have been other adaptations. Three years ago, Illy hired an outside chief executive — Massimiliano Pogliani, a former executive at Nestlé’s Nespresso — for the first time since the company was founded in 1933 by Mr Illy’s grandfather, Francesco. Mr Illy has also built a board including executives from clothing group Moncler and Italian cosmetics group Kiko...... studies show that family businesses often fail in the third generation. The move to hire outside management and governance comes as studies also show that family-owned, professionally-run companies are among the best performing in the long term. ......Mr Illy sees these alliances as the only way for a family business model to thrive and to not have to cede control to a multinational when “complexity is becoming too big for a single person to manage”.
.....good stewardship is good business......The Illy family is a supporter of arts and culture, including Trieste’s annual sailing regatta, the Barcolana, where hundreds of boats race across the bay. Mr Illy says this creates a virtuous circle: the more attractive Trieste becomes, the more talented people Illy can attract to work for it and the more visitors come to the city and raise its brand profile........A portrait of his father Ernesto hangs opposite his desk. “I put the painting there to ask him to control what I do,” Mr Illy says.

What, then, has he learnt from his family? “Society is made by the private sector, mostly. And if you want to improve society then we need to be able to pursue long-term goals which are beyond profitability, and then you have to be free and accountable only to yourself,” he says.

Three questions for Andrea Illy
Who is your leadership hero? I have three: Muhtar Kent, former chairman of Coca-Cola; my father; Sebastião Salgado [the photojournalist].

If you were not a CEO/leader, what would you be? A neurosurgeon.

What was the first leadership lesson you learnt? My father asked me when I turned 14 years old where I wanted to go to school. Do you want to start a journey to be a leader or do you want to have fun? I chose the first option and as a result chose boarding school in Switzerland over a local school at home. There I learnt about discipline and hard work but also about the power of a charismatic leader from my headmaster.
alliances  boards_&_directors_&_governance  climate_change  coffee  coopetition  dynasties  family  family_business  family-owned_businesses  financial_buyers  heirs  high-quality  Illycaffè  investors  JAB  licensing  Nestlé  premium  private_equity  privately_held_companies  stewardship  sustainability  the_counsel_of_the_dead  virtuous_cycles 
12 weeks ago by jerryking
The Tech Profile: How a Small Retailer Handles I.T. - NYTimes.com
May 17, 2011 | NYT |By DAVID H. FREEDMAN
The business: JetPens, based in San Jose, Calif., is a 14-person online
retailer of mostly Japanese pens and pen-related paraphernalia. The
slick, slightly edgy Web site is packed with stuff that you won’t find
just anywhere, including pens designed specifically for drawing Japanese
Manga-style cartoon art and a five-function eraser. As a result,
JetPens has drawn a cult following and fills about 100,000 orders a
year.
running_a_business  marketing  retailers  e-commerce  David_Freedman  google  PayPal  Quickbooks  facebook  handwritten  analog  writing  artifacts  IT  owners  small_business  Japanese  premium  brands  Stanford  alumni 
may 2011 by jerryking

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