An exclusive interview with Andrea Illy: Tea & Coffee Trade Journal sat with Andrea Illy, CEO of illycaffe to discover what's brewing with the company.

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Tea & Coffee Trade Journal: In today's coffee world there are a number of seminars, trade fairs and conferences. Among these happenings, are there some events that illycaffe believes they need to be present for marketing reasons?

Andrea Illy: We take special importance in attending some of these events, especially specialty coffee meetings where we learn about the latest trends in consuming and producing countries. Also, the annual Food Fair in Paris is important for us because we usually have a large exhibition stand. The bi-annual conferences of the ASIC (Association for Sciences and Information on Coffee) are also important and as president of ASIC, I am looking forward to our next meeting in September 2008 in Campinas, Brazil. We expect to receive more than 400 participants from 35 countries and I am proud that it is being held in Brazil, the world's largest coffee exporter and producer and second largest consuming country.

T&C: The bi-annual Triestespresso Expo was impressive in its growing importance within the Italian and European trade. Do you think it will attract a broader international audience?

AI: Trieste is known as the city of coffee and the city of espresso, and the regional government has recently declared Trieste a new industrial coffee district. This points out Trieste's status as the most important coffee port on the Mediterranean, with access to markets in Central and Eastern Europe. The act will bring benefits to many importers, roasters, brokers and other allied trade interests in the region.

T&C: In the second ICO World Coffee Conference in September 2005, Dr. Ernesto Illy declared he did not believe in the future of organic coffees. Do you have the same opinion?

AI: Yes. It has been proven that without restoring some of the natural or synthetic chemicals necessary for the plants growth, there is soil depletion affecting the plants health and quality, with lower yields not always compensated by price premiums. An integrated agriculture practice obeys environmental considerations to produce a healthy tree, a quality product for the profit of the farmer. However, he noted that illycaffe is not totally unfavorable to organic coffees since some of the world's finest coffees are produced 100% organically in Ethiopia, which are an essential component for their espresso blends.

T&C: On a similar subject, what do you think of the certification seals for coffees confirming conditions of Utz Kapeh, Fair Trade, Rainforest Alliance, 4C and others?

AI: In his reply, Andrea appeared skeptical of the certification conditions, which are costly to qualify and not always compensated with better prices. The profusion of seals has created confusion to consumers, and consequently some are not willing to pay a price premium. In his opinion, certification does not relate to quality and illycaffe's primary focus is to market top quality coffees, which has been recognized by their customers who will pay a premium for consistent, uniform quality. This has permitted illycaffe to fund promotions in places like India to educate and help farmers to upgrade the quality of their coffees in accordance with basic environmental conditions. He also noted that in some producing countries like Ethiopia; where there are more than 150,000 small producers, there is no possibility for the grower to bank the cost and all the conditions for certification.

T&C: As an important green coffee buyer, does illycaffe request certification for some purchases?

AI: No. Certification is not required, illycaffe quality is more important.

T&C: illycaffe has opened and reported expanding a chain of typical Italian-style cafeterias called "Espressamente lily" (Espressly illy). Do you plan to open this project in Brazil and other countries?

AI: We plan on opening an "Espressamente illy" cafeteria this year in Sao Paulo as the first of a series to be established in other capital cities. illycaffe has operations in 140 countries and 50% of our sales are outside Italy.

T&C: illycaffe recently launched a roasted and ground product called HYPERESPRESSO, claimed to brew a cup of espresso equal to the quality and aspect brewed in machines in restaurants and bars. Can you tell us more about this product?

AI: HYPERESPRESSO was developed after long studies and tests and is a unit containing all the specific temperature and pressure elements to brew a new type of patented capsule of espresso coffee with all the quality and crema of a large machine. It is specifically designed for medium to low consumption for those who want to enjoy an espresso drink.

T&C: illycaffe is now associated with the Santos Carvalhaes family and their export "Porto de Santos." Does this mean there will be a permanent presence of illycaffe staff in Santos or elsewhere in Brazil?

AI: This question should be answered by Anna, and she replied: "Since the beginning of our association with the Carvalhaes group, there has been a constant interaction of traveling by Eduardo Jr. and Nelson Carvalhaes to Trieste, and myself and other illycaffe executives to Brazil. We expect this interactivity to continue. Massimo Capoleva and I will be the illycaffe representatives responsible for the operations of our partnership. Perhaps, sometime in the future, we will have a permanent representative in Brazil."

T&C: illycaffe's roasted and ground product found in the best hotels and restaurants in Brazil is imported from Italy. Do you have plans like Segafredo's to buy or install a roasting facility in Brazil in order to be more competitive?

AI: Not so far. Our espresso coffee products are a combination of high quality coffees from several producing countries including about 60% from Brazil. Unfortunately, Brazil regulations do not permit imports of green coffee so we would not have all the qualities essential to produce the consistent flavor and quality of our products.

T&C: Consumer research reports a big increase in Europe of espresso pod and capsule demand. What percentage of illycaffe's production is represented by these products and do you expect increases in other countries like Brazil?

AI: These products we call "porzionato" (pre-dosed) and are a growing factor in many markets among institutional and domestic consumers. Their popularity in developing countries like Brazil will depend on the introduction and availability of the brewing units. Presently "pre-dosed" products represent about 4% of illycaffe's sales and they are constantly growing.

T&C: illycaffe has chocolate interests in Italy and Europe. Do you have plans for a chocolate business in Brazil?

AI: In 2006, illycaffe bought an 80% interest in the traditional Italian chocolate company Domori S.r.I. This was the first step in our plans to operate in other high quality food products to compliment our coffee business. Further acquisitions included Agrimontana, an Italian leader in top quality jams, jellies and confections and also the French firm Damann Freres, with international fame for their selection and distribution of special quality teas. Our plans include researching the chocolate market in Brazil, but so far we have not found, in the cocoa producing regions of north Brazil, the quality required for our planned projects.

T&C: How do you see the future of world coffee consumption with specific reference to brewing methods (espresso/filter/others) and for regular, soluble and decal coffees?

AI: I am optimistic about increases in world consumption triggered by the strong potential among young and old consumers now appreciating the pleasures of drinking quality espresso coffees and the specialty coffees available in shops and stores. This trend has stimulated among more sophisticated consumers a demand similar to wine lovers for gourmet quality coffees. At the same time the espresso phenomenon has stimulated among many consumers an appreciation for better quality coffees. The general upgrading of quality and exposure to all consumer levels of a better coffee beverage should result in increased world consumption above present levels and for all coffee products regular, soluble, espresso and decaf. He also believes there will be increased demand in the developing Asian markets for soluble coffee and if presented with good quality should evolve into a demand as happened in the U.K. and Japan for regular coffees with predictable consumption increases.

With reference to decaf, he noted two problems related to the industry:

1: Most decaf products don't respond 100% to the consumers taste preference, which he says is due to roasters using lower qualities for their decaf product.

2: There is an aversion against the product by some consumers influenced by reports of health problems resulting from decaffeination methods.

He believes decaf demand will continue to grow along with world demand but suggests the industry should unite forces in campaigns like the Brazilian Roasters Association (ABIC) programs to address the referred problems and convince roasters to upgrade quality and consumers of the health benefits of their product.

Observation: This exclusive interview with illycaffe CEO Andrea Illy and Director Anna Illy Belci took place on the occasion of the celebration of events commemorating the 16th edition of the illycaffe Brazil Coffee Quality Awards for Espresso. At press time, we learned of the passing of Dr. Ernesto Illy. Our condolences to his family. The coffee industry mourns a great man.