Illy caffé is an Italian coffee company known for producing high-quality coffee in over 140 countries. Aside from the sale of coffee, Illy Company offers office assistance and sells customized espresso machines. Authorized distributors, online shops, Illy bars, HoReCa, and wholesalers provide the distribution channels for Illy caffe. The multi-channel distribution ensures that every product is available to consumers and businesses. Illy coffee utilizes the Business to many (B2M) model to integrate Business to Business (B2B) and Business to Consumer (B2C) models. Through efficient distribution techniques, illy coffee has successfully expanded to the Chinese and the U.S market. Andrew Illy is the CEO of the Italian coffee group, which is the reference standard for coffee excellence and culture globally.
The rising Chinese consumption and demand for coffee attracted illy cafés in the market. Speaking to Reuters, Andrew said, “the rapid emergence of megacities in China would create business opportunities for groups like Illy Caffe to boost coffee drinking, typically in Italian style, in the form of cappuccino or espresso” (Landini, 2019). The consumption in China is mainly focused on cafes and coffee shops. The cafes and coffee shops would enable Illy caffe to sell its products directly to the consumers without intermediaries. Illy maintains a strong presence in the Chinese online market, allowing consumers to purchase their products. The B2C model of Illy caffe gives direct contact to the consumers hence the capacity to influence the coffee experience.
Illy caffe’s interior and exterior designs are different across different regions to integrate culture and consumer preference. The interior and exterior designs of shops should be developed thoughtfully to provide cultural perspectives and the needs of the consumers. The coffee seller intends to drive the Italian coffee passion to the new market and utilizes art and design to connect with the consumers. For instance, the coffee drinkers, coffee cups, espresso machines, and the ground coffee capsules are designed attractively to attract customers.
Besides the B2C model, Illy café distributes its products to businesses in China, especially offices. The Italian coffee maker is known for its quality espresso machines and coffee capsules in high-end offices in the Chinese cities. Illy caffe’s success is found in market segmentation and positioning to incorporate the aspects of the market mix. The market segmentation is the attractive Chinese niche Illy café has found in cities, whereas market positioning is the production of unique, top-quality coffee and products (Bisello, 2021). Illy can optimize the B2B channels by leveraging market segmentation and positioning.
Illy café uses the single blend approach to satisfy the B2B and B2C distribution models. The single blend approach produces a diversified portfolio on a single business or industry line. Illy group uses different distribution channels in China, including online markets, distributors, and Illy cafes, to serve individual customers and businesses. The services include delivery and machine servicing and personalized accessories such as cups, spoons, and sugar sachets (Deloitte, 2021). To drive sales up, Illy set up a Galleria store in Beijing and hosted cultural events and exhibitions in the “café pop-up on steroids.” Influencing Chinese artists would perform in these events and hence Illy has a history of pairing its products with culture in China. Monitoring consumers’ perceptions in the B2C model through cultural inclusion is critical for the success of distribution channels. The distribution channel utilized by Illy caffé in China is all integrative and leverages culture to attract customers.
The Italian company’s presence in the U.S is progressively becoming significant with more coffee shops opening. For instance, Illy café announced its plan to add a dozen cafes and shops in the U.S in 2022 and the 20 already in service. Mr. Illy announced that the U.S market needs an authentic coffee brand since it is already saturated. Like the Chinese market, Illy caffé in the U.S distributes to offices, accredited restaurants, and individual customers in B2-B and B2C models. Illy café maintains good relations along the supply chains, resulting in better Business in the U.S. In 2021, Illy became a B corporation, following its commitment to creating value for broader stakeholders, including employees, customers, and communities (Naecsu, 2018). Illy caffé in the U.S market is increasing with efficient distribution channels.
Illy caffé’s stores in the U.S engage the customers using an experimental model. Inside the cafés, customers take part in visual experience and coffee tasting. The customers are also interestingly taught about the brand. Engaging customers in an educative manner fosters brand loyalty to the distributive channel. Illy caffé’s footprint is growing faster in North America than in any other area it serves. North America has 23 shop locations that engage customers using the experimental method (Boaventura et al., 2018). The online sale of Illy’s products is significantly developing with the increasing market presence. The differentiation method applied by Illy of producing authentic coffee creates sustainable development in a highly competitive market.
Besides the experimental method, illy created the first University of coffee in an effort to enhance the distribution channels. The University of the Coffee in San Francisco reflects the great knowledge and skill Illy has in coffee production and preparation (Naecsu, 2018). Demonstrating knowledge and passion for the distributed products creates consumer trust and product differential. To align with the American sustainable development goal, Illy caffé reduced its carbon in its production and distribution activities. Illy’s differentiation method of managing competition creates a unique and outstanding brand.
Besides distribution to the customers, the Italian coffee maker distributes its products in offices, hotels, and restaurant businesses in the U.S. Illy café offer technical support and superior service to the Business they distribute their products to. For example, Illy caffé in North America partnered with Ammirati Coffee, Inc. to effectively distribute coffee products in restaurants, offices, and hotels in the New York metropolitan. Ammirati has a history of maintaining quality, having spent 60 years in the coffee industry operating in the ultra-competitive New York market. The New York market largely utilizes online shopping hence the delivery, comprehensive technical, and service support of Ammirati is critical to Illy.
The growing demand for coffee consumption led Illy café to become a global brand expanding into other countries. Illy caffé serves individual customers in their B2C model and distributes its products in offices and approved restaurants in the B2-B model. Moreover, Illy have an online shop that serves all kinds of customers. The distribution channels utilized by Illy value cultural inclusion to create a good perception among consumers. Online shops, authorized dealers, Illy bars, and wholesalers. Quality cohesion and skillful use of innovative design enable Illy’s coffee shops to have perfect interior and exterior designs. Illy has implemented strategies to improve the efficacy of the distributive channels, such as the experimental method used. The American and Chinese embraced the taste of Illy’s coffee leading to exponential growth and revenues.
References
Boaventura, P. S. M., Abdalla, C. C., Araujo, C. L., & Arakelian, J. S. (2018). Value co-creation in the specialty coffee value chain: the third-wave coffee movement. Revista de Administração de Empresas, 58, 254-266. Web.
Bisello, G. (2021). Starbucks and Illycaffé: different strategies to successfully enter the Chinese coffee market. [Thesis]. Universita Ca’Foscari Venezia. Web.
Deloitte. (2021). White paper on China’s freshly brewed coffee industry. Web.
Landini, Francesca. (2019). Italy’s Illycaffe sets five-year target for U.S. expansion. Reuters. Web.
Neacsu, A. N. (2018). Quality management on the coffee market. Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V, 11(1), 109-118. Web.