Coffee wars continue brewing…

Illy, the family-owned Italian coffee company, has appointed an advisor to review its strategic options, according to the FT yesterday. Coffee over the last 10-15 years has been where it’s “at”, with a boom in choices for the consumer, both in actual coffee brands and where the consumer can drink their cuppa in terms of coffee retailers.

In appointing an advisor, Illy is facing speculation that it will list, not unlike Massimo Zanetti Beverage Group SpA, better known as Segafredo, the other Italian coffee company that listed 35 per cent of its shares on the Milan Stock Exchange a little over two weeks ago and raised some EUR 128m in the process.

The coffee manufacturing sector has seen some consolidation already, with one of the biggest deals in the industry taking place in 2014 and the other scheduled to reach a conclusion imminently. April 2014 saw Oak Leaf, a Dutch investor group, pay EUR 7.5bn for Douwe Egberts Master Blenders 1753 NV and subsequently take the company private. Now DE Masters Blenders is in the process of “merging” its coffee business with that of Mondelez International Inc. in a deal valued EUR 3.5bn which is expected to close before the end of the year.

As long as consumers continue to have “coffee choices” consolidation may not be such a bad thing!