Illy coffee magnate seeks investment for wine business

Riccardo Illy, grandson of the founder of Illy coffee, is searching for an investment partner to help the non-coffee division of the business, which includes wine, chocolate and tea, match the €470 million annual sales generated by the coffee side.

Riccardo Illy, image: wiki.

As reported by Reuters, Illy, 63, is offering up a 40% stake in the business valued at €100 million, which includes French tea company Dammann Frères, jam brand Agrimontana, wine estate Mastrojanni and Italian chocolate producer Domori.

It is reported that he is also searching for vineyards in Montalcino and Barolo in order to produce “fine Italian wines”.

His brother Francesco already owns Podere Le Ripi in Montalcino, which he bought in 1998. Later, in 2003, Francesco planted the then “densest vineyard in Montalcino” with 11,000 vines on just one hectare. A couple of years later, he created another experimental quarter-acre vineyard planted with 62,500 vines just 16 inches apart. Producing very low yields, he calls them his “bonsai vines”.

Francesco has since converted the Podere Le Ripi estate to biodynamics and convinced his brothers Riccardo and Andrea to buy the neighbouring Mastrojanni in 2008, which is now part of the Illy Group. Podere Le Ripi, on the other hand, is not.

Having left the main coffee business two years ago to focus on diversification, Riccardo Illy wishes to bring in a private equity investor by the end of next year.

As part of the plan, the Illy Group intends to list its non-coffee businesses separately, beginning with tea brand Dammann Frères in the next two to three years and followed by chocolate company Domori. Together these businesses account for 80% of the €53 million making up Illy’s total non-coffee sales.

Illy told Reuters that the capital from the tea and chocolate companies will be reinvested in wine.

“Wine is a passion. We are searching (for) a winery or vineyards in the Montalcino or Barolo areas to be acquired next year,” he said.

He revealed that he’s already had interest from private equity fund investors in Italy, the UK and France.

“With the right financial partner, some acquisitions and a lot of luck it could take ten years to reach the coffee sales. Otherwise [it will take] up to 20,” he said.