illy's Espresso Revolution: A Luxury Business Model And The Search For The ...
And Nespresso, and an inherently limited supply of high quality raw material, while maintaining the luxury soul of his product.
“A limiting factor for us is that we look for the superlative coffee nature can provide, which I estimate is about 1% of global production,” Illy told Forbes , explaining that in the 1990s, they made a decision to buy their coffee directly from producers. For Illy, who comes from a family of innovators that came up with the first high pressure espresso machine and novel packaging techniques that allowed coffee to be shipped far from the source and retain its freshness, that challenge presented an opportunity.
In a clear example of growing the pie larger, illycaffe chose to pay Brazilian producers, with a reputation for cheap and bad quality Arabica coffee, a higher premium if their product matched their high standards. “When we started buying [Brazilian coffee], we were alone,” Illy said, as other major coffee makers stayed away. So Illy began to train Brazilian farmers to produce high quality beans, paying above market rates for the top of the crop. “We built a symbiotic relationship, they got knowledge, a premium price, and an endorsement.” Taking only the first-class quality meant illycaffe only took about 30% of the crop, at some point reportedly paying a 100% premium on market prices, but armed with that reputation, farmers could take their crops to market at higher rates.
Espresso Machines at $20000 Bring High Design Into Homes
Wealthy individuals, however, have recently begun purchasing commercial espresso machines as showpieces for home kitchens, van der Westen says -- no small commitment given the specialized electrical hookups, plumbing and water-filtration systems required.
Edwin Mayer, a London media lawyer, saw one of van der Westen’s Speedsters in the window of a local coffee shop and was immediately smitten.
“I loved the look of it,” he says.
While the Speedster’s price gave him pause, Mayer says he considers the purchase on a par with a painting or sculpture.
“It’s a functional piece of art,” he says.
Having bought it for its aesthetics, Mayer quickly came to rise its brewing prowess.
“It makes superb coffee and is very forgiving and easy to maintain,” he says, adding that most home machines aren’t robust enough to produce consistently excellent espresso.
Other manufacturers cashing in on the trend in commercial-quality espresso at home include Seattle-based La Marzocco International LLC, whose GS/3 has found a niche among coffee obsessives, selling 800 to 1,000 units worldwide each year despite its $7,000 price tag.