TRIESTE, Italy – The illycaffè SpA shareholders’ meeting approved the 2020 Annual Report, posting profits in a year deemed overall positive despite the COVID-19 pandemic and associated containment measures. Sales related to home consumption and e-commerce partially compensated the reduction in sales attributable to the pandemic in the out-of-home segment, which suffered from the closure of many bars and restaurants in Italy and around the world for most of the year.
2020 saw a 30% increase in sales in Italian supermarkets, also thanks to the excellent performance of compatible aluminum capsules, with a market growth of 10%.
The digital transformation of the company and its business is proceeding apace, together with the intensification of activities related to sustainability.
In a year so heavily affected by the pandemic, with consumption outside the home – bars, restaurants, hotels, and offices – severely limited, the growth of home consumption, mainly through the e-commerce and modern distribution channels, allowed to achieve revenues of € 446.5 million, a decrease of only 14% compared to the prior year.
Business composition in 2020 thus shifted towards home consumption channels, which accounted for 56% of total revenue (versus 40% in 2019). This significant growth was seen in both portioned coffee systems, which include Iperespresso capsules, compatible capsules and the ESE compostable paper pods (the latter supported by the launch of two new coffee machines), and the ground coffee and coffee bean sectors, with the iconic illy can.
In 2020, the digital transformation that had been launched in previous years allowed illycaffè to be ready to face the challenge posed by the pandemic, ensuring an increase in online sales and capturing the incremental growth in this sector triggered by the increase in home consumption.
The digital transformation process thus continued along the entire value chain, with a +39% growth in the e-commerce channel compared to 2019, thanks to an increasingly consumer-centric business model, as evidenced by the client acquisition rate, and supported by the trend towards premium brands facilitated by the pandemic.
Business trends in the various markets closely mirrored the evolution of the pandemic, with the United States among the hardest-hit areas and Asia already in an advanced recovery phase, with South Korea in particular showing significant growth.
Together with all other out-of-home sectors, the illy Caffè network – including both those directly operated and those in franchising – was hit by the closures caused by COVID-19. At the end of 2020, there were 225 single-brand illy retail outlets, including 186 illy Caffè (of which 16 are directly operated) and 39 illy Shop (of which 11 are under direct management).
“We faced the pandemic with solid fundamentals, a clear vision of the value of our brand, and a strong commitment to the digitalization of our business – commented Massimiliano Pogliani, CEO of illycaffè – While our 2020 results were inhibited by limited out-of-home consumption, they confirm the strength of our brand, the efficacy of the actions we implemented to mitigate the impact of the pandemic, and our ability to respond to changing consumer needs. Our ceaseless commitment to sustainability, which has always been one of illycaffè’s core and founding values, was further boosted by obtaining B Corp certification, another milestone in our path towards continuous improvement. We look to the future with optimism. As the international vaccine campaign speeds up and the pandemic is gradually brought under control, consumers and companies will return to a new normal, with further opportunities for growth”.
While adjusted Ebitda fell compared to 2019, it still amounted to € 57.7 million, with an incidence of 13% of revenues, confirming the efficacy of the actions adopted to stem the impact of the pandemic, and ensuring the progression of strategic initiatives for long-term development.
Despite the continuing weakness of non-home consumption channels throughout 2020, net profits amounted to € 5 million. This result takes into account the continuation of the multiple initiatives already launched in support of strategic development areas (sustainability and digital transformation first and foremost), the implementation of a number of actions to ensure the safe continuation of production and the health of our employees, and donations related to the pandemic (including one that allowed Trieste’s Cattinara Hospital to open a new COVID-19 ward) through which illycaffè wanted to show its solidarity with the local population.
Net financial position was negative € 103.3 million, an improvement of € 10.7 million compared to the prior year.
In recent days illycaffè, already a Benefit company (Società Benefit) under Italian law since 2019, became the first Italian coffee company to obtain B Corp certification, issued by an authoritative international body exclusively to companies that operate according to the most stringent social and sustainable standards, and can thus call themselves sustainable.
No more than 3% of the companies that apply for certification obtain it, and only at the end of a very complex process. There are less than 400 B Corps worldwide, and just 120 in Italy. Last year, illycaffè was confirmed, for the 9th year running, one of the World’s Most Ethical Companies; it is the only Italian company to have been recognized as such.
In November 2020, illycaffè announced its selection of Rhône Capital, a global private equity firm focused on investments in businesses with a pan-European, North American or transatlantic presence, as an equity investor and strategic partner. Rhône was chosen due to its ability to help illycaffè with its international expansion, especially in the United States, as well as its investment experience and capabilities to drive illycaffè’s growth strategy.
