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STRONG BREW

How Italian roaster Illy reimagined the coffee supply chain

coffee pours into illy cup
Reuters/Alessandro Bianchi
Coffee futures.
  • Cassie Werber
By Cassie Werber

Cassie writes about the world of work.

Published Last updated

Thirty years ago, Guatemala was using coffee beans to mend roads—the commodity was so cheap, it was more economical than using gravel.

The Italian coffee company Illy started to do something different: Instead of buying the best beans it could at the cheapest prices, it started working directly with coffee growers to perfect the growing and processing of beans, and began paying a premium for the product.

Those relationships have paid off for the Trieste-based brand, says David Brussa, who joined the company in 1991 and is now its quality and sustainability director. Illy and its most trusted growers can move stocks of coffee quickly, and the sampling process before committing to buy is now shorter. When the pandemic struck, everyone in the supply chain felt the difference: Processes like tasting and travel, which had hitherto been key, had to be curtailed. But, Brussa says, quality didn’t suffer.

“It was a ‘shaking hands’ agreement, but we had no issues at all,” Brussa told Quartz.

Brussa says these examples illustrate Illy’s approach—that treating everyone in a supply chain well results in better business. And while that’s not a revolutionary statement, it’s still hard to find companies that truly walk the walk.

Last year, Illy also became a B Corporation after years of preparation—a process that sees companies commit to creating value not just for shareholders or owners, but for a much wider stakeholder group that includes employees, customers, and communities.

Brussa talked to Quartz about what that means in practice—for a company that sells 100 cups of coffee every second, globally—and how the pandemic put its new B Corp standing to the test. The conversation has been edited for clarity and length. 

Let’s talk about the supply chain. That must be the hardest place for a coffee company to make changes.

The journey of sustainability for Illy has been a very, very long one.

Whenever you make an espresso, you use exactly 50 beans. If they’re not the perfect quality, it’s a problem. Often you can have a good natural product, but it can be compromised by human treatment, or processing.

In trying to develop the quality, we started to pay a premium price for the beans of 20-30% above market price. It was the beginning of a “de-commoditization” of green coffee. That started to give the producers economic sustainability. That helped increase social sustainability. After about 10 years we began to see a relationship between economic, social, and environmental sustainability—because the way coffee is cultivated has a real effect on the environment. Quality and sustainability, we realized, are two faces of the same coin.

We were buying coffee from 20 different countries around the world, but sometimes before buying from a new producer, we spent up to five years working together, in order to promote the best way to cultivate the coffee.

Then, in the supply chain, we started about 10 years ago to do some social projects: Against child labour, promoting good waste management, correct water treatment—because water is one of the key ingredients in the process of transforming the cherry to the bean.

Selection of producers, transfer of knowledge, premium price, and sharing the best practices available on the market: This allowed us to build strong relationships with the producer.

And what about sustainability in other areas of the business?

In 2012 we decided to pursue the Kyoto targets—reducing emissions by 20%. In one example, we put in place a project to collect all the heat from the roasting and use it to heat the factory, and in summertime we converted it to cool the buildings.

Around the same time we began buying 100% renewable energy, and put in place a plan to increase energy efficiency.

More recently, we decided B Corp certification was the real test, and represented a big opportunity: To measure the overall sustainability of the company: carbon, governance, customers, workers, environment, community, etc. It was a 360 degree schema.

Back in 2019, Illy wanted to be judged as we were, without any tactical changes. Since then, we have made the necessary changes, and became B Corp certified in April 2021.

So you were in the process of certifying when the Covid-19 pandemic struck?

Covid happened exactly in the middle of the assessment period. Immediately travel and meetings had to stop, and the company had to change.

Before the pandemic, between 60 and 70% of Illy’s market was the hospitality sector, with the rest made up of home, office, and places like airlines and cruises. In 2020, once the pandemic struck, 56% of the company’s business came from home consumption, with a marked increase in online buying.

[The company has also been through other major changes. In November 2020 it announced that Rhône Capital, a private equity firm, would be taking a 20% stake in the formerly family-owned company. In January 2022, Cristina Scocchia took over as CEO.]

We changed CEO 1st Jan, and by the 4th January we had already re-confirmed that the B Corp platform would be our sustainability framework.

We want to increase the value of the company in a tangible way. This is very key: Sustainability needs to work together with the business. In order that the strategy of Illy works together with value we create for stakeholders.

How have Illy’s employees responded?

B Corp certification included the culture and the way of working of the directors, employees, workers, consumers, society. It changed peoples’ minds in a way that our other certifications were not able to. A lot of people found that they felt responsibility, accountability, when Illy became a B Corp, that they had to change their way of working, promoting new solutions on sustainability. This was a big, beautiful surprise.

Obviously, though, it wasn’t an easy process.

Given the difficulties of Covid-19, but also of having a very big, distributed supply chain, how do you make sure you keep standards high throughout that chain?

That was our nightmare back in March 2020. In two days, 90% of our employees started to work from home. Only production continued, and we didn’t stop a single day. I, and some of my colleagues, were here every day: I’m a taster-assessor and it’s difficult for me to taste the coffee from my house!

To protect workers we separated shifts, and departments. We triplicated the dressing rooms, the worst place for contamination, and separated the toilets. We mandated masks from March 7 2020, even though their efficacy was debated for much longer in Italy. We had a doctor here daily for testing, always free of charge for employees.

We also tried to do a lot for our clients. When coffee bars had to close, we taught them how to shut down the equipment, how to conserve the coffee.

In July 2020, when the bars started to open again, a lot of our competitors’ customers asked to use Illy. Why? Because when our bars reopened after lockdown the quality was still good. Other brands had issues, because they hadn’t been taught how to close. The fact that Illy is packaged in pressurized cans guarantees the quality of the coffee for three years; it was a good opportunity to prevent food waste.

Illy used the time of home-working for training on things like sustainability, human rights, smart working, diversity and inclusion. We guaranteed to keep all our employees in production and offices, even if they had to move departments. [The exception was a few US staff covered by the US furlough scheme.]

In 2021, rural areas where coffee is grown were affected by the pandemic much more [than in 2020], but we still had no problem with supply. We had problems instead with containers, ships, raw materials like plastic, paper, steel, energy. But again the fact that we put in place more efficiency measures reduced the risk of a big negative effect on our numbers. We had some luck, but the strong relationship that we have with all our suppliers—of all materials—also meant we could maintain our agreements with the whole supply chain.

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