additional reading le$.$g$.$ about Illycaffe, South Affrica Coffee Market, Specialty coffiee shops, and SPar.

Case Study: lllycaffe by Francesco llly$.$

Illtraffe was founded in $1993$ in Trieste by francesco llty$.$

Whie illycaffe ariginated in haly, its presence has expanded to many countries around the world, induding South Africa. Ely's journey in South Africa reflects the company's global expansion and comentment to offering exceptional coffee experiences.

Illys introduction to the South African market likely toak place in response to the country's growing interest in coffee culture and the demand for premium coffee products. South Africa's evolving coffer scene, characterised by a burgeoning coffec culture, the rise of Specialty coffee shops, and a discerning clientele, provided fertile ground for lly to establish a presence. Over the years, llly has likely formed partnerships with local distrituttors, coffee shops and hospitality establishments in South Africa to make its coffee products available to a broader sudience. Iy has partnered with SPAR to distribute affordable, ready$-$to$-$drink coffee.

Today, it is led by the third generation of the family. Andres llly is the Chairman, and Cristina Scorchia is the CEO. Anna Rossilly, Emesto's wife $($the founder's son passed away in $2008),$ is honorary Chairman. Anna llly jr continues her father's work and handles relations with coffee growers. Andrea llly is the CEO of the global premium coffee company that bears his family's name.

As one might expect, he is passionate about coffee $-$ its science, its heath benefits, its taste, and its besuty. Illy also has a dream that someday soon, the coffiee market might be transformed into something approaching the market for wine.

Where connoisseurs discuss the fine points of various origin coffees and blends, where customers are willing to pay a premium for the finest examples of the coffee$-$making art, and where the growers, roasters and baristas will be compensated fainly for the expertise they contribute to every cup.

Pape $4$ ad $13$

$22,21$: $24$

Unfortunately, the current coffee market differs from such an ideal. Coffee growers in most parts of the globe work at a bare subsistence level.

One bad harvest $($made all the more likely by the ravages of climate change$)$ or a sudden decline in the commodity price of coffee can drap them below subsistence to hunger. Even in good times; growers have little incentive to improve their operation $-$ they have minor contact with the rasters or customers and no knowledge of how their crops get translated into the cup. This disadvantages not only the grower but also the consumer $-$ coffee sourced from good quality beans is hard to find.

Illy believes that the solution to the sad state of affairs is to initiate a "virtuous circle" that draws the grower, the roaster, the barista, and the customer together. Growers with better knowledge of the market will work to improve their crops or experiment with new varieties. Roasters and preparers will educate their customers as to the qualities of various beans, roasts, and preparations. Customers, in turn, will be willing to pay more for the best beans, and that premium will be sent back up the chain to pay for even more quality and variety. And so on$.$

Certainly, there have been some positive signs. Indeed, many observers argued that a "third wave" of transformation in the coffee market was already starting. $($The first wave is said to have accurred when Maxwell House and Folgers made coffee a mass commodity, and the second wave was when Starbucks initiated a move to quality and higher prices.$)$ Specialty coffee roasters had worked to build cafes and brands around origin$-$based beans sold directly to the roasters without. reference to the commodity prices of coffee. With these third$-$wave raasters, every coffee came with a story of its origins, and growers could count on occasionally eye$-$popping premiums for their beans.

As yet, Specialty coffee represented a small slice of the overall market, and there were other signs that it might not ever grow beyond a small circle. New trends like coffee$-$based drinks and singke$.$ portion coffee in pods $($e$.$g$.$ K$-$cups, Nespresso$)$ shifted mare of the value$-$added towards roasters whthout a premium for growers. A consolidation was taking place among mass roasters that were even sweeping up third$-$wave roasters in its wake. Observers argued that this could lead to greater uniformity with even less emphasis on origin based, direct$-$traded coffee.

Pape Sot $13$

$22,23$: $24$

Illy hopes that someone would come up with an imoration that would solidify the beginnings of the third wave and help reshape the market. Such a change would nat necessarily have to involve Illycaffe; Andrea llly believes as the world's premium brand, an increased emphasis on quality in the market would only help his company. The most important thing was to make the coffee supply chain more equitabile and coffee better$-$tastine.

Question $1$

$($Marks: $100]$

In Learring Unit $1$ to