Illy ally

MARKETING: Barista has an alliance to serve coffee fresh and honest.

What was that again? "Proud to serve Illy". If you've dropped by a Barista outlet lately, that's what would greet you on posters and tent-cards.

Locating the source of this cafe chain's newfound pride takes only a little research "" which you may conduct at the outlet's counter (unless Google is handier): Illycafe is among the most widely distributed of Italian specialty coffee brands.

The reason that the chain is suddenly so gung-ho on it "" a rival brand, in a sense "" is that the company has tied up with group company Fresh & Honest (both are part of the Sterling Infotech group) to serve "Illy" coffee in India.

According to R. Shivashankar, CEO, Fresh & Honest, the company has a five-year distribution agreement with Illycafe by the terms of which both companies would be investing $15-20 million each to market Illy in India.

The first phase of this deal involves supplying the coffee to hotels and building the brand franchise through Barista.

Shivashankar says that the company is in the process of doing market research to determine what kind of products would work at the retail level. "Once we have determined the product mix and price points," he adds, "the coffee will be available in most SEC A towns. This would happen in about three months."

As a trial, Barista is offering five hot and five cold Illy beverages. According to Partha Dattagupta, CEO, Barista Coffee, the new brand already accounts for over a tenth of the hot beverage sales at the few outlets that are serving it.

By widening the menu thus, Illy helps Barista woo the coffee connoisseur.

The company, meanwhile, is in consolidation mode. The food systems are being reworked for cost efficiency. Some 20 weak outlets have been shut; and another 100 are planned this year. "The Rs 50-crore expansion we have planned is the largest we have undertaken, and this would be funded internally," says Dattagupta. Highway outlets are coming up too.

Is Starbucks keeping count? Who knows... but Illycafe sure is.