Latest news with #AndreaIlly
Forbes
17-04-2025
- Business
- Forbes
Quality Through Sustainability: How Illy's Regenerative Practices Create Award-Winning Brazilian Coffee
Italian coffee powerhouse illycaffè is rewriting the narrative of Brazilian coffee through a focus on regenerative agriculture. In October 2023, illy launched the first coffee certified by regenagri, a leading global regenerative agriculture verification system. The results have been transformative: Brazilian coffee farms implementing these regenerative practices have won illy's prestigious Ernesto Illy International Coffee Award for two consecutive years in 2023 and 2024. The transformation is particularly noteworthy given Brazil's historical reputation. Brazil has long been the world's largest coffee producer, as it accounts for nearly 38% of the world's coffee, with approximately 4.2 million metric tons (69.9 million bags; 60 kilograms per bag) annually. Traditionally, Brazilian beans were rarely celebrated for exceptional quality. However, through regenerative practices, these farms have achieved recognition previously thought impossible. The regenerative farming practices hold even greater significance if considering the coffee industry's substantial environmental footprint. Coffee is grown on more than 11 million hectares globally and employing an estimated 25 million farmers across 50 'coffee belt' countries, 80% of whom are smallholders (less than five hectares) vulnerable to climate change and market volatility. I spoke with David Brussa, Chief Total Quality & Sustainability Officer at illycaffè, about the company's comprehensive approach to regenerative agriculture. Our conversation builds on my previous interview with Andrea Illy in 2021, where he described taking a sabbatical to study regenerative agriculture. Three years later, illy has taken the concept of "Virtuous Agriculture" from vision to implementation and demonstrated how regenerative practices can transform both environmental impacts and coffee quality. The company's adoption of regenagri certification is just one manifestation of this broader commitment to transforming coffee cultivation from a potentially extractive practice into a regenerative one. We also explored some of illy's specific regenerative practices, strategies for adapting to climate change, and innovative approaches to consumer education about sustainability. We touched on how illycaffè ensures fair compensation for farmers implementing these methods and their efforts to collaborate across the industry to bring systemic changes. Read more about illycaffè's approach to regenerative agriculture in the interview below. Christopher Marquis: I know the idea of regenerative agriculture is becoming more prominent in coffee. When I spoke with Andrea Illy about three years ago, he mentioned taking a sabbatical to study this concept from his background as a chemist. Could you share how illycaffè's ideas around regenerative agriculture have evolved, particularly regarding your coffee ecosystems and communities? David Brussa: The regenerative momentum we're experiencing now comes from two concurrent developments. First, in 2018, Dr. Illy spent a year studying the best sustainable practices in the private sector, particularly in coffee production. He developed a philosophy called "Virtuous Agriculture" – a way to obtain double benefits for both the environment and human health. The concept involves producing in harmony with nature by reducing chemical fertilizers and pesticides, working with cover cropping and intercropping, considering how the land should be cared for, and increasing fertilization so the product becomes healthier and better quality. At the same time, in 2019, we became a benefit corporation and started the process to become a certified B Corp, which we achieved in April 2021. During the B Lab assessment, we discovered that companies scoring below 80 points are classified as "extractive companies," while those above 80 are considered "regenerative companies." For us, quality and sustainability are two sides of the same coin, with ethics as the edge connecting them. In our multi-year plan, we're currently in what we call the "circularity period." In about five years, we aim to focus on restoration – restoring what humans have already damaged. Then, in approximately ten years, we'll work on conservation – maintaining what companies, together with public entities, have recovered and restored. Marquis: Could you elaborate on some specific projects you're implementing in coffee regions to reform agricultural practices? Brussa: In October 2023, we launched the Arabica selection from Brazil, certified as regenerative agriculture by regenagri. This was a pure Arabica product from farmers certified in regenerative agriculture. The concept of regenerative agriculture originated in Pennsylvania from the Rodale Institute more than 50 years ago and encompasses over 180 different practices. We studied these practices to identify which ones could be implemented in coffee production, since coffee trees are perennial plants that live 20-30 years, unlike annual crops. After three years of work, we identified 18 practices, and during our last trip to Africa, we discovered two more. So our list of regenerative agricultural practices that are suitable for the coffee sector are, for instance, to cut the arms with the scissor and not with the machete. Use the inter cropping maybe with big trees that can make shadows and reduce the evaporation of the water. If you are growing your trees not on flat land but in a slope situation, try to make a little terrace in order to stop the water during the flow and maintain the moisture closer to the roof. Replacing chemical fertilizers with organic fertilizers that helps create synergy with livestock farming. Study and use biostimulants instead of fertilizers to naturally increase soil fertility year after year. Avoid tillage entirely to preserve soil microbiota. Last but not least the cover crops increase biodiversity that can host the 'enemies of your enemies' as insects that fight naturally the pest worms that would otherwise require pesticides. These practices reduce evaporation, helping Arabica coffee absorb moisture through the roots, which is crucial for seed growth and maturation. We're testing these approaches at plantations in Ethiopia, Guatemala, Costa Rica, and nine locations in Brazil, where we measure benefits in terms of greenhouse gas reduction, biodiversity increase, worker health, and crop yield. We've also introduced precision farming techniques, using sensors to measure soil conditions, air temperature, and moisture. We compare these monitored areas with conventional sections to quantify the benefits. This approach has gained momentum partly because many farmers' children, who studied abroad and returned home during COVID-19, brought new technological ideas and perspectives. Marquis: Beyond the environmental aspects, what are you doing to positively impact farmers in a regenerative sense, particularly regarding compensation and benefits? Brussa: For 90 years, illycaffè has recognized that quality has a cost and must be rewarded with a premium. We purchase coffee based on quality, with the stock option value as the base plus a quality premium connected to production. Today, we look not only for quality but for "superior quality and sustainable coffee." Our approach to paying producers is already part of our business model, independent of market fluctuations. If you want quality and sustainability, you must pay more, because otherwise, producers aren't motivated to improve. Our peer-to-peer contracts, whether annual or multi-year, allow illy to work hand-in-hand with producers and pay the real value for the coffee. We operate under what we call a "sustainable procurement process," developed in line with two international standard organization guidelines: ISO 26000 for corporate social responsibility and ISO 20400 for sustainable procurement. Through this process, we train producers not only in quality but also in sustainability practices. We teach them how to manage funds, control costs, collect primary data for carbon footprint and water usage calculations, and select the most beneficial and least harmful inputs when treatments are necessary. Knowledge transfer occurs directly through our Università del Caffè della illycaffè(University of Coffee) and through online platforms in Brazil, where we share weekly information on new technologies and best practices. Regenerative agricultural practices are now part of this knowledge transfer to our suppliers. Marquis: Climate change is a major concern for coffee cultivation. How is Illy thinking about adapting to these changes, particularly regarding potential shifts in growing regions? Brussa: Climate change is now a daily reality we must confront, not just because areas that were once moist are now dry, but because we're experiencing extreme and rapid weather variations that are confusing the plants. Working with regenerative agricultural practices, we've found several effective adaptation strategies. For example, we suggest that producers maintain older coffee plants rather than replacing them every 10 years, as ancient plants have longer roots and are more resilient in absorbing moisture. We recommend various cover cropping patterns to retain moisture, reduce soil temperature, and improve plant health. We're also identifying and suggesting coffee varieties that are more resilient to drought or excessive moisture, depending on the location. For areas with strong winds, we recommend planting taller trees as windbreaks to reduce evaporation. Additionally, we're introducing biostimulants and conducting chemical analyses of pH and microelements to optimize growing conditions. This is highly specific work that depends on each plantation's unique characteristics, including location, soil type, and coffee variety. We're developing climate adaptation solutions that help Arabica trees remain alive and fertile despite changing conditions. Looking toward the future, we're exploring artificial intelligence applications in agriculture. Unlike industrial processes where continuous improvement occurs daily, in agriculture, each growing season starts anew. We're collecting comprehensive data from specific fields using sensors that monitor weather conditions, soil chemistry, plant health, and bean quality. By identifying correlations among these factors, we hope to help growers select the best practices for their specific conditions rather than relying on trial and error. Marquis: Turning to the consumer side, I recently tried your regenerative coffee from Brazil. How are you communicating the importance of regenerative agriculture to consumers, and are they responding positively? Brussa: This is a crucial question because if consumers don't understand what we're doing, we're working for nothing. When we became B Corp certified, we saw good success, and when we launched the regenerative coffee can in retail stores, we achieved much greater success. Consumers compare different products on the shelf, and our enhanced product information, including QR codes linking to videos and detailed explanations, helps convey the sustainability story effectively. The QR codes deliver comprehensive information in a convenient way and are particularly appealing to younger customers. This year we're promoting the Brazil Arabica Selection in the HoReCa market (Hotel, Restaurant, and Catering) in Italy and abroad. An interesting development is that for the past nine years, we've held the Ernesto Illy International Coffee Award in New York, recognizing the best coffee from the nine origins in our blend, (most purchased during the year). For seven years, Brazil never won. Then in 2023, a Brazilian producer who was certified in regenerative agricultural practices won the award. In 2024, another Brazilian producer won again – this time a farm practicing regenerative agriculture without certification but meeting our assessment criteria. This back-to-back victory is significant for the industry because Brazil has historically been known as a leader in quantity, not quality. Now, they're demonstrating leadership in both areas, challenging other producing countries to raise their standards. When serving this coffee in cafes and restaurants, baristas can tell customers they're tasting an award-winning, regeneratively grown Brazilian coffee. This creates a compelling story and differentiates certain hospitality businesses looking to emphasize sustainability. While our illy blend remains our core business product with 100% sustainable procurement process, the Arabica Selection offers superior quality and higher sustainability for consumers seeking those attributes. We believe that transferring knowledge through the product is an effective way to create value for customers. The entire chain of custody is certified by regenagri to avoid any greenwashing risks and protecting our reputation. Marquis: You mentioned working on pre-competitive practices and how the recognition of Brazilian coffee has sparked industry discussions. How are you collaborating within the industry to spread regenerative practices more broadly? Brussa: Currently, only about 0.2% of agricultural land is certified by regenagri, which is minimal. We're working in a pre-competitive way with companies like Nestlé, JDE Peet's and Keurig dr. Pepper (KDP) through the Global Coffee Platform to develop a regenerative farm protocol called 'Regncoffee'\. This collaborative effort aims to demonstrate that proper coffee cultivation can increase economic, social, and environmental sustainability while enhancing market resilience and value. We need to standardize and define a common method to measure and assess whether a producer is truly regenerative. As I mentioned, regenerative agriculture isn't a static status but a continuous improvement process. When certified, producers must meet a minimum score (of 65%) and then increase that percentage during reassessment yearly, demonstrating ongoing improvement. A major challenge in the coffee industry is its structure: about 30,000 producers account for only 20% of worldwide coffee production, while the remaining 80% comes from 12 million smallholder farmers with less than two hectares each. To drive change at scale, companies like illy promise to purchase coffee from producers adopting regenerative practices, guaranteeing them a market and premium prices. This ensures farmers earn a fair income, which is crucial since for many years, market prices were below production costs. Dr. Illy is also leading the development of a coffee resilience fund, combining private and public resources to support small producers who often live in poverty and receive only 5-10% of the coffee value chain. The philosophy is to help the weakest part of the supply chain, working not just with direct suppliers but throughout the entire value chain. We approach this with a stakeholder mindset, seeking win-win-win solutions for roasters, producers, and the planet. This pre-competitive approach reflects our belief that tactical sustainability is a dead end, while being business creates the resources to pursue true sustainability – what we call the "BC state" (Benefit Corporation, B Corp, Benefit Business, Collaborative and Common Benefit). This philosophy is embedded in illy's approach. As a benefit corporation and B Corp, we understand the importance of working hand-in-hand with producers in a peer-to-peer relationship, rather than the traditional client-supplier dynamic where compliance is demanded. This collaborative approach extends beyond green coffee to all our procurement processes.
CBS News
27-02-2025
- Business
- CBS News
Why are coffee prices rising in the U.S.?
It's not only the surging cost of eggs that is making breakfast pricier these days — the price of coffee is also spiking because of a confluence of factors. The cost of wholesale arabica beans — the most popular on the planet — surpassed $4 a pound for the first time this month and have doubled over the past year, running up from less than two bucks a pound in January 2024 to a record $4.30 a pound on February 13, 2025, according to futures contracts traded in New York. For consumers still grappling with high food costs, that means soaring prices in the grocery aisle. The retail price of ground coffee hit an all-time high of $7 a pound in January, up 75% from $4 in January 2020, government data shows. Coffee drinkers are likely to see even steeper prices over the next three or four months, with Andrea Illy, chairman of Italian roaster and global retailer Illycaffè, recently predicting that bean prices could climb 25% this year. Unlike some products, coffee is viewed as essential by many consumers, making them more willing to pay up for their java fixes. Without a direct substitute for coffee, retailers and suppliers generally have greater room to raise their prices. "Coffee, as we all know, it's a pass-through category," J.M. Smucker CEO Mark Smucker said in an earnings call in November. "We've been very pleased with our performance in the quarter, despite the fact that we continue to see significant inflation," said the executive, whose company's brands include Folgers and Cafe Bustelo. Cost of climate change As with the cost of other global commodities, supply and demand are a large part of the equation. Getting caffeinated is likely to become an ever-costlier proposition because of rising temperatures, droughts and excessive rains striking Brazil and Vietnam, the world's two biggest producers. The 2024 coffee growing season saw a drought followed by August frost in Brazil, and flooding in October came in the wake of a drought in Vietnam. Brazil's coffee exports during the month were down 7.4% year-over-year and Vietnam's December export fell nearly 40%, according to a January report from the International Coffee Organization. "When the crop in Brazil does not produce as much coffee as expected in the year, that causes the prices to shoot up," Gregory Zomfotis, founder and CEO of Gregory's Coffee, told CBS News. "Some of the major producers have really not seen the production levels that were expected and quite far from it, so that's caused a severe spike in the price of coffee," added Zomfotis, whose company operates more than 50 stores nationwide and expect to purchase up to 700,000 pounds of coffee this year. Amid those supply constraints, global demand for coffee in growing. For example, consumption is up 150% over 10 years in China — the world's most populous country, according to the U.S. Department of Agriculture. Other factors also are contributing to the pricing pressures, including politics. President Trump on Tuesday vowed to proceed next week with his previous threats of 25% tariffs on Canada and Mexico. A levy on Mexico, whose largest coffee export market is the U.S., would likely push prices up further. Separately, a new European Union law that is now set to take effect in December prohibits the sale of products, including coffee, if companies can't show they are not linked to deforestation — a bid to lessen greenhouse gas emissions and biodiversity loss. That effort to address the climate crisis could further tighten supplies of coffee beans. Geopolitical conflicts are also a factor in rising coffee costs. Fighting between Israel and Hamas has caused havoc in the Red Sea, which carries 30% of the world's container traffic, including coffee from Vietnam. Slowdowns in the Red Sea and the Suez Canal meant as many as 5 billion bags of coffee had not yet arrived in Europe, the International Coffee Organization reported in December.
Yahoo
13-02-2025
- Business
- Yahoo
Coffee is in a 'perfect price storm' — and it's finally starting to hit your wallet
Coffee futures (KC=F) have ripped more than 30% year to date, hovering near all-time high levels. The surge is starting to pass through to consumer wallets. The Consumer Price Index report released Wednesday showed that the prices consumers paid for roasted coffee rose 2.5% in January over the previous year. Meanwhile, instant coffee jumped a whopping 7.1%. Read more: From $5 eggs to insurance premiums, here's where prices are rising One global buyer and seller of coffee told Yahoo Finance that while it has yet to raise prices, it has no choice but to consider hiking them in the medium term. "Coffee is in a perfect price storm," Andrea Illy, chairman of illycaffè, said in an interview Wednesday. Illy points to climate issues at top world producers and exporters, including Vietnam and Brazil, where poor weather conditions impacted harvest. Brazil had its hottest year on record in 2024, with a record number of forest fires impacting its arabica coffee and sending prices higher. The US imports the second-highest amount of coffee per year behind the European Union, with top supply coming from Brazil, Colombia, and Vietnam. 'There is no alternative," Illy said of price increases. Of the surge in coffee futures, he added, "We don't know how long it will last." Other companies are considering price hikes as well. "If you look at 2025, we expect coffee inflation to continue to ramp. We will look to offset with pricing that is going into market early in the year," Sudhanshu Priyadarshi, CFO of Keurig Dr Pepper (KDP), said during the company's most recent earnings call in October. Not all commercial coffee buyers are seeing a big impact, as it's common practice for big retailers to purchase large quantities at least a year in advance and lock in prices with futures contracts. "Given our overall practices and hedging strategy, our year-over-year coffee price impact was minimal in Q1," Starbucks (SBUX) CFO Rachel Ruggeri said last month on the company's post-earnings conference call. Part of the reason instant coffee saw a big pop in the CPI report is that the already-low price points make it easier for companies to raise them without giving consumers major sticker shock. "Generally, instant coffee is a lot cheaper, and [retailers are] able to bump up that price and still be in the 'lot cheaper' category," said Shonali Paul, founder of Paul John Caffeine, a Florida-based coffee roaster. Instant coffee uses robusta, a lower-tier bean compared to arabica, the kind used for restaurant chain coffee. Climate droughts in Vietnam last year impacted robusta production, sending prices 60% higher over the past year. Rising shipping and labor costs have also weighed on the instant coffee market. "With instant coffee, your margins are just so thin, it's why you see them take a hit on some of those other logistical costs so much sooner," Heather Perry, CEO of Klatch Coffee, told Yahoo Finance. Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre. Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
Yahoo
13-02-2025
- Business
- Yahoo
Coffee is in a 'perfect price storm' — and it's finally starting to hit your wallet
Coffee futures (KC=F) have ripped more than 30% year to date, hovering near all-time high levels. The surge is starting to pass through to consumer wallets. The Consumer Price Index report released Wednesday showed that the prices consumers paid for roasted coffee rose 2.5% in January over the previous year. Meanwhile, instant coffee jumped a whopping 7.1%. Read more: From $5 eggs to insurance premiums, here's where prices are rising One global buyer and seller of coffee told Yahoo Finance that while it has yet to raise prices, it has no choice but to consider hiking them in the medium term. "Coffee is in a perfect price storm," Andrea Illy, chairman of illycaffè, said in an interview Wednesday. Illy points to climate issues at top world producers and exporters, including Vietnam and Brazil, where poor weather conditions impacted harvest. Brazil had its hottest year on record in 2024, with a record number of forest fires impacting its arabica coffee and sending prices higher. The US imports the second-highest amount of coffee per year behind the European Union, with top supply coming from Brazil, Colombia, and Vietnam. 'There is no alternative," Illy said of price increases. Of the surge in coffee futures, he added, "We don't know how long it will last." Other companies are considering price hikes as well. "If you look at 2025, we expect coffee inflation to continue to ramp. We will look to offset with pricing that is going into market early in the year," Sudhanshu Priyadarshi, CFO of Keurig Dr Pepper (KDP), said during the company's most recent earnings call in October. Not all commercial coffee buyers are seeing a big impact, as it's common practice for big retailers to purchase large quantities at least a year in advance and lock in prices with futures contracts. "Given our overall practices and hedging strategy, our year-over-year coffee price impact was minimal in Q1," Starbucks (SBUX) CFO Rachel Ruggeri said last month on the company's post-earnings conference call. Part of the reason instant coffee saw a big pop in the CPI report is that the already-low price points make it easier for companies to raise them without giving consumers major sticker shock. "Generally, instant coffee is a lot cheaper, and [retailers are] able to bump up that price and still be in the 'lot cheaper' category," said Shonali Paul, founder of Paul John Caffeine, a Florida-based coffee roaster. Instant coffee uses robusta, a lower-tier bean compared to arabica, the kind used for restaurant chain coffee. Climate droughts in Vietnam last year impacted robusta production, sending prices 60% higher over the past year. Rising shipping and labor costs have also weighed on the instant coffee market. "With instant coffee, your margins are just so thin, it's why you see them take a hit on some of those other logistical costs so much sooner," Heather Perry, CEO of Klatch Coffee, told Yahoo Finance. Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre. Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
Bloomberg
07-02-2025
- Business
- Bloomberg
Illy Chairman on Coffee Rally, Outlook & Demand
Coffee's recent dizzying rally has been fueled by a lack of insight on future supply and short-term speculation, resulting in pricier brews for consumers, according to Andrea Illy, chairman of Italian roaster Illycaffè. Illy spoke on "The Pulse with Francine Lacqua" on Bloomberg TV. (Source: Bloomberg)
