Illy Expanding into Ice Cream?

by chee Leng
(Singapore)

First, we have Starbucks venturing into supermarket with Via, then we heard Nescafe opening cafes (Currently less than 5), and now illy is going into the ice-cream business? Why are companies not sticking to that own domain?

Illy recently invest 2.5 million into a relatively new ice cream company known as Grom. The latter although having started just a few years, have expanded to 40 outlets, and even to places such as Japan. While, this seems like a good company to invest in, from coffee to ice cream seems a little far off (although the top[ management of illy says is perfect match).

So, why is illy doing this expansion? It is a form of diversion? Or, it is trying to craft out a new niche?

My $0.02

1. The power of its brand

illy branding and positioning is so good, that expanding on it might proves detrimental. Think about it, when you mentioned illy, immediately one would think of good Italian coffee. This is a branding that was build over the years. It has its own audiences, its own loyal following. Of course, it also has its own limitations.

Illy might be facing a saturation point for this group of audiences and see a need to expand, and so they need to find new segment, new audiences, and using its current positioning might dilute what it brand equity.

2. Different segment

The fact is illy is pretty couragous, some time back it did issimo, cold coffee with Coca Cola. While, it has yet to be the world's most popular ice coffee, it is popular and the market is growing.

Encouraged by this growth, and potential of a new segment, new stream of income, might be a reason for the investment in ice cream

3. It is reall a good match!

While, personally I don't really think so. The fact is, big ice cream brands such as Hagan Dazz are using illy coffee, and I believe the sales are good for illy to be making the acquisition of Grom.

With the many changes taking place in the coffee world, only one thing is certain -you need to constantly change and innovate to compete in today's market. Failure to do so would meant losing out to competition.

What is your view on this, do you think coffee company should be selling ice-cream?