Coffee Maker Illy Uses Backdoor To Take On Starbucks in the U.S.

Italian coffee maker IllyCaffè SpA has a stealth plan for moving in on Starbucks Corp.'s turf. By joining forces with independent coffee shops, Illy can get its name in front of more customers without having to buy or rent its own shops. For more than 20 years the closely held company, based in Trieste, Italy, has sold its coffee in high-end grocers such as Whole Foods and in coffee shops, hotels and restaurants in the U.S. Now it's expanding its reach by signing contracts with cafes in the U.S. that agree to serve Illy exclusively and allow Illy a hand in quality control. For the shops, aligning with a premium brand is a way to differentiate themselves from chains and other independent shops—and to charge higher prices.

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