Speaker 1: You're listening to Bloomberg BusinessWeek with Carol Messer and Tim
Speaker 1: Stenebek on Bloomberg Radio. You the cream in my coffee?
Speaker 2: You saw it in little talking about coffee. A little
Speaker 2: bit of news. First, Arabica coffee futures jumping to the
Speaker 2: highest June traders looking closely at the issue of declining
Speaker 2: exchange inventories to him, which were at the lowest since
Speaker 2: nineteen ninety nine. Basically kind of supplied ament.
Speaker 1: What were you going to say, I was going to
Speaker 1: say Arabica or what's the other being? Robusto Robusta.
Speaker 2: We have an expert in the house.
Speaker 3: Yeah, that voice you're hearing Elie Cafe chairman Andrea e Lee,
Speaker 3: the grandson of Eli founder Francesco Ely, who started the
Speaker 3: coffee company ninety years ago in Italy. By the way,
Speaker 3: if you had any sort of espresso drink today, you
Speaker 3: can thank Andrea's grandfather because he invented the steam driven
Speaker 3: coffee maker that we now know as espresso machines. Andrea
Speaker 3: joins us here in the Bloomberg Interactive Brokers studio.
Speaker 4: How are you very well pleased to be here?
Speaker 2: What was it like growing up with that history?
Speaker 4: Oh? I felt it was coffee was at the center
Speaker 4: of the universe because my father, as I am, was
Speaker 4: a chemist, always thinking and talking about coffee, and he
Speaker 4: started drinking coffee, sipping, let's say, coffee, when I was
Speaker 4: two and a half years old, and since then all
Speaker 4: this coffee, coffee, coffee, cofee, coffeeffee.
Speaker 3: So there's no it's not two is not too young
Speaker 3: to drink coffee.
Speaker 4: No, it was just sipping, you know, admiring my mother,
Speaker 4: you know, trying to prepare express with these little, tiny
Speaker 4: express machines at home at the time, no capsules that
Speaker 4: were still existing, because we started the very first capsule
Speaker 4: portionate fifteen years later than that, in order to you know,
Speaker 4: make it easier to produce coffee everywhere in the restaurants
Speaker 4: or offices or home. But before that it was quite difficult.
Speaker 4: You needed to be a trained barrista. But in this
Speaker 4: case you need to have a cumbersome a big machine
Speaker 4: at home. Was very difficult. So and my father I
Speaker 4: nicknamed her the Engineer of Coffee, you know, was a
Speaker 4: precursor to this, you know, expertise in home express of brewing.
Speaker 2: So Andrea, how comes is there's so many bad cups
Speaker 2: of coffee out there, Like, what is the difference? Like
Speaker 2: we were talking, we talk about it of it sometimes, don't.
Speaker 1: Go there, You're going to get fired. I'm going to
Speaker 1: get fired.
Speaker 2: But why is it that you can have what makes
Speaker 2: a great cup of coffee?
Speaker 4: Well, you need good beans, first of all, and it's
Speaker 4: difficult to access them, just to tell you. In order
Speaker 4: to access to good beans with this pioneered the direct
Speaker 4: source thing in nineteen ninety one. So we did organize
Speaker 4: ourselves to go direct, working hand in hand with coffee growers.
Speaker 4: And the second major step has been creating the University
Speaker 4: of Coffee in order to transfer knowledge to them how
Speaker 4: to elevate their agronomical practices for better sustainable quality. And
Speaker 4: this is the reason why we had this award that
Speaker 4: we are giving tomorrow to the best growers of the
Speaker 4: nine let's say origins where we use coffee from. But
Speaker 4: producing high quality coffee is not an easy job. So
Speaker 4: direct Trading, University of Coffee Electronics sorting out every single bean.
Speaker 4: This has been one of our patents, sorting every single bean,
Speaker 4: because one defective being can spoil up to one keil
Speaker 4: of coffee. You know, this is an amazing let's say
Speaker 4: science behind and this is the reason why I'm second
Speaker 4: generation scientist chemist coffee for coffee.
Speaker 3: How often do you find a bad being that could
Speaker 3: spoil an entire kilo of coffee? Like, how what is
Speaker 3: the rate of a bad being within a badge?
Speaker 4: So at the time we started sorting, it was maybe
Speaker 4: two three percent. Now is less than half a percent.
Speaker 4: Also because in the meantime we did improve substantially agronomical practices.
Speaker 4: But you know, some of these defective beans could be
Speaker 4: invisible because maybe they have some off flavors that you
Speaker 4: cannot that you cannot find, So it can still happen.
Speaker 4: But if everything is well processed consistently, then you can
Speaker 4: prevent that. But this is not the standard in the
Speaker 4: industry because the coffee growers produced for us are specifically
Speaker 4: produced for us. We buy coffee upon our own standards.
Speaker 4: Coffee growers like to joke about that ELI coffee doesn't
Speaker 4: exist because it doesn't course to any official market standard.
Speaker 4: And this is the reason why we also pay a
Speaker 4: substantial premium for that, because on average we pay thirty
Speaker 4: percent premium on top of the best highest coffee prices
Speaker 4: in order to motivate them and reward them for the
Speaker 4: extra effort for producing superior quality.
Speaker 2: Is it harder to grow better coffee beans?
Speaker 4: It is harder. You need the right people. This is
Speaker 4: why direct sourcing because we need to really get access
Speaker 4: to the people who are, let's say, philosophically seeking the
Speaker 4: best in life. No matter how rich or how educated
Speaker 4: they are, there are some people like that. You need
Speaker 4: to find the perfect ecosystem, you know, weather, soil, like
Speaker 4: the turd war. They time exactly exactly the same. You
Speaker 4: need to find the right cultivar, so the right plant.
Speaker 4: Not all coffee varieties are as good. And finally, you
Speaker 4: need those people to process coffee in a way which
Speaker 4: is perfect. So yes, it takes. It takes quite an.
Speaker 2: Effort and increasingly sustainable, which when you talk about standards.
Speaker 2: I want to talk a little bit about this award
Speaker 2: that is being given at the United Nations, the unesto
Speaker 2: ELI International Coffee Award. It is to the individual, the
Speaker 2: farmer that produce the most sustainable coffee. And what's interesting
Speaker 2: is that we're having this conversation. I've talked with the
Speaker 2: folks over at ab and BEV like they understand the
Speaker 2: importance of water, like their business will not continue unless
Speaker 2: they have great access to water and other things. Obviously
Speaker 2: crops that go into beverages. Same thing for you guys,
Speaker 2: right in terms of the impact on the environment, Yes,
Speaker 2: your businesses, you need to make sure it's done in
Speaker 2: a sustainable way.
Speaker 4: So yes, the award is for the best sustainable quality
Speaker 4: in the company was born ninety years ago upon my
Speaker 4: grandfather dreamed to offer the greatest coffee, and so as
Speaker 4: a strategy we decided to have only one, because the
Speaker 4: greatest can be only one, right, and of course the
Speaker 4: greatest need only need must only not only be the
Speaker 4: best in taste, but also the best in how it
Speaker 4: is produced. Actually, as a matter of facts, sustainability and
Speaker 4: quality are two phases of the same coin. You don't
Speaker 4: have the one without the others. So it's not difficult
Speaker 4: for us to kind of, let's say, find find a way.
Speaker 4: And this award, this blend that we produce is made
Speaker 4: of nine origins because each origin has a different aroma profile.
Speaker 4: It's like having a nice orchestra, and the more instruments
Speaker 4: you have, the richest the orchestra. Okay, so nine and
Speaker 4: the three best growers of each of the nine origins
Speaker 4: are awarded tomorrow at the United Nations, so they would
Speaker 4: know who's the first, second, and third and go back
Speaker 4: home with an extreme satisfaction and being completely boosted motivation wise, etc.
Speaker 4: Which is also helping them to sell the rest of
Speaker 4: the coffee. They don't sell too early to the rest
Speaker 4: of the market at premiums. So the company Eli Cafe
Speaker 4: has been a knowledge in many countries for having contributed
Speaker 4: to transform the coffee industry in a let's say, more
Speaker 4: sustainable way, and this is we are very proud of.
Speaker 2: We're here with Eli Cafe Chairman Andrea Ely, of course,
Speaker 2: the grandson of the founder of the company started some
Speaker 2: ninety years ago in Italy. Here in Urbenberg Interactive Brokers Studio.
Speaker 2: I want to pull John Tucker in because he's normally
Speaker 2: in the wee hours of the morning drinking a lot
Speaker 2: of coffee and you're listening to our conversation and I
Speaker 2: wonder if you have a.
Speaker 1: You know, the beans that we get, there's a whole
Speaker 1: lineup and it's fantastic they do this for us. Among
Speaker 1: them Jamaican Gourmet, there's the Rwandan high altitude coffee bean.
Speaker 1: And just from your perspective, what do you suppose is
Speaker 1: the best coffee bean that is out there.
Speaker 4: And there is no such thing as the best what's
Speaker 4: your favorite? Ruanda that you mentioned has been an award
Speaker 4: winning coffee at our nesto Ili Coffee Award. And amazingly,
Speaker 4: because there are two awards, one is the let's say,
Speaker 4: best of the best, which is chosen by an independent
Speaker 4: jur of very sophisticated you know, coffee tasters, and the
Speaker 4: other is the so called coffee over choice, let's say,
Speaker 4: selected by coffee people in the street, you know, in
Speaker 4: the coffee shops. And the Wanda coffee was a lady
Speaker 4: who started a little cooperative won both awards at the
Speaker 4: same time. Quite unique, it's quite amazing. You can't want
Speaker 4: one that's similar to Ethiopian coffee. This is the plateau
Speaker 4: in Echiopy where coffee was born. Is still considered to
Speaker 4: be one of the refined, most refined coffee, but not
Speaker 4: the only one.
Speaker 1: Can you train us how to make a good cup
Speaker 1: of No, I'm serious. You can't have a YouTube video
Speaker 1: or something like that out there. How to make it
Speaker 1: depends if.
Speaker 4: You if the preparation, if you want to be an
Speaker 4: expert in expresso preparation, or.
Speaker 1: American simple American American coffee.
Speaker 4: Well, I typically use a V sixty or a brewer
Speaker 4: or chemics with the special filters. Then you look like,
Speaker 4: don't don't boil the water. Make it one seventy five
Speaker 4: or something like that, not too hot, because otherwise you
Speaker 4: burn the coffee. And then rinse the filter before and
Speaker 4: in order to get remove this flavor of the filter.
Speaker 4: And then you do you gently, you gently pour your
Speaker 4: water on top of the coffee, and you will get
Speaker 4: a nice coffee. Don't worry.
Speaker 3: I have a Camex, I have a Harriov sixty. Come
Speaker 3: on over my place. I'll make you a great cup.
Speaker 2: Of cor Bring it all.
Speaker 3: It's fine, I'll bring it all in. It's also the
Speaker 3: grind of the beans matters a lot.
Speaker 4: It matters, but less so for filter coffee, very much
Speaker 4: so for expresso coffee, because espresso is critical. It's the
Speaker 4: same time a solution, a little colloidal suspension of these
Speaker 4: tiny oil droplets which makes the coffee so flavory and
Speaker 4: so smooth. And then it's also an emulsion with a
Speaker 4: cream at topping the coffee. This is more critical to
Speaker 4: get and you need a really perfection. Also in the grind.
Speaker 3: Can you talk a little bit about transporting the coffee
Speaker 3: after it's roasted to its final destination, because my understanding
Speaker 3: is you need to have fresh beans. How do you
Speaker 3: keep beans fresh if they're roasted in Italy in santainis This.
Speaker 4: Is an interesting question for us because yes, you either
Speaker 4: have a coffee freshly roasted, or like we do, you
Speaker 4: have aged coffee. Because our technology is to pressurize coffee,
Speaker 4: which not only preserves under pressure and no air, so
Speaker 4: no oxygen which could oxidize the aroma. You preserve the fragrance,
Speaker 4: but then you enhance the aroma of coffee because you
Speaker 4: could ate it like it would be a precious wine.
Speaker 4: So that means that our age coffee is more complex,
Speaker 4: richer and elegant in terms of aroma profile compared to
Speaker 4: a freshly roasted wine. But this is unique to Illy, okay,
Speaker 4: and we can make it only thanks to these tins,
Speaker 4: which are basically a kind of a flavor lock, you know,
Speaker 4: a kind of a locker of flavors instead of just
Speaker 4: a container. Otherwise you could use a simple bag.
Speaker 2: All right, now, I want a cup of coffee. I
Speaker 2: want to get to climate change and the impact it
Speaker 2: has had on farmers who grow coffee beers.
Speaker 4: Yeah, coffee growing coffee agriculture is very, very sensitive to
Speaker 4: climate conditions. Do you have narrow conditions to grow coffee
Speaker 4: in terms of temperature and rain? And as a consequence
Speaker 4: of climate change, up to fifty percent of the currently
Speaker 4: suitable land will be gone by twenty fifty. Already there
Speaker 4: are some countries which are gradually exiting the market. There's
Speaker 4: a consequence of climate change, so we have to adapt
Speaker 4: as quickly as possible. And in order to adapt, there
Speaker 4: are three sequential actions to be done. First, improving the
Speaker 4: agronomical practices transitioning regenerative agriculture seems to be the most
Speaker 4: promising one, and then we can talk about reginative agriculture.
Speaker 4: Second most important move is rejuvenating the plantation themselves with
Speaker 4: younger plants, but also plants made of new varieties which
Speaker 4: are more resist resistant to the adverse conditions caused by
Speaker 4: climate change. And only if these two first initiatives are
Speaker 4: not enough, then you can consider moving migrating the plantation
Speaker 4: to higher latitudes or higher altitudes where you can meet
Speaker 4: milder climates. But start with the regenerative agriculture and We.
Speaker 2: Only have about a minute left. Just a real quick question, Now,
Speaker 2: where are most of your beans coming from.
Speaker 4: Most of the beans come from Brazil because they are
Speaker 4: better for expresso coffice, high body and rich, but also
Speaker 4: because Brazil is such a large producing country. Regenerative agriculture
Speaker 4: is important because it's based on enriching the soil, nourishing
Speaker 4: the soil with a organic carbon. So not only it's
Speaker 4: a quested carbon in the soil, but it nourishes the
Speaker 4: soil microbiolta, which is good for fertility, which is good
Speaker 4: for protecting against pathogens which might let's say damage the crop.
Speaker 4: And it makes the coffee production reed get rid of
Speaker 4: most of the agrochemicals that you use, So that means
Speaker 4: that you also have a benefit not only regenerative for
Speaker 4: the environment, but also benefit for health because you have
Speaker 4: less residues from ago chemicals.
Speaker 3: We only have thirty seconds left. But earlier this year,
Speaker 3: the CEO of the company said that there's going to
Speaker 3: be an IPO in twenty twenty six, And you're still
Speaker 3: thinking about that.
Speaker 4: Yes, I think I know that this is the trajectory,
Speaker 4: let's say the road map. Okay, so twenty six is
Speaker 4: still far away they find that decision needs to be made.
Speaker 4: Of course, as you know better than me, will depend
Speaker 4: on the market condition at that time, so we shall
Speaker 4: be flexible about the timing. But this is the goal,
Speaker 4: this is the.
Speaker 2: Goal, just real quickly. Do you ever drink tea?
Speaker 4: Sometimes? Absolutely? Sometimes, but there's the occasionally put.
Speaker 1: Some Bailey's in the coffee, Bailey's Irish scream at natty irishman.
Speaker 1: You ever have that?
Speaker 2: Andrea, what a pleasure, thank you, so I appreciate it.
Speaker 2: Andrea Ely, of course, chairman of Eli Cafe here in studio,