Illycaffe seeks U.S. retail partner to expand its coffee cafe network

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MILAN (Reuters) - Premium coffee maker Illycaffe is ready to sell a stake in the Italian company to a strategic partner to help it boost its retail network, the family-owned group said on Thursday.

The coffee maker has picked Goldman Sachs to find a major U.S.-based retailer as a partner to expand Illy’s U.S.-branded cafes to 200, more than 10 times its current footprint.

In July, Chairman Andrea Illy told Reuters the group could consider selling a minority stake for the first time since its foundation in 1933, should the right operating partner come along.

He said the Italian group wanted to expand its network especially in the United States where bigger rivals like Starbucks Corp SBUX.O and JAB have jumped on a consumer trend away from regular coffee bars toward high-end cafes.

The premium brand of Illycaffe, which produces a blend made of nine varieties of arabica beans, gives it an edge over rivals, the analysts say.

The roaster - which serves up 7 million cups of its brew in restaurants and cafes each day - is currently 100% owned by the Illy family.

Last year the group posted sales of 483 million euros ($528 million), up 5% at constant exchange rates. Adjusted core profit rose 10.7% to 75.3 million euros.

It signed a licensing deal with conglomerate JAB last year to produce and sell illy-branded coffee pods that work in Nestle SA's NESN.S Nespresso machines.

($1 = 0.9152 euros)

Reporting by Francesca Landini; Editing by Lisa Shumaker