MILAN — “Eataly has an opinion.”
This is one of the elements that differentiate the Italian food and beverage mecca, according to executive chairman Andrea Guerra. “This brand speaks of the revolution in food. People talk about experience in fashion, but what about food? In the past, it was even worse; it was all about the shopping list and functional corridors,” observed Guerra during an interview at the Eataly offices above the brand’s unit here located in a former theater, the Smeraldo — a three-story sensory feast of market stalls brimming with fresh produce, restaurants and endless rows of the best wines and groceries. “When you think that the most precious thing you put in your body is food and how it was purchased before the arrival of Eataly, it’s quite incredible. It was all about price, price and price again and promotions — buy four at the cost of two — without offering the possibility to try and taste the products. And the important pivot in this is the education, testing food, learning and having fun, but there is always a cultural element that helps in this journey, making us more aware of what we do.”
Eataly’s opinion stems from a series of long-term projects that, for example, support Italian biodiversity. Guerra said that, two years ago, Eataly rediscovered 50 kinds of Italian seeds that had been “lost” over time. “It’s a very simple job on the operative front but very complicated in terms of bureaucracy,” he said, explaining the process in a partnership with the University of Palermo and the international Slow Food association. “The market of seeds is 90 percent held by four companies in the world, we are tiny in a world of giants and these are our first steps but we think that one step at a time we will get somewhere.”
Another important issue is saving bees, hurt by the concentration of monoculture farming that impoverishes pollination. “We asked a number of farmers, whom we call “resistant,” to reforest 1,000 hectares in Italy.
Eataly’s values and premium range are a draw to a certain kind of customer. “Price is always an issue, those that say it’s not are lying, but the real theme is what customer do you want? It is obvious that our positioning says a number of things. If you want to work with small producers, if you want production carried through in a certain way, if you want the producers’ margins to be sustainable in the long-term, we will be out on the market with a certain price. But that price is important and I will always try to be more accessible to allow consumers to have all that Eataly can give at the best price. This does not mean I can be competitive with a discount or a self-service but it also does not mean that I want to be so.”
Guerra took a leap in 2015 to join Eataly after his 10-year run as chief executive officer of Luxottica Group and a stint as Senior Strategic Advisor for Business, Finance and Industry to former Italian Prime Minister Matteo Renzi. Before Luxottica, he was ceo at leading Italian white goods manufacturer Merloni Elettrodomestici. Asked what drew him to Eataly, the executive said the fact that it is an Italian brand “was attractive” to him and also because “it’s a real start-up, a new company,” which allows “the possibility to develop it in the long-term, molding it in time and in the world. This was very interesting to me.”
Guerra said he had to learn to work in a start-up, which requires a lead that is “closely operative, being constantly available on a daily basis, but at the same time with a long-term approach. This shift between long-term and tomorrow morning is normal in an established company but it is frenetic in a start-up. All new things are beautiful.”
From the first Eataly that opened in Turin in January 2007 by founder Oscar Farinetti, the company has been steadily expanding with units around the world. Guerra underscored the openings in Las Vegas at the end of the month, followed by venues in Toronto, Dallas and San Jose, Calif., starting from the spring. “We are also in advanced negotiations for three to four additional stores in the U.S.,” he revealed, adding that the U.S. is the company’s second market in terms of sales volumes. “Like all start-ups, at first we moved instinctively on the wave of the success and opportunities that could open up — it’s quite natural,” he remarked. In time, Eataly realized that North America, including Canada, was the group’s most important target, and Guerra expects the region to become bigger than Italy in 2019. Next year, the company expects revenues to hit around 600 million euros.
Guerra believes visitors instinctively like Eataly “because it’s an immersive experience, it lets them be part of this experience. On top of that it takes a very clear stance, which is one of the elements that make a brand contemporary and successful.”
Eataly started to expand in Europe three years ago, opening in Munich and Stockholm. It will land at Galeries Lafayette next spring and in London in the spring of 2020.
The company also has a point of view in recovering and restructuring old buildings whenever possible. In Italy it has done so with the Smeraldo theater, for example, or in Rome in a disused train station. In the latter, which is the group’s biggest store in the world, Eataly has teamed with Ikea because Guerra felt it would be “interesting to have more than one experience within the location. We asked Ikea and they said yes immediately as they are trying to occupy the center of cities.” The store opened last month and Guerra was upbeat about the results, but said this was a one-off initiative that will not be replicated in other stores.
Going forward, he believes Eataly must increasingly be “a market,” getting closer to the customer, showing how bread or mozzarella are made, inviting producers and breeders to the stores and “tell our stories. This is what I try to do every day, to give an idea of the Italian market around the world.”
In the long-term, Guerra would like to see a Eataly location in every capital in the world, leveraging “a stable and solid growth.”
Guerra admitted there were several options to fuel this growth. “Clearly, we don’t see the conditions in Italy for an initial public offering at the moment and in 2019,” Guerra said. “This is an open company and we are ready for different solutions,” he added noting that the Farinetti family, flanked by the TIP Tamburi Investment Partners relied on outside managers from Day One.
Guerra also talked about brick-and-mortar versus online. Eataly’s online business accounts for 4 percent to 5 percent of sales, with products distributed globally. “The entry of Amazon in Whole Foods [in 2017] represented a change of paradigm not only in food but in all categories,” contended Guerra. “Until then, everyone thought the online channel would be the winning one, but with that deal we realized that online giants, too, were saying that the human contact is important. Our stores are and will always be the epicenter of our relation with consumers. Amazon, but also Alibaba and JD.com, they all understood that if they want to enter retail, the food segment, from restaurants and markets to schools, is an easy and right way.” Asked about potential deals with online groups, Guerra said “it’s evident that we had as series of relations and conversations, not necessarily proposals, but conversations with all digital players in the world.”
Guerra also underscored he saw no separation between on and off-line. “There is a relation with consumers that must go through all the moments of the day and all technological tools. Surely the physical experience is not dead, on the contrary.”