The next time you visit your local (i.e. NOT Starbucks) coffee shop, pay attention to whether they touting that they are exclusively brewing a particular brand of coffee. If they are, there is an increasing likelihood that it is Illy, a premium Italian coffee brand.  Instead of opening dozens of new coffee houses, or acquiring local chains, Illy has decided to take on Starbucks by signing exclusive deals with independent coffee houses - first in Italy and over the past year throughout the United States.  This joint venture provides a differentiator for the cafe and creates a larger pipeline for Illy to compete against Starbucks.

As we wrote nearly a year ago, external growth is about more than just mergers and acquisitions.  We encourage our clients to look at all options and let demand in the marketplace tell them which way to go.

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