Illy was brought up in Temesvár where he studied economics. After secondary school he moved to Vienna, where he worked for two big Transylvanian companies. At the age of 22 he was conscripted into the Austro-Hungarian Army and served from 1914 at almost every front of the First World War, including at the Battle of Kraśnik and the Battles of the Isonzo.
After the war he stayed with his sister in Trieste, where he soon married a Triestine woman. He found work with companies dealing with cacao and coffee roasting. He later invented his own the method for maintaining the quality of freshly-roasted coffee so it could be delivered to other locations rather than roasting on site. He formed a partnership with local coffee manufacturers Hausbrandt.
In 1933 Illy founded illycaffè which invented the first automatic coffee machine which substituted compressed air for steam. The La Illetta became the predecessor of today's espresso machine. His son, the food chemist Ernesto Illy (1925-2008) took over the management of the coffee company, which is now in the hands of the third generation Illy's.
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