(Repeats with headline tag 'FOCUS')
* Italian coffee brand to grow its tea, chocolate & wine brands
* Riccardo Illy seeks partner for non-coffee business
* Price tag may be optimistic - banker
* Illy plans to list non-coffee businesses over 10 years
* Looks to buy a vineyard for high-end Italian wine
By Mark Bendeich and Francesca Landini
MILAN, Oct 31 (Reuters) - Riccardo Illy, whose family owns one of Italy's most renowned coffee brands, would rather discuss the finer points of tea and cellared wine these days than the perfect espresso.
A grandson of the Illy founder, he left the main coffee business two years ago to spearhead a diversification into tea, wine and chocolate and reduce the family's reliance on the intensely competitive coffee business.
He is now searching for an investment partner to help make the non-coffee business as big as 85-year-old illycaffe - which has annual sales of almost 470 million euros ($530 million) - within a decade.
"With the right financial partner, some acquisitions and a lot of luck it could take 10 years to reach the coffee sales," he told Reuters. "Otherwise up to 20."
The Illy family wants to bring in a partner such as a private equity fund by the end of 2019, offering to sell up to 40 percent of the non-coffee business, which Riccardo Illy says is worth an overall 100 million euros. Bankers, however, say selling a minority stake at that valuation may be a challenge.
It's a strategy that in some ways resembles another Italian family's diversification -- the Benetton dynasty's shift away from clothing two decades ago.
The Illy group plans to grow and separately list its non-coffee ventures, starting with its tea brand, French-based Dammann Frères.
That is likely to be listed within two to three years in Paris, followed by the Italian chocolate business, Domori, said Riccardo Illy.
Together these two ventures accounted for 80 percent of Illy's total non-coffee sales last year of 53 million euros, which excludes outside interests in Dammann Frères and another Italian confectionery business, Agrimontana.
Riccardo Illy said he was in final-stage talks to boost sales with the purchase of a foreign truffle producer, which has sales equal to about half of the Domori chocolate business.
He gave no details but said the acquisition should close in the first half of 2019. Illy is being advised on the deal by Banca Imi, investment banking arm of Intesa Sanpaolo.
Illy plans to reinvest cash flows from tea and chocolate into wine, which requires the most patience, and focus on high-end Italian wines with an international reputation, brands likely to do well in big, fast-growing markets like China.
"Wine is a passion," he said. "We are searching (for) a winery or vineyards in the Montalcino (Tuscany) or Barolo (Piedmont) areas to be acquired next year," he added.
Riccardo Illy said he was in talks with private equity funds and investment banks about co-investing in the non-coffee businesses and had received interest from Italy, Britain and France.
He would move sooner but said the group must first incorporate the non-coffee businesses into a single subsidiary, a restructuring that would only take effect next June.
An investment banker with good knowledge of the Illy brands up for sale said the equity valuation of 100 million euros for the non-coffee businesses could be a stretch for some investors.
"The plan looks challenging because Illy is looking for a minority investor and has high expectations in terms of valuation," the banker said. "It will not be easy."
A 100 million euro price tag would value Illy's non-coffee subsidiary, to be born debt-free, at roughly two times revenues.
This lofty valuation was achieved by Italian investment fund 21 Partners in June when it sold pastry firm Forno D'Asolo to private equity firm BC Partners, which paid an enterprise value of around 300 million euros, or 2.5 times 2017 sales.
However, BC Partners bought the entire company and only after 21 Partners had developed the business for four years through investments and acquisitions.
A private equity fund would prefer a controlling stake, said Robert Waldschmidt, head of consumer equity research at Liberum.
"Finding a private equity fund interested in acquiring a minority interest could be difficult, especially considering the new business would be fragmented in several brands," he said.
Premium food and restaurant brands have attracted deep-pocketed investors in Italy in recent months, but high political and regulatory uncertainty is taking a toll.
Riccardo Illy wants a partner who is content to leave the family in control and to sell out when the price is right. That reflects a desire for independence that his brother, Andrea, also pursues as chairman of illycaffe. (Editing by Susan Fenton)