December 28, 2009 7:18 pm

Pasta barons with enough on their plate

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Barilla

Food empire: Luca, Paolo and Guido Barilla

For a man born into a pasta empire in the city that calls itself Italy’s capital of food, Paolo Barilla appears jaded about the product that has made his family’s fortune.

The Barilla family has been making pasta in Parma since 1877 and today it produces enough for 10bn bowls of pasta every year.

It is hard work. Pasta, as Mr Barilla points out, is one of the world’s cheapest products and it is difficult to push profits higher.

“I wouldn’t advise anyone to go into the pasta business unless they have a strong attitude to discipline,” says Mr Barilla, 48, the youngest of the three brothers who run the company.

“The profit you make in pasta is all in the efficiency you can wring out of [production]. You can’t put a margin on top of that. So it’s not an appealing business from that perspective.”

Tall and serious, the former professional racing driver gave a rare interview at Parma’s Academia Barilla, a marketing and cookery centre and menu library established in 2004 on the site of Barilla’s first pasta factory. The company has also established a nutrition centre that looks at wider industry issues.

Over a lunch of Parma ham with four cheeses, Mr Barilla agrees that, in most other ways, the family could not be happier.

“We like the pasta business,” he says. “It’s the origin of our company, it’s the quintessential Italian product and it is probably the cheapest calories you can buy.”

Pasta has been good to the family. Barilla is the world’s biggest maker of pasta, with a turnover in 2008 of €4.5bn ($6.5bn) and employing 16,000 people.

The Barilla brothers – Guido, 52, is chairman and Luca, 50, is a vice-chairman alongside Paolo – own 85 per cent of the business along with their sister Emanuela. The Anda family, based in Switzerland, owns 15 per cent.

There is a curious twist to this tale of family ownership. In 1971, their father sold the business to US multinational WR Grace, as Italy descended into years of terrorism, some of which targeted businessmen.

“Lots of Italian companies were sold to multinationals in the 1970s,” Mr Barilla says. “I remember my father watching the news and being scared.”

The family bought it back in 1979. Recently it has expanded abroad, including its largest single acquisition – Kamps, a German bread company, for €1.8bn in 2002. It has proven difficult to integrate, although bread is also a volume business.

“Germany is an unfortunate story,” Mr Barilla says. “When you expand abroad you have to learn all the unwritten cultural and national rules. We misjudged the daily bread business. It’s difficult to raise prices in Germany – it’s a country of discounters. But the business is now stable and we are keeping it. We have to be strong in Europe because it’s one country.”

Like other Italian families in the food business
the Barillas are largely unknown outside Italy even as their products appear on so many dinner tables worldwide. But they are a major presence in Parma. “There is a long history of good relations between the family and the city,” Mr Barilla says.

The family, he says, is not especially wealthy. “My father was not an accumulator. He did not feel comfortable with that [lifestyle] and I think we have inherited that trait. In absolute terms we are very wealthy. We own a big company, we live a good life and we are happy with what we have. But in terms of money, no.”

A listing is not on the agenda. Barilla is likely to pass to the seven children of Paolo’s older brothers (he has no children).

He is pessimistic about the immediate economic future – he thinks consumer spending will not rebound until 2012. But neither he nor his brothers wish to see Barilla grow too big. “In 20 years I would wish Barilla to be stronger, healthier and safer,” he says. “If it’s all of those things, it’s big enough.”

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