In 2002, Italy-based pasta company Barilla spent €1.8 billion, $1.9 billion, buying the German bakery chain Kamps and only managed to cover a portion of the price through sales. It sold the chain again, reportedly for under €50 million, in 2010.
Now, thirteen years after that costly mistake, the family-owned company has reason to rejoice again in Germany.
German sales have doubled in the past ten years, and the country contributes €200 million to Barilla’s total sales of €3.3 billion. According to Euromonitor, Barilla is No. 1 in the German pasta market with a 15-percent share, well ahead of fast-growing Ebro Foods, which has almost 5 percent. The company enjoys a 28-percent share in sauces and 47-percent share in the crisp bread market.
Barilla is also opening its first museum in Germany this week, showcasing the history of the company and the founding family in Celle.
Currently, the company has 9 percent of the global pasta market. “We want to reach a market share of 20 percent worldwide in pasta,” said Paolo Barilla, Barilla’s vice president and the great-grandson of the founder.
“The Germans are wild about pesto.”
Germany has become a testing ground for new ideas. For example, the Italians introduced a package containing pairing pasta with a fitting sauce on the German market first. It was such a success that Barilla now offers it in other markets.
“The Germans are wild about pesto,” Mr. Barilla said, noting how surprised the Italians were to see Germans using pesto as a barbecue or fish sauce.
Meanwhile, the Barilla family has digested the blunder with Kamps.“That was an important chapter,” Mr. Barilla said. “Because the experience also taught us the lesson of strengthening outside management to avoid repeating such mistakes.” Today, a diverse group of external managers with international experience sit on the supervisory board.
The company, which along with pasta, sauces and bread also sells cookies, has also learned from another big mistake: president Guido Barilla’s declaration on a radio interview that he would “never film a commercial with a homosexual family.” The gay and lesbian community was outraged.
Although the vice president is still annoyed and believes his brother’s words were wrongly interpreted, he said:“We learned from it and convened a Board for Diversity Inclusion.” Among the representatives are LGBT people, women and the handicapped.
“In retrospect, I can only say that it’s good that it happened to us and raised our awareness,” Paolo Barilla said. “Just imagine it would have happened with an issue like religion.”
Barilla has been at the forefront of increasing sustainability for many years under the slogan, “Good for you, good for the planet,” which advocates a low-protein diet. It’s no simple undertaking, particularly in the U.S., where low-carb diets continue to hold their ground.
“The shift in customer preference from carbohydrates to proteins like milk products is restricting the chances of growth for Barilla’s core products of pasta and bread,” said Pinar Hosafci, food and nutrition analyst at Euromonitor International.
So far, Barilla opted not to introduce an organic line. “We are taking a close look at it,” Mr. Barilla said. “But we have to see if it is industrially feasible.” He has no interest in being a niche player in organic foods and insists the product be affordable. Additionally, he said, it is difficult to understand what organic really means. “We are a known brand,” he added. “We can’t afford mistakes.”
Barilla is also testing products in the Asian markets. Noodles are, of course, a staple in Asian cuisine, but the cooking methods differ. “We can’t force them to cook pasta in big pots of water,” Mr. Barilla said. The company has introduced a pasta product in Asia that cooks within nine minutes in a wok.
The company continues to scout for small and medium-sized acquisitions worldwide, but the family-owned business isn’t for sale. “We are remaining independent and we are not going public,” Mr. Barilla said.
But what if Nestlé came knocking? “Then, we’ll shake hands and drink a good Italian espresso,” Mr. Barilla said. “And then see each other again in ten years for another espresso.”
Katharina Kort is Handelsblatt’s Italy correspondent. To contact the author: email@example.com