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A Penne for Your Thoughts: Barilla Talks Pasta Company

Students expecting a plate of spaghetti for lunch may have been disappointed when they arrived at Guido Barilla’s “Lunch with an Entrepreneur” event on Thursday.  

The president of the Italian food company Barilla that’s well-known for its pasta, Guido Barilla spoke to students as a part of the Shea Center for Entrepreneurship’s lunch series about the origins of the company best known for its pasta.

The company began as a small bakery shop founded by Barilla’s grandfather in Parma in 1877.

During a trip to the United States after World War II, Barilla’s father realized the increasing importance of effective advertising in the post-war market. When he returned to Italy, he invested in new machines that packaged the company’s products before they were sold to consumers. This strategy was unique in Italy at the time and allowed Barilla to progress rapidly in the late 1950s and ’60s. The company also built its flagship factory in Parma during this time, which is still the largest pasta factory in the world today.

Although the company entered the bakery business during its expansion in the 1980s, Barilla’s father lacked the skills and organization to build up the brand outside of Italy. He encouraged his sons to focus on expanding the company internationally shortly before he died in 1993. The company was half pasta, half bakery, and entirely in Italy, Barilla said.

When Barilla and his brothers took over the company, they realized that it was skilled at handling the wheat supply chain and the production cycle. Therefore, Barilla recruited people in several European countries to follow the brand’s simple but intense business model, and began to build up the company’s organization outside of Italy.

“The biggest job an entrepreneur has is to find the right people to run the business,” Barilla said. “You can always find a more skilled and knowledgeable person to do specific things within the organization.”

“The enjoyment that you get every day is what makes the journey spectacular. It’s the quality of the people around you that really counts.”  

—Guido Barilla, president of Barilla

The company initially struggled to sell its products in America because of high tariffs. Barilla knew that he had to construct a factory within the country to be competitive in the market. He decided to invest $500 million in the factory even though the product was relatively unknown in the U.S. at the time.

“Today, the United States is the most healthy and profitable part of the Barilla business,” he said.

The payback was slow, however, as Barilla did not see its first profit dollar until 2006, 10 years after the construction of the factory.

The company is still facing some challenges. Barilla has reached a peak in its share of the market and needs to enact drastic changes in order to continue to grow in the future, according to Barilla. To increase its growth potential, the company is exploring options like acquiring another U.S. pasta producer and entering the country’s bakery market. It is also working with a Dutch company to pioneer a 3-D printer that can produce pasta, although this project is only in its preliminary stages. Barilla does not want the company to develop too quickly, however, as that risks losing the brand its culture and stability.

Barilla has had more success in places where there has been significant history of Italian immigration. Countries such as the U.S. allow the brand to build on a better tradition and a stronger heritage from its products, Barilla said.

In Asian countries where Italian pasta is not as popular, like Singapore, the company markets its products as niche items to consumers. Barilla is currently the world leader in the Italian pasta category.

Barilla concluded the discussion by commenting on the importance of family businesses in the world economy. He believes that family businesses often face crises and fail when there is a change in the generation that controls the company, as the children are often spoiled by the success of the family and unprepared to advance the business.

“Success in life gives you money, not the reverse,” Barilla said.

The children who inherit family business often lack the work ethic of the previous generation and simply focus on how they can make money from the business instead of investing in it, according to Barilla. While there are some notable exceptions, Barilla believes that there is often a strong sense of discipline among family businesses that succeed.

Barilla encouraged budding student entrepreneurs to leave time to develop their ideas inside their soul before acting on them. He also cautioned them to be disciplined, and to understand that it is the journey toward success, rather than success itself, that matters.

“The enjoyment that you get every day is what makes the journey spectacular,” he said. “It’s the quality of the people around you that really counts.”  

Featured Image Courtesy of Getty Images

November 6, 2016