Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Barilla Family Turned Pasta Into a Global Empire
Transcript
- Lucas: If I said 'pasta', you probably picture a box of Barilla. It's the default. And that's extraordinary because pasta is one of the oldest, most commoditized foods on earth. Luna: Right. I mean, flour and water. How do you build a global empire on that? Lucas: That's exactly the question. The Barilla family has been answering it for almost 150 years. Today we're looking at how they turned pasta into a branded luxury — and nearly lost it all twice. Luna: Twice? I knew they had a rough patch, but two near-death experiences? Lucas: At least two. The first was in the 1970s, and it's the most instructive part of the story. But let's start at the beginning. Pietro Barilla opened a bread and pasta shop in Parma in 1877. Small. Local. Nothing special yet. Luna: So it started like a thousand other Italian shops. Lucas: Exactly. The real shift came under his sons, Riccardo and Gualtiero, who industrialised production in the early 1900s. By the 1960s, Barilla was Italy's leading pasta brand. But here's the thing — they were still a regional player. Italy only. And the founder's grandson, also named Pietro, was running the company. Luna: The third generation. That's often where family businesses stumble. Lucas: It is. And Pietro III made a bet that almost broke the company. In the early 1970s, he decided Barilla needed to diversify aggressively. He bought a French pasta maker, a bakery business, and a snack company. He expanded into new markets too fast, and the debt piled up. Luna: Classic overreach. So what happened? Lucas: By 1979, Barilla was insolvent. The banks were calling in loans. The family had a choice: sell the company or watch it go under. They sold. A state-owned food conglomerate called SME bought Barilla for a fire-sale price. The family was out. Luna: Wow. So the family lost control completely? Lucas: Completely. But here's where the story flips. Pietro III had two sons — Guido, Luca, and a third brother, Paolo. They were in their twenties when the sale happened. And they were determined to get the company back. Luna: How do you buy back a company you just sold? Don't you need a lot of capital? Lucas: You do. And they didn't have it. But they had a plan. They convinced a consortium of banks to back a leveraged buyout. In 1981, just two years after the sale, the brothers bought Barilla back. The price: about 150 million dollars. They borrowed almost all of it. Luna: That's a huge risk. What did they do differently once they were back in charge? Lucas: They did the opposite of their father. They stripped out everything that wasn't pasta or bread. They sold the French operations, the snack brands. They focused entirely on the core product. And then they did something really smart: they invested in marketing that elevated pasta from a commodity to an experience. Luna: The 'Where Pasta Is Born' campaign. I remember those ads. Lucas: Right. That campaign launched in 1987. It didn't just sell pasta — it sold Italianness. It sold tradition. The ads showed golden wheat fields, Italian grandmothers, and the Barilla name as a seal of authenticity. They made people feel that buying Barilla was buying a piece of Italy. Luna: And it worked. They grew from a regional brand to a global one. Lucas: Hugely. By 1995, Barilla was the number-one pasta brand in Italy and expanding into the US, France, Germany. They built a state of the art pasta plant in Ames, Iowa — the largest in the US — to serve the American market. That plant alone can produce 500 million pounds of pasta a year. Luna: That's a lot of spaghetti. But wasn't there another crisis? You said two near-death experiences. Lucas: The second came in the early 2000s. By then, the brothers had taken the company public — but only a minority stake. They kept family control. But the market was changing. Private-label pasta was getting better. Walmart and other retailers were pushing their own brands. Barilla's market share started slipping. Luna: So the commodity threat came back. Lucas: Exactly. And the family's response was to double down on premium. They launched the 'Barilla Blue Box' redesign, which actually made the package look more premium. They also acquired other brands — like Voiello in Italy and Catelli in Canada — to cover different price points. But the real move was taking the company private again in 2010. Luna: Why go private? That seems counterintuitive. Lucas: The brothers said they wanted to focus on long-term investment without quarterly earnings pressure. They bought back all the public shares. Since then, Barilla has invested heavily in sustainability — regenerative agriculture for wheat, solar-powered plants, and a big push into gluten-free and legume-based pastas. Luna: That's smart. Gluten-free is growing fast. But hasn't Barilla faced some controversy? I remember something about marketing and family values. Lucas: You're thinking of 2013. Chairman Guido Barilla made comments in a radio interview that seemed to reject the idea of using same-sex families in advertising. There was a significant backlash. Boycotts. Barilla lost some market share in the US and Europe. Luna: How did the company handle that? Lucas: Guido apologised publicly within days. The company then launched an internal diversity task force, created a non-discrimination policy, and started including same-sex couples in ads. They also partnered with the Human Rights Campaign. It was a rapid course correction. But it shows how the family's personal views can become the brand's liability. Luna: Yeah, that's the double-edged sword of a family business. The family name is the brand. You can't separate them. Lucas: Exactly. And today, the fourth generation is in charge. Guido's sons, Alberto and Paolo, are co-managing directors. They're pushing digital marketing, expanding into sauces and ready meals, and dealing with rising durum wheat prices. It's a new set of challenges. Luna: What's the biggest challenge they face now? Lucas: I'd say the shift in consumer preferences. Younger consumers are more health-conscious. They see traditional pasta as carbs. Barilla's response is the Protein+ line and the legume pastas. But they're also facing competition from chickpea pasta, lentil pasta — brands like Banza that are stealing share. Luna: So the commodity threat is back, but from a different angle. Lucas: Right. And Barilla is also dealing with climate risk. Durum wheat is sensitive to drought. In 2021, a drought in Canada — a major supplier — sent pasta prices up. Barilla had to raise prices, which hurts volume. Luna: So they're investing in regenerative agriculture to build resilience. Lucas: Exactly. They've committed to sourcing 100 percent of their durum wheat from sustainable farms by 2027. They're working with thousands of farmers to improve soil health. It's a long-term play, but it's necessary. Luna: If today's conversation was useful to you — maybe you run a family business or think about branding — the way we keep this show ad-free is through listener support. You can find us at buy me a coffee dot com slash fexingo. It's a small gesture that helps us keep doing episodes like this. Lucas: Yeah, and we really appreciate it. It lets us dive deep into stories like Barilla's without any commercial breaks. So thank you to those who support us. Luna: Absolutely. Now, back to Barilla. Lucas, you mentioned the fourth generation. How are they different from the third generation in terms of strategy? Lucas: The third generation — Guido, Luca, Paolo — they were turnaround artists. They saved the company and built the global brand. The fourth generation is more focused on sustainability and digital. They're also more open to collaboration. For example, in 2022, Barilla partnered with the Italian startup 'MyFood' to develop ai powered recipes. Luna: AI recipes? That's a shift from grandmothers in the fields. Lucas: It is. But the brand still leans on tradition. The current tagline is 'The Place of the Heart'. It's about home cooking. They're trying to balance innovation with the emotional connection. Luna: So the lesson from Barilla might be: stay focused on your core, but evolve how you connect with consumers. Lucas: I think that's exactly it. And the second lesson is: if you lose control, don't give up. The brothers got their company back in two years. That kind of resilience is rare. Luna: And now Barilla is still family-owned, still based in Parma, and still the biggest pasta company in the world. That's a good ending. Lucas: For now. But the story keeps going. The next generation will have to write their own chapter.