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JULY 7, 2003
Guido Barilla Chief Executive, The Barilla Group, Italy Guido Barilla hungered for global growth when he took control of his family's Parma-based pasta producer in 1993. The Barilla Group was already No. 1 at home, so the new CEO set his sights on foreign markets. He then served up a series of foreign acquisitions, topped last year by his biggest to date: the $2.1 billion hostile takeover of Kamps, Germany's No. 1 industrial baker. Kamps nearly doubles Barilla's revenues, to $5.1 billion. Barilla, the great-grandson of founder Pietro Barilla, has proven an able steward of the family legacy. Eating up market share from rivals such as Nestlé's Buitoni and Hershey Food Corp.'s Ronzoni, Barilla transformed the Italian market leader into the world's top pasta maker. Sales last year, before the Kamps acquisition, were an estimated $2.9 billion, a 12% increase over 2001. Barilla's appetite for global growth was triggered in part by two years spent abroad, studying philosophy at Boston College. "I always saw the U.S. as a natural expansion," says Barilla, who launched exports to the U.S. in 1995. In 1999, looking to expand his product line, Barilla snapped up Wasa, a market leader in crisp breads, paying $560 million. With Kamps, which boasts well-known brands such as Harry's biscuits in France, Barilla now is also No. 1 worldwide in fresh breads and crackers. And despite the food industry's notoriously thin margins, the company estimates pretax profits last year rose 39%, to $215 million. Although it's thriving now, the company has been through some hard times. When Barilla became CEO, profits were plunging. Seeking some grey-haired expertise, the then-35-year-old and his brothers in 1995 hired former Procter & Gamble Co. CEO Edwin Artzt as executive director. In his three years at Barilla, Artzt helped the Barillas slash costs, upgrade marketing, and establish a U.S. beachhead, plowing $135 million into a state-of-the art pasta factory in Ames, Iowa, in 1997. Barilla is now the leader in the U.S., the world's biggest pasta market. This year, Barilla has earmarked $585 million for international expansion. Has Barilla piled too much on his plate? Kamps came saddled with $900 million in debt. Interest payments and acquisition costs eroded its margins, resulting in a 2002 loss of $148 million. Barilla aims to slash debt, cut costs by centralizing the purchase of raw materials such as wheat, and boost quality. "We have a big task ahead with Kamps. We have to improve the performance of the company dramatically," says Barilla. If he can just leaven Kamps's profits, Barilla will have cooked up something truly delicious.  Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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