Family and Business: An Italian Tale

By Giorgio Buttironi

Family is the cornerstone of Italian society. This characteristic is a core social feature of the country, but also has its repercussions on the economy. Counting on a tradition of money saving, Italian youngsters are often able to rely on financial assistance from their parents to purchase a home or set up a business. It is easy to see how, in an economic environment marked by tough austerity policies and ever-growing difficulty to secure loans from banks, family becomes an even more valuable element within this societal framework.

But no more is its importance visible than in the business world. In fact, there are companies that – over a century or less – have gone from being a single retail store in local provincial cities onto becoming prominent firms at an international level. A common trait: the constantly significant role of the founders’ family within the company. Expanding on this topic, two specific Italian firms come to mind: Barilla S.p.A. and Illy Coffee. Unsurprisingly, these companies are concerned with agricultural products and foodstuff, elements that are extremely valued in the country’s culture.

Barilla: from local pasta shop to worldwide brand

It was 1877 when Pietro Barilla Sr. opened a pasta and bakery shop in the centre of Parma, at a very peculiar time in history. Italy had just been officially sixteen years before and the newly born state displayed a heterogeneous mix of different cultures, with clearly distinct identities throughout the whole peninsula. This sudden coming together of people with separate traditions bore its difficulties. As Massimo d’Azeglio – a renowned Italian historian and statesman – pointed out: “Having made Italy, it is now time to make Italians”.

In 1910, Riccardo and Gualtiero – Pietro Barilla’s sons – took over the reins of the company and started its progressive path towards industrial production, inaugurating a new factory outside Parma; by this time, 33 years since its establishment, the company was already employing 80 people. The company managed to survive the two world wars that devastated the continent and brought Italy to a state of deep depression, both economical and societal.

When Riccardo died in 1947, the company’s management was entrusted to his sons Pietro Barilla Jr. and Gianni Barilla. Under their stewardship, which saw the final closure of the initial retail store in Parma, the company underwent a radical modernization. Strong of his marketing experience in the United States, acquired throughout the 1950s, Pietro Barilla Jr. supervised the expansion of the company in several directions: the first commercials were aired on the newly constituted Italian state television in 1957, and two new factories were opened respectively in Rubbiano (1965) and Pedrignano (1968). Although the majority of the company was sold in 1971 to the American multinational Grace Ltd, which oversaw the acquisition of Voiello Pasta (Sothern Italy’s largest pasta company) in 1973 and the creation of the Mulino Bianco brand in 1975 (Barilla’s bread sub-company), the two brothers bought Barilla back in 1979. Under their renewed administration, the company was guided through its expansion to foreign markets such as Germany in 1991.

At the death of Pietro Barilla Jr. in 1993, his son Guido Barilla took over the company as Chief Executive Officer. The company opened two new factories in the United States and expanded its export capacity further, as well as starting a new project aiming to safeguard the cultural value of pasta across the world, through the launch of the Academia Barilla in 2004.

Having reached the fourth generation of family administration, Barilla today employs 8,000 people and exports to over 100 countries across the globe. Not at all bad and shockingly impressive for a brand, which started as a small enterprise from a tiny retail store in central Parma. Barilla has become throughout Italy and the world the most tangible face of pasta, a chief identifying element of Italian culture across the entire globe.

Illy Coffee

Originally born in Hungary, Francesco Illy moved to Trieste after World War I and – in 1933 – founded Illy Coffee in the same city. The invention of the famous Espresso Machine over the following years remains his greatest contribution to both Italy and the world.

After World War II, his son Ernesto Illy established the company’s first coffee laboratory in 1947 and opened the first manufacturing plant in 1965. In 1974, Illy released yet another innovative product: the first coffee pods. The Easy Serving Espresso pods made it simple to prepare espresso for people, thus rendering it available to homes and offices, and no longer confined exclusively to bars.

Throughout the 1980s, Riccardo Illy (Ernesto’s son) was responsible for developing a new marketing strategy leading to the brand’s expansion to new market places; additionally, he also patented a computerised system for quality inspection, serving to secure the product’s quality, which would become a hallmark of Illy Coffee.

In 1994, when Andrea Illy became Chief Executive Officer, the company undertook a massive international expansion in terms of marketing and coffee production. In 1999, the University of Coffee – an educational institution dedicated to coffee growers and producers – was officially inaugurated. At the present day, the Illy family remains deeply involved in the administration of Illy Coffee, a company that currently exports to over 140 countries worldwide.

The Family Rhetoric

What lesson can then be drawn from these companies? Their respective histories surely represent exciting accounts of how the smallest company can grow to become a symbol of what it sells. Nevertheless, it is worth looking into what specifically made these companies successful and capable to survive through two world wars and just as many periods of financial hardships. In my opinion, three particular elements come to mind: the capacity to evolve through time, the ability to preserve their historical heritage and safeguarding quality, and the continued presence of family administration.

Firstly, both Barilla and Illy have shown remarkable skill in adapting to the constantly evolving historical contexts. On one hand, the first three generations of Barilla managers were shrewd in foreseeing the benefits of industrial expansion from local retail production and – eventually – in marketing and public relations campaigns. On the other hand, the Illy family was equally able in locating the potential for investing heavily into marketing their product and constantly renew their brand, from both a stylistic and financial standpoint.

Secondly, both companies excelled in staunchly preserving the value of their historical heritage and the meaning of quality. As a matter of fact, they turned the latter into a valuable asset, managing to become hallmarks of the very product that they produce. Barilla accomplished this by launching socio-cultural projects aimed at safeguarding the value of pasta throughout the world. Illy Coffee – bearing credit for the invention of instruments that are now prevalently used to make Espresso – showed remarkable shrewdness in safeguarding their inventions and promoting the upholding of coffee standards.

And last but not least, the renewed presence of family within the respective administrations. It does seem very old-fashioned to say in the current times, but family is exactly the key element that – in these two specific cases – made the difference. The dedication in carrying out the dreams and projects of their forefathers is what provided an accelerant, which was fundamental in making the transition from small business to large enterprise possible.