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Barilla’s American dream


Barilla’s pasta-making plant in Ames is helping the Italian company eat up market share in the United States and throughout the world.

The $135 million plant, stark white in color and the tallest feature for miles, is a dominant landmark just south of Ames along Interstate 35. Running 24 hours a day each day of the week, its machines churn out 240 million pounds of pasta annually. It is Barilla’s only plant in North America, producing 25 different types of pasta.

In a market that has risen at less than 5 percent a year for the past decade, Barilla is ringing up double-digit gains year after year. The company’s sales of pasta rose 17 percent for the 12 months ended in September from a year ago. Its market share in the U.S. today stands at 20.8 percent, up 4 percentage points from October a year ago.

It’s success stems from a variety of factors, including the company’s ability to capitalize on its Italian roots and its nationwide distribution. Its managers say the popularity of Barilla’s pasta, made from wheat grown in Arizona, North Dakota and South Dakota and in Canada, is driven by its quality.

“You can’t overcook it,” said Tanya Jones, Barilla’s financial controller in Ames. “I’ve tried.”

Then there is its Ames facility itself, which has been invaluable to Barilla in its assault of the U.S. pasta market.

Barilla, the world’s largest pasta maker, employs 129 people in Ames directly, including fewer than a dozen that were recently added to help increase output. The plant’s operations have led to still more jobs through subcontractors. It hired Jacobson Cos. to manage its warehouse and handle shipment of its boxed pasta. Maahs estimates that Jacobson employs about 35 workers at the site.

When the supply chain is working flawlessly, machines that are capable of filling more than 200 boxes of pasta a minute deliver the final product to Jacobson’s waiting trucks.

“It’s the perfect plant,” said Paolo Federici, the plant manager in Ames. “There’s no in-process inventory. It’s location cuts down on our transportation costs and we’re able to respond to orders quickly.”

It is located on the main east-west rail line of Union Pacific Co., which sends as many as 25 rail cars per week filled with wheat to the plant. The plant has a mill attached and is less than a mile from I-35, and fewer than 20 miles from Interstate 80, two of the largest highway networks in the United States.  

“Clearly, Ames was a very strategic choice for us,” said Paul Davis, president of Barilla America. “It’s centrally located and close to our wheat. It’s got a dedicated employee base and has given us a competitive advantage over our competition.”

The company, which nearly chose to build the factory in Indiana before construction began in 1997, has plenty of room to expand in Ames. It has recently boosted output by roughly 20 percent. Barilla owns 240 acres of land and currently uses about a quarter of that.

The positioning, combined with the facility’s milling capabilities, have cut Barilla’s costs and made it easier for the company to deliver its finished products to customers, which in Central Iowa include Dahl’s Food Marts and Hy-Vee Inc.

“We were fortunate to have been selected,” said David Maahs, executive director of both the Ames Chamber of Commerce and the city’s Economic Development Commission.

Part of Barilla’s success stems from its ability to play to its Italian heritage and capture Americans’ love of Italian culture and cuisine. It’s television advertisements, heavy with a feeling of romance, feature a lonely American woman who catches the eye of an Italian man serving pasta.

Top managers who have come to the company from some of the strongest brand-builders in the business world today have strengthened the company’s image.

Davis was head of North American operations for Starbucks Co. Barilla’s head of marketing came from Kraft Foods Inc. Federici worked for years at Unilever Group N.V., one of the largest makers of packaged consumer goods worldwide, before he moved to Barilla. Mike Biegger, human resources manager in Ames, came to the company from The Procter & Gamble Co.

Getting such talented executives has accelerated Barilla’s success in the U.S. market, according to Lopo Rego, an assistant professor of marketing at the University of Iowa’s Henry B. Tippie College of Business.

“They’re acquiring knowledge and jumping the learning curve,” Rego said. “This is one way of accelerating the introduction of a foreign company into a domestic market.”

Before Barilla came to America in the mid-1990s, the U.S. pasta market was dominated largely by regional names: Prince in the Northeast, Creamette in the Midwest and American Beauty on the West Coast. Barilla is has about 43 percent of the pasta market in Italy. Its biggest competitor in the U.S. is American Italian Pasta Co., which makes Mueller’s and Golden Grain.

The national distribution has made Barilla’s pasta popular with large retailers, including Wal-Mart Inc., Costco Wholesale Corp., The Kroger Co. and Albertson’s Inc. who prefer dealing with one supplier.

“The big national players are looking for companies they can grow with,” Davis said. “We’ve been able to step in and fill that need.”

Today, the company is working to import more of its stuffed pastas, including varieties of tortellini that don’t need to be refrigerated. It’s also introducing Voiello, a high-end type of pasta that Barilla hopes to sell to chefs and specialty stores.

The company is also focusing on making premium sauces, a market worth about $1.4 billion a year. Barilla, which makes the sauces at a plant in Upstate New York, is aiming for customers who would buy sauces from Bertolli and Newman’s Own. For the year ended in September, Barilla’s sales of sauces rose 13 percent from the year-earlier period. That growth outpaced the 4.7 percent growth for rival Classico.

“If I had to put a big circle around one reason why Barilla is successful, it’s superior quality,” Davis said. “We’re a company that’s been in business for 126 years. Pasta is not new to us. It’s something we know, and know it very well.”

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