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Barilla defies crisis with new Italian investment

Chef Tommaso Moroni shows how to make fresh sauce for pasta at the Barilla Academy in Parma October 8, 2012. REUTERS/Alessandro Garofalo
Chef Tommaso Moroni shows how to make fresh sauce for pasta at the Barilla Academy in Parma October 8, 2012. REUTERS/Alessandro Garofalo

By Lisa Jucca

PARMA, Italy (Reuters) - The world's leading pasta-maker, Barilla, is defying Italy's recession by opening a 40-million-euro ($52 million) plant near its Parma home base, just as other big industrial names are pulling out of the country or freezing investments.

Prime Minister Mario Monti inaugurated the new factory on Monday for ready-made pasta sauces, a fast-developing market that adds to Barilla's 13 Italian plants and complements its core business of pasta varieties like spaghetti and penne.

The new plant, located in Italy's northern Emilia Romagna region, is a relatively modest investment, reflecting a drive by the 135-year-old company to keep up with cultural changes at home and abroad, or even lead them.

Barilla has its sights set on ever busier Italians, who have traditionally made their own pasta sauce, and fast-growing economies such as Brazil, where Italian cuisine is already popular, and China, which may be a tougher market to crack.

"Ready-made sauces are one of the most important ways to further develop our brand," Guido Barilla, Chairman of the family-owned company, told Reuters in an interview. "It made sense to build this plant here because Emilia Romagna produces some of the best tomatoes in the world."

BRIGHT SPOT

Most of the workers at the new factory in Parma - whose ham and Parmesan cheese makes it Italy's food capital - will come from another plant. But it is a rare bright spot in Italy, where 140 large industrial sites are at risk of closure or shrinking.

Alcoa Inc is shutting its Italian aluminum smelter and domestic carmaker Fiat has frozen a multi-billion investment plan in the country due to adverse market conditions and competition from low-cost production outside Europe.

"The phase of deep restructuring that Italian companies face to adapt to global competition is still ongoing," Monti said as he officially opened the plant. "Italy is strongly positioned in the global food sector even though it faces competition from products that sound Italian, but do not taste Italian."

Italy is home to the "slow food" movement, a reaction to U.S.-style fast food that advocates cuisine based on fresh ingredients produced and consumed at a leisurely pace, but an increasing pace of life is hitting traditional home cooking.

"Even though Italy is one of the world's biggest markets for pasta, penetration of ready-made sauces in Italy is very low," said Guido Barilla from his office in Parma.

"In due time, this segment will develop and improving the quality of the products will help it expand."

The plant will employ 120 people when it runs at full speed, the vast majority from former local supplier Rodolfi. But more could be hired if Barilla manages to bring production from the current 35,000 metric tons of sauces a year to the 60,000 metric tons that represent the factory's full capacity.

Pasta-related products accounted for 40 percent of Barilla's 2011 sales of 3.9 billion euros. Of these, around five percent are from sauces and condiments, a share Barilla will seek to increase steadily under newly-appointed Chief Executive Claudio Colzani, an industry veteran recruited from the Unilever group.

Barilla wants to concentrate on pasta and condiments plus a smaller range of bakery products, which still make up 60 percent of sales. It is shedding other assets, including German bakery chain Lieken, for which it has already received numerous expressions of interest, Guido Barilla said.

POTS AND WOKS

In the United States, Barilla's second-biggest pasta market after Italy, it is offering microwaveable pasta meals that are in tune with the local fast-pace food culture and is considering opening a pilot Barilla-branded restaurant next year.

Barilla has set up operations in Singapore this year as it prepares to launch a dedicated product offering in Asia.

"Asians are more reluctant to accept products belonging to Italy's culinary tradition for their daily basis consumption," said Guido Barilla. "South America, which witnessed a mass emigration from Italy over the last 100 years, is more open."

The company spent 18 months interviewing 1,600 Chinese consumers on their views of Italian cuisine and Guido Barilla himself spent days lunching with Chinese families and exploring local supermarkets to understand how they cook pasta.

"These people do not have pasta pots or drainers and cooking pasta without these tools is a monumental effort," he said. "Our offer must include products that can be cooked in the wok." ($1 = 0.7657 euros)

(Additional reporting by Elisa Anzolin; editing by David Stamp and Philippa Fletcher)

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