NORWALK, Conn. -- Barilla, Europe's largest brand of pasta, is mounting a frontal assault on America's fragmented pasta market.
The U.S. marketing arm of the Parma, Italy-based company is switching over from a prior go-to-market system that was based on specialty importers to an aggressive marketing approach using food brokers, said Gianluigi Zenti, managing director for North America at Barilla America, based here.
In an interview, Zenti said Barilla is positioning the brand at a slight price premium to domestic dry pasta, but with a simplified deal structure aimed at winning over grocery buyers with promises of higher everyday category margins. In the process, the company hopes to build a national-brand presence on the pasta aisle, a goal that has thus far eluded Borden and Hershey, the two largest domestic makers.
"In the United States, you see multiple brands, all of which have similar pricing for deals. A buyer's initial reaction is 'Why should I take another pasta brand? I already have too many,' " Zenti said.
"We say we are not here to add stockkeeping units. We are here to market the category. We differentiate the category," he said. "There is pasta, and pasta."
Zenti said Barilla's pasta business in Europe had total sales of $1.1 billion in 1995, making it Europe's fourth-largest grocery brand of any type in total sales. According to the British trade publication, Checkout, Barilla was eclipsed only by No. 1, Coca-Cola, and by two Procter & Gamble brands, Ariel detergent and Pampers diapers.
By way of comparison, Nielsen Scantrack data shows that for the 52 weeks ended Sept. 9, 1995, total U.S. sales of dry spaghetti and macaroni combined were $1.05 billion. More than 99% of those sales were through supermarkets.
With a brand base overseas as large as the entire category in this country, Zenti believes Barilla has an opportunity to build a major presence in the U.S. market.
He estimates that each of the two major U.S. players, Hershey and Borden, has 15 to 20 local or regional pasta brands assembled through acquisitions of local players. They currently control about half the market. The No. 3 player in the category, CPC International, controls another 5%, while private label has a 20% share. The remaining fourth of the market is split up among even smaller brands.
"Their weakness is that they have no national brands, so they cannot market their products," he said. "They spend basically
nothing on measured advertising media. How are they selling? On price."
Zenti said his analysis shows current norms in the pasta category -- tier pricing and frequent deals -- are bad for retail profits. "The lack of everyday low pricing hurts their logistics and accounting systems."
If this rhetoric sounds vaguely familiar to American brand marketers, it may be due to the presence on Barilla SpA's board of directors of Edwin Artzt, retired former chairman of Procter & Gamble, and champion of that company's 1992 Value Pricing initiative.
"He has a major role in setting strategy of the company worldwide," Zenti said of Artzt. He added that the former P&G executive has "a direct advisory role in the U.S. business. One reason he was asked to join the board was to help us set this strategy."
Barilla pastas, made in Italy, have been available in the United States for 15 years through a network of specialty distributors, who sold them to specialty store and food-service channels, said Zenti.
Currently in its U.S. headquarters in Norwalk, Conn., the company has six people in its sales department. It has retained 17 brokers in the Northeast, Midwest and mid-Atlantic regions, which Zenti says represent more than 50% of the total pasta market. In New York, the first market Barilla entered, about 9 months ago, the brand has been posting "steady share gains," Zenti said. "We think every consumer that we convert becomes a loyal customer."