Panzani

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Panzani

BP 6452, 4 rue Boileau
Lyon, F-69413 Cedex 06
France
Telephone: (33 04) 72 82 23 01
Fax: (33 04) 72 82 23 09
Web site: http://www.panzani.com

Wholly Owned Subsidiary of Ebro Puleva S.A.
Incorporated: 1950
Employees: 730
Sales: EUR 484 million ($605.5 million) (2005)
NAIC: 311823 Pasta Manufacturing; 311421 Fruit and Vegetable Canning; 311423 Dried and Dehydrated Food Manufacturing

Panzani is the leading manufacturer of pasta and pasta sauces in France, and the number two producer in Europe. Headquartered in Lyon, with factories elsewhere in France, Panzani produces a full range of dry and fresh pastas. The company's Panzani brand remains its core brand for its pastas, sauces, and semolina. The Panzani brand also counts among the ten most recognized French brands. Panzani also markets high-end pastas under the Giovanni brand—named after the company's founder—as well as Trésor de blé, a range of wheat germ enhanced pastas. The company produces and distributes its Tomacouli tomato purees and Tomapulp conserved fresh tomatoes. Since 2002, Panzani has also controlled another of France's leading food brand families, Lustucru, the French rice leader under its own and the Taureau Ailé brand, as well as Lustucru-branded fresh pastas and sauces. Panzani itself was acquired in 2005 by top Spanish food group Ebro Puleva in its bid to gain a global presence in the international foods market; since 2006, Ebro Puleva also controls New Pasta Co. in the United States, the former pasta division of Hershey Foods, including its Ronzoni, American Beauty, and other brands. Panzani produces more than 300,000 tons of food per year, for sales of more than EUR 485 million ($605 million) in 2005.

BIRTH OF A FRENCH BRAND LEADER IN 1950

Giovanni Ubaldo Panzani was born in Italy in 1911 then emigrated to France with his parents in 1929. Panzani's parents operated a shop selling pasta and other Italian foods before World War II. Prior to running the shop, Panzani's father had himself been a pasta maker, while the younger Panzani, also known by his French name Jean Panzani, became an accountant. At the outbreak of the World War II, Panzani fought in the French army but was demobilized after being wounded in 1940. At that time, Panzani decided to launch his own business manufacturing fresh pasta.

Panzani set up shop in the attic of his wife's parents' home in Niort, in the Deux Sevres region of western France, and began making pasta by hand in 1940, which he then delivered locally. By the end of the war, Panzani had begun developing the ambition to build his business into a full-fledged food company. At the end of the war, Panzani opened his first factory in nearby Parthenay in a building that had originally housed a shirt factory. At first, the business still faced the severe limitations imposed by France's postwar food rationing program. Panzani's opportunity came at last in 1949, with the abolition of rationing and return to a free market system. In 1950, Panzani established a new company, Pasta Panzani, and launched large-scale production for the first time.

From the start, Panzani hit upon a simple, yet highly effective means of setting himself apart from the many other pasta makers of the time. Where pasta had traditionally been sold in cardboard boxes containing just 250 grams of pasta, Panzani decided to package his pasta in clear cellophane—with 500 grams of pasta. Consumers were immediately attracted to the new format, and Panzani quickly grew into a leading name in the French pasta market. Panzani was also quick to capitalize on his success, launching a large-scale advertising effort to further build the company's brand name.

Panzani grew strongly through the 1960s, notably through its acquisitions of and mergers with a number of other French pasta producers. The company made its first purchase in 1959, acquiring Biscuits Brun. This was followed in 1960 with the takeover of rival Pâtes La Lune. At the same time, the company continued to expand its Parthenay facility, adding new production and warehouse space.

In 1964, Panzani turned south for the first time, taking over Marseille-based Régia Scaramelli, then the number two in the French market. By the mid-1960s, Panzani claimed the number one position in the French pasta market, ahead of domestic rivals such as Lustucru, and Italian challengers, including Barilla, which was on its own way to becoming the top pasta producer in the world.

Difficulties in ensuring the company's supply of durum wheat semolina—under French law, all pasta was required to contain 100 percent durum wheat—led Panzani to shift its focus of operations to Marseille starting in 1967 with the construction of a new pasta factory. By then, the company had also acquired a semolina producer in St. Just, which not only provided the company with its own source of its products' principal ingredient, but also established Panzani as one of the French market's major semolina manufacturers.

SWALLOWED BY DANONE IN 1971

By the beginning of the 1970s, Panzani had caught the attention of the fast-growing French dairy products group Danone-Gervais. That company had entered the pasta market in 1969 with the acquisition of one of Panzani's main rivals, Milliat Frères. In 1971, Danone-Gervais bought Panzani as well, and the two pasta operations were merged into a new entity, Panzani Milliat Frères. Danone-Gervais merged with another French food giant, BSN, two years later. Following that merger, a restructuring of BSN's operations helped expand Panzani's own business. In 1974, for example, when BSN's Lesieur vegetable oils subsidiary was refocused on its core oils production, its prepared foods division was added to Panzani.

The year 1975 marked a new milestone for Panzani. In that year, the company debuted a new advertising campaign based on a fictional character, Father Don Patillo. The campaign was an immediate success, and the Patillo character remained a company figurehead into the early 1990s, becoming one of the most popular advertising icons in French history.

The 1980s saw Panzani expand its brand family to include a variety of new products. The company appealed to the increasingly fast-paced food market with the launch of new line of enriched pastas in 1977. This was followed by the debut of its first packaged tomato purees under the Tomacouli brand. Panzani also began producing pasta and other sauces, starting with Spagheto in 1989.

By then, however, Panzani had started to lose some of its momentum. Part of this came as a result of the group's efforts to phase out its Don Patillo character toward the end of the 1980s. The company's new advertising campaign, featuring a group of young people, failed to inspire the consumer public. Into the 1990s, Panzani attempted to revive interest, launching a number of new pasta varieties. These included a new range of "festive" fantasy pastas, introduced in 1991. These were followed by the launch of the "Venitiennes" line of pasta shapes inspired by traditional Italian pasta varieties, introduced in 1993. These in turn were followed by the Maestria line of fast-cooking pasta, introduced in 1996. By then, the company's advertising campaigns had adopted the healthful messages that marked much of parent Danone's own advertising efforts. In 1996, the company was merged with another Danone holding, William Saurin, a maker of prepared foods.

COMPANY PERSPECTIVES

The Panzani brand today: number one in pasta in France; number two in Europe; number one in pasta sauces in France.

By the second half of the 1990s, Panzani clearly no longer featured among Danone's priorities, its advertising budget reduced by some two-thirds toward the end of the decade. By then, Danone had decided to refocus itself around its dairy products, and began selling its noncore food operations. Panzani's turn came in 1997, when it was acquired by Paribas Affaires Industrielles, an investment wing of the Paribas banking group. Two years later, Paribas separated the pasta group from the William Saurin business.

NEW OWNERS IN THE NEW CENTURY

Backed by Paribas, Panzani entered a new growth phase. The group brought back its Don Patillo character; a highly successful campaign in the late 1990s had the character meeting with a Godfather-like mafia figure demanding to know the secret of Panzani pasta. With a revitalized advertising budget, Panzani began extending its product range, counting some 50 different products by the turn of the century. The company, which by then was not only the leading pasta and sauce producer in France, but also number two in Europe, also targeted the number one Barilla. That company had traditionally positioned itself as a high-end pasta maker, leading Panzani to launch its own high-end brand, Giovanni Panzani, in 1999.

Panzani also went beyond pasta at the end of the 1990s. In 1999, the company launched its own Blédor brand of precooked wheat, a market that had been pioneered by rival brand Ebly. The company also expanded its sauce range to include a new line of Giovanni Panzani-branded sauces in 2000.

By then, Panzani had also set its sight on expanding beyond France, and particularly into the fast-growing Eastern European market. The company first established its brand in the Czech Republic, and by the early 2000s had launched its entry into the Polish, Hungarian, and Romanian markets as well.

Into the 2000s, Panzani sought further extensions to its product line. In 2002, for example, it launched a new line of single-serving pastas, aimed at singles and two-person households. By the end of that year, however, the company had scored a new and more major expansion, when it agreed to acquire Skalli, owner of the Lustucru brand family.

Lustucru's own history reached back to 1824, with the creation of a pasta factory in Grenoble. In 1911, that company created a new identity for its products, based on Père Lustucru, a fictional character featured in a popular children's song. Lustucru soon grew into one of France's top food brands. The company also expanded beyond pasta to become the French leader in packaged rice under its own brand and the Taureau Ailé brand.

Following the merger, completed in 2003, Panzani agreed to sell Lustucru's dried pasta business in order to satisfy competition authorities. The company nonetheless kept the popular Lustucru fresh pasta line, as well as its market-leading rice brands. At that time, Panzani also began plans to enter the prepared frozen foods market, one of the French market's fast-growing foods categories. Meanwhile, Panzani continued to innovate with its own branded products, launching a new line of chilled fresh sauces in 2002, and a new line of wheat germ–enriched pasta soon after. The year 2003 also marked the death of the company's founder, Giovanni Panzani.

KEY DATES

1940:: Giovanni Ubaldo Panzani begins producing pasta in an attic in Niort, France.
1950:: Panzani establishes Pasta Panzani and begins large-scale production at factory in Parthenay.
1959:: Panzani acquires Biscuits Brun.
1960:: Rival company Pâtes La Lune is acquired.
1964:: Panzani completes a takeover of Marseille-based Régia Scaramelli, then the number two in the French market.
1967:: The company acquires its own semolina production capacity through the takeover of St. Just.
1971:: Danone-Gervais acquires Panzani, which is merged with Milliat Frères.
1974:: Panzani takes over the prepared foods operations of Lesieur.
1996:: Danone merges Panzani with William Saurin.
1997:: Paribas Affaires Industrielles buys Panzani from Danone.
1999:: Panzani and William Saurin split into two separate companies.
2002:: Panzani acquires the Lustucru brand.
2005:: Ebro Puleva of Spain takes over Panzani.

Having revitalized Panzani, Paribas began to seek a return on its investment at mid-decade. In 2005, it agreed to sell Panzani to fast-growing Spanish foods group Ebro Puleva for EUR 640 million. Ebro Puleva, founded through the merger of the sugar company Ebro and the dairy products company Puleva in 2001, became the largest foods group in Spain. The Panzani acquisition became an important part of the Spanish group's effort to develop itself into one of the world's top food companies. Soon after the Panzani acquisition, Ebro Puleva reached a new milestone, buying New World Pasta Co., formerly the pasta division of Hershey Foods, which owned such popular U.S. brands as Ronzoni and American Beauty. Panzani, as part of one of the world's fastest-growing foods groups, appeared certain to remain one of France's—and Europe's—strongest brands in the new century.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Lustucru S.A.

PRINCIPAL COMPETITORS

Kraft Foods Inc.; Groupe Danone; Bunge Alimentos S.A.; Barilla G e R Fratelli S.p.A.; Toyo Suisan Kaisha Ltd.; Northern Foods PLC; Goodman Fielder Proprietary Ltd.; Nong Shim Company Ltd.; House Foods Corp.