Spaghetti in one hand

Author: Eleonora Pakhomova, Business

One of the world’s largest producers of pasta and confectionery products – Italian concern Barilla – decided to strengthen its presence in the Russian market. The other day Barilla signed a contract for exclusive distribution in Russia with Ameria. With the conclusion of the contract, Barilla expects to increase sales of pasta and sauces in Russia – due to the centralization of flows, the company intends to reduce costs and move to a lower price segment.

About the fact that Barilla signed a contract with Ameria, told the marketing director of Ameria, Sergei Konstantinov. Export manager Barilla Fabio Fabris confirmed this information. «Previously, we used different channels of distribution to Russia, logistics costs were very high and our products in Russia were positioned in the superpremium segment. Now, due to the fact that we will be represented in Russia by one distributor, we expect to cut costs, reduce the price by 15-20% and go to the premium segment», says Fabrice.

According to Konstantinov, now Barilla products will be presented in all metropolitan retail chains. «We have established connections with all retailers and regional distributors, which will allow us to easily sell Barilla products», says Konstantinov.

Market participants call Barilla’s decision to transfer the right to sell their products in one hand in a timely manner. «To have an exclusive distributor means not only to be present on the market, but also to develop», says Alexei Konelsky, director of Agros’ joint sales service. However, he believes that Barilla was more logical to conclude an agreement on exclusive distribution with a larger player in the macaroni market. «But for Ameri this agreement is a significant acquisition of macaroni brands in the portfolio», he adds.

Previously, Barilla in Russia had a strong position only in the confectionery market – it owned the brand Dan Cake (one of the leaders in the market of rolls). According to Farbis, now the Italian concern will focus on promoting pasta and sauces in Russia. «In the long term, we expect to sell 10,000 tons of macaroni per year in Russia», he said. A source familiar with the plans of the Italian concern added that Barilla is considering the possibility of acquiring a macaroni factory in Russia. However, Barilla did not confirm this information.

According to Andrei Gurov, General Director of the Infolink Group (producer and large distributor of pasta), Barilla currently sells about 200 tons of macaroni a year in Russia. The whole market, according to his estimate, is 700-820 thousand tons. «In total, about 15,000 tons of Italian macaroni are sold in Russia, 12,500 of which are sold by our company. The demand for this product is limited», Gurov said. He calls Barilla’s plans to sell 10,000 tons of macaroni a year in Russia “unreal»: «This will be possible only if this segment grows two and a half times».

Julia Blinkova, Director for Strategic Marketing of Agrosa, on the contrary, is sure that Barilla will be able to sell the declared volumes in the Russian market. «But for this they will have to reduce prices», she said.

Participants in the sauce market doubt that Barilla will succeed in becoming a serious player in this segment. In order to become a serious player in the market (now the proportion of Barilla sauces is minimal), Italians will have to invest seriously in the promotion, says Baltimore owner Alexei Antipov. «When a producer produces several products, he still identifies the product that is the most important for him. For Barilla, this product – pasta, they are unlikely to invest serious money in the promotion of sauces», – says Antipov.

Barilla SpA – one of the largest producers of pasta, also produces sauces, bread and confectionery. It was founded in 1877. In 2003, the company’s revenue was $ 5.522 billion. In August 2003, Barilla acquired the French bread and confectionery manufacturer Harry’s, which, with the Dan Cake brand, holds about 22% of the roll market.
According to Business Analytica, the leaders of the Russian macaroni market in the first half of 2005 are Makfa (28.1%), Extra-M (14.3%), First Petersburg Pasta Factory (7.1% ), Europe Goods GB (6.6%), Pasta Zara (6.1%). Barilla occupies 0.12% of the market.