De Cecco's path to success

by Meyer Sosland
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Since its founding in 1886 by Filippo Giovanni De Decco, the De Cecco Group has utilized a simple recipe, high quality ingredients and the latest technology to give its customers premium pasta and food products. Using this simple formula and strong leadership by generations of the De Cecco family, the company has grown from one small pasta factory in Fara San Martino, Italy to a significant commercial presence in three Italian cities and an international presence in 87 countries with 120 markets served.

De Cecco’s total sales for 2013 were €411 million ($563.9 million), which represents a 10.18% increase from €373 million the previous year. The EBITDA for 2013 was €45 million, and the net profit was €7.5 million.

De Cecco’s commercial headquarters is now located in Pescara, Italy. The company’s assets in Fara San Martino include plants, flour mills, offices and 13 pasta production lines with a daily production capacity of 500 tonnes. De Cecco’s Ortona, Italy facilities include plants, offices and 11 pasta production lines with a daily production capacity of 450 tonnes.

In 2013, De Cecco’s overall pasta production for the year reached 150,256 tonnes, an increase of 1.9% from 147,397 tonnes in 2012.

In recent years, De Cecco has been growing both organically and through acquisitions. In 2011, the company acquired OJSC Moscow Furniture and Woodworking Industry Group, the second largest producer of pasta in the Russian market. The company has also experienced double-digit growth in France, the U.S., Belgium and the U.K.

De Cecco’s milling business precedes the founding of its pasta business. In the later portion of the 1800s, Don Nicola De Cecco produced high quality flour in his stone mill in Fara San Martino, Italy. It was his son, Filippo De Cecco, who started the family’s first pastifcio — pasta factory — in 1886.

After shutting down the Pescara flour mill in the 1980s, De Cecco’s flour milling business was concentrated at the Fara San Martino production site where, today, De Cecco has a durum wheat flour milling capacity of approximately 1,400 tonnes per 24 hours.

Over the last three decades, De Cecco has partnered with the Uzwil, Switzerland-based Bühler Group to undertake three major flour mill expansion projects at the Fara San Martino complex:

• The 390-tonne-per-24-hour Mill A built by Bühler in 1986;

• The 500-tonne-per-24-hour Mill C built by Bühler in 1998;

• The 500-tonne-per-24-hour Mill B upgraded by Bühler from its original 360 tonnes per 24 hours in 2012.

Mill B

In 2012, De Cecco made an €8 million investment in its flour milling infrastructure. The company worked with Bühler to replace two of the mills’ three production sections, increasing the capacity at its B Mill by 21.4% from 1,100 tonnes to 1,400 tonnes per 24 hours.

“The reason this investment was made is to satisfy the increasing export demands, especially from Asia,” Gianluca Sabatini, De Cecco operations manager, told World Grain in a recent interview.

When the new durum mill project was built, the objective was to build up a plant that would stand the tests of time and be strong in terms of sanitation, reliability, productivity and energy efficiency.

Through a simplified milling diagram and the reduction of the installed machines, the quality of the finished product — in terms of safety — was improved.

“The mill renewal had a betterment of hygienic and sanitary conditions in terms of a lower risk of infestation and fine particles,” Sabatini said. “The building itself facilitates the cleaning activities both in qualitative terms and saving time.”

When the grain enters Mill B’s cleaning section, the product is conveyed through two MTKB combi-cleaning machines and then onto an optical sorter. The optical sorter is able to recognize foreign bodies and “sick” grains and eliminate them from the main flow.

With the objective of obtaining a high degree of hygiene and a uniform and efficient grinding, the grain moves onto the Moisture Controller MYFD and Dampener MOZL, and then it progresses to the pearling process where the grain is dehulled. After this process, the grain arrives at the grinding process with a clear reduction of the harmful substances.

The new milling section integrates roller mills, plansifter and purifiers to achieve a pristine product. It includes Bühler’s Antares double roller mills (8 rollers), Sirius Plansifter and a Polaris Purifier.

“Quality parameters have been certified by De Cecco,” Sabatini said. “As regards the semolina, the yield must be less than 67%; a percentage higher than 40% of semolina with a particle size greater than 400 microns.”

Sabatini noted that if further capacity is needed, De Cecco may replace the third production line.

A History of investment and growth

It has taken both small but impactful breakthroughs and long-term decisive strategies throughout its history for De Cecco to reach its current position as a significant force in the international pasta and food market.

Since its earliest years of operation, De Cecco has utilized and invested in the latest technology to supply its customers with a premium product.

In 1889, a few years after De Cecco was founded, Filippo De Cecco created the first artificial hot air dryer in the new pasta plant that was built next to the family mill. The artificial hot air dryer gave De Cecco freedom from the whims of the weather, and it increased the pasta’s shelf life and reduced the volume of the packaged product.

For the first 50-plus years of its time in business, De Cecco experienced international growth that was in part due to the Italian diaspora. Wherever Italian emigrants put down new roots, they brought many things including their love of pasta. This growth helped create new markets for De Cecco.

Following the overthrow of Mussolini and Italy joining the Allied side, German forces in October 1943 occupied and emptied De Cecco’s facilities of machines, equipment and stocks. The buildings were mined and completely destroyed.

Following this destruction, the De Cecco family decided to reinvest themselves in the rebuilding of their pasta business. De Cecco said that with the commitment, determination and sacrifices from the owners and workers alike, the plants were quickly rebuilt. By 1944, the machinery in De Cecco’s facilities was restored with whatever came to hand and, one year later, production was back to the same level as before. A new plant was also built in Pescara, Italy that was designed on the model of the original mill.

In 1952, De Cecco registered the label bearing the young farmer girl wearing the traditional female costumes of the women of Abruzzo.

De Cecco’s post-war “rebirth” was just in time for a transformation in consumption and lifestyle that took place during the post-war period. De Cecco noted that new tastes and new habits developed, but pasta remained a constant of the Italian diet and identity.

In the 1960s, the company’s next strategic goal was to increase pasta production capacity. In order to create space, a new mill was built in 1965 beyond the Verde River, close to the mountain. This meant the pasta plant could be renovated with the addition of another floor. The new 60-meter-long room became home to four lines for long pasta, four for short pasta and one for egg pasta. Following this investment, in just a few years, daily production increased fourfold to 100 tonnes from 25 tonnes.

Despite this growth, De Cecco could not meet the demand for its pasta in the 1970s. The company now needed space for warehouses and further expansion. In 1972, the De Cecco family decided to invest in a new plant in Fara San Martino, Italy. In 1974, the new plant was launched without losing a single day of work. Within a few years, De Cecco was able to increase its annual production capacity to over 50,000 tonnes of pasta a year.

This level of production volume required the company to reorganize its sales structure from a system based on local distributors to a direct sales organization controlled and managed by De Cecco. This new sales organization was established in 1986 to supply directly to supermarkets.

With this transition, the company went from handling 50 clients to 25,000. It also gave the company higher margins and the opportunity to plan constant growth. In just four years, from 1986 to 1990, De Cecco’s sales grew to five times what it was in the early 1980s.

In the meantime, investment into industrial facilities continued. A new flour mill in Fara San Martino, Italy was built in 1980.

The company developed and implemented a diversification strategy in the early and mid-1980s. De Cecco expanded beyond pasta products. In 1986, the Olive Oil Company was founded and would soon be followed by lines of rice, potato gnocchi, tomato products and sauces, balsamic vinegar of Modena, flours and organic products.

In 1994, a new pasta factory in Ortona, Italy was established, which over the years would succeed the Molino & Pastificio De Cecco in Pescara, Italy that had existed since the 1920s.

In just a few years, the pasta factory in Ortona, Italy increased to 45,000 square meters of covered space.

In 1998, De Cecco partnered with Bühler to completely renovate and add a third milling section to the Fara Mill. The mill (which also produced semolina for the Ortona plant) operated with three shifts and was able to produce 1,100 tonnes of wheat per 24 hours.

Following building work during the late 1980s and early 1990s, the Fara San Martino complex now included a mill, a pasta factory, three storage silos with an overall storage capacity of 68,000 tonnes, and the oil headquarters (housed in the original building).

The current Fara San Martino pasta factory has 13 production lines, 7 for long pasta and 6 for short pasta, and is active 24 hours a day.

Ownership structure

As the company strived to update its sales infrastructure in the 1980s, De Cecco also transformed itself from a family company into a managerial company.

The De Cecco Group again restructured itself in 2008. Today, ownership of the company is divided into 22 shareholding groups. The largest shareholders of F.lli De Cecco di Filippo SpA are the De Ceccos themselves: Filippo Antonio and his brother Giuseppe Adolfo, cousins Giuseppe Aristide, Giuseppe Alfredo and the majority shareholder Saturnino De Cecco. Lesser shares belong to other family members.

F.lli De Cecco di Filippo SpA, based in Fara, controls 89.61% of the Molino e Pastificio De Cecco SpA Pescara and 100% of the Olearia F.lli De Cecco.

The production company is flanked by trading subsidiaries (De Cecco France, De Cecco Deutschland and De Cecco UK) and the holding company DE.FIN. srl, which owns 100% of Prodotti Mediterranei Inc. (for marketing in the USA) and DESE.MARK srl (for data handling and management).