Family business

Two presentations at the Finat congress in Italy gave powerful insights into how successful businesses have dealt with the issues of succession in a family business. Andy Thomas reports

The great majority of label converting businesses are small and medium-sized family owned companies, and with the founder generation now approaching retirement, the issue of handing the business to sons and daughters is becoming more urgent. Two presentations at the Finat congress in Italy brought these issues into sharp focus – one from an old-established Italian wine maker, and one from John Hickey, CEO of Smyth Industries.

Marcello Lunelli is vice-president of leading Italian sparkling wine producer Ferrari Spumanti, a 110-year old company now in its third generation of family ownership.

Lunelli started with the extraordinary observation that 70 percent of family owned companies in Europe close down in the third generation. To survive, the family’s values need to define the style of the company and its products and maintain continuity between generations: ‘the challenge is to change without changing.’

For Ferrari, each individual bottle and its label has to transmit these values – ‘quality, elegance, a prestigious but friendly spirit.’

Lunelli spoke of the difficult transition in 2007-8 when his father and uncles stepped back from the business. ‘They stimulated us to follow different study paths. I am the technical part, other children studied economics and law and PR so we all have different roles. You need to create areas in which you can all operate and make mistakes, and give heirs the freedom of action to see if they have the capacity to manage a certain situation. My father and uncles give us the freedom. But at the same time we have tried never to have a confrontation with the older generation and try to take them with us to the future which they can’t imagine. My father is 75 and it is a big effort to think how the world will be when you are 85. It’s harder the older you get. So you need an older generation that will give way, but the young must appreciate this and respect it.’

Lunelli spoke in more detail about the hard road of innovation in a ‘tradition-led’ family brand. ‘In the 1980s the company was resistant to innovation. Our labels used wet glue paper without varnish and which were not water resistant.’ The 1990s saw a more modern labeling spirit – laminated gold labels, embossing to make the name pop out. ‘But at the same time the lettering has never changed. The label must be a bridge from past to present.’

Today the company has fully embraced the advantages of self-adhesive labels. ‘These have so many advantages. As one example, it can take our products two weeks to reach Japan, and quality is very important for Japanese consumers. Now with a PE label it is in perfect condition when it reaches the retailer.’

Family members have to ‘imagine the future’ in which their products will be used. ‘Our products come out in 10-15 years time so we have to be proactive towards a future difficult to imagine. But also not forget past, which gives us our roots
and strength.

As an example of innovative thinking Lunelli cited a bottle designed with a cone-shaped base, meaning it will not stand up. ‘This is not only a striking design, but also educates the consumer how to keep and consume the wine properly. The bottle simply has to be put in an ice bucket! At the same time the bottle has technical requirements which must also be met – resistance at six atmospheres means it is under a lot of pressure. We only made a few of these bottles for vintage harvest years, but it keeps up our branding concept and positions us as innovators and guardians of traditional values at the same time.’

Finally, Lunelli reminded delegates that family members must be proactive in personally marketing the company and its values. He recalled how lucky his father had been to get the Italian World Cup team photographed celebrating from a bottle of Ferrari Spumanti. The latest coup is to have the Italian president celebrating the 100th anniversary of Republic with a specially produced anniversary bottle. 

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Pictured: Marcello Lunelli, vice president of Italian sparkling wine producer Ferrari Spumanti

This article was published in L&L issue 4, 2011