PARMALAT How the Milk Spilled

            

Authors


Authors: Abdul Khader, Sanjib Datta,
Faculty Associate, Faculty Member
ICMR (IBS Center for Management Research).



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The Origins

Tanzi was a young man of 22, when he inherited the family business that was started by his grandfather. "Tanzi Calisto e Figli - Salumi e Conserve" (Tanzi Calisto & Sons - Cold Cuts and Preserves), produced processed foods like seasoned ham, cured meat and tinned tomatoes. Tanzi, who had a strong entrepreneurial streak, was not satisfied with simply running the family business and decided that he wanted to explore new products and markets to help the business grow. On a trip to Switzerland, he noticed a carton of milk on a super market shelf and decided that the route to success was through milk. He set up a pasteurization plant near Parma to produce milk and sell in the areas surrounding the town.

In 1963, the name 'Parmalat' was given to the company and the milk was also marketed under the same name. (Parmalat meant 'milk from Parma', latte being the Italian for milk. Parma was well known as a center for culinary excellence in Italy, and Tanzi capitalized on this reputation). Parmalat was the first branded milk to be produced in Italy and became hugely successful. Over the years, the company expanded operations to other areas of Italy, and Parmalat soon became a national brand.

Tanzi's commitment to innovation and marketing contributed to the company's success. Parmalat was the first milk processing company to package its milk in a tetrahedron shaped carton called 'Tetra Pak' and use the Ultra High Treatment technique in the production of milk. Tanzi's innovativeness considerably increased the shelf life of milk and Parmalat became well known for its long life milk. The company was also one of the earliest to use sports persons to endorse its milk, earning it global recognition as the 'milk of champions'. 

Over the years, Parmalat diversified into a variety of other products like yoghurt, vegetable sauces, fruit juices, baking products, soups and mineral water. In the 1980s, the company expanded rapidly and entered several other countries around the world. In 1990, to raise the money to support its rapid expansion, the Tanzi family gave up 49 percent of their stake in the company and Parmalat was floated on the Milan Stock Exchange. By the early 2000s, the small company from Parma had become a global food empire spanning 30 countries and employing over 35,000 people.

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