Innovation Keeps Centuries-Old Family Business on the Leading Edge
Participating in the Cornell Smith Family Business Initiative’s annual trek to Italy offered a unique insight into Italian family enterprises. The group visited six family businesses across Rome and the Campania region, witnessing the profound impact of family-run businesses on Italy’s economy and gleaning insights into how these firms navigate the global business landscape.
Italy’s economy is deeply intertwined with family businesses. Small and medium-sized family-owned enterprises account for over 85% of all companies and 70% of employment by some estimates. These enterprises, often passed down through generations, have thrived amidst global economic shifts.
One standout from the trek was Rummo Pasta in Benevento, Italy. Founded in 1846, Rummo has remained under family ownership for over six generations. Historically focused on private-label manufacturing, Rummo underwent a significant shift toward premium branded products 15 years ago. At the time, the company’s revenue mix comprised nearly 95% private-label products and 5% branded products. The catalyst for this pivot began with internal disagreements that led to a leveraged buyout, highlighting the complex dynamics within family businesses.
The decision to focus on premium branded products was not made in haste; it was a response to global trends. With connectivity fueled by social media and a growing global appetite for authentic Italian pasta, Rummo sought to introduce the brand to new markets. It executed a comprehensive campaign across major European cities and airports using full-wrap trams, digital signs, billboards, and social media marketing. This approach increased brand visibility and built Rummo’s image as a premium, authentic Italian pasta maker. By 2023, Rummo had become one of the top five pasta brands in Italy and the fastest-growing pasta brand in the U.S., securing distribution nationwide through Whole Foods Market. Today, the company revenue mix has evolved to nearly 97% branded products and 3% private-label products.
At the heart of Rummo’s success lies its robust focus on innovation through research and development. The company operates its own R&D center and internal training school, which led to the development of new product lines such as gluten-free, legume-based, and protein-based pastas, catering to evolving consumer preferences. Rummo also has invested in advanced technologies and sustainable practices, including a trigeneration plant supplying nearly 80% of its energy needs, showcasing how innovation can drive both product excellence and environmental responsibility.
Rummo’s journey offers several key takeaways:
- Strategic adaptation: Businesses must be willing to assess and adapt their strategies to market changes, even if it equates to a complete turnaround.
- Leveraging brand awareness: Authenticity and heritage can be powerful assets in branding and marketing, especially in global markets seeking genuine experiences.
- Navigating internal dynamics: Understanding and managing internal relationships is crucial for the longevity and success of the business.
- Embracing innovation: Integrating modern technologies can enhance a brand’s ability to connect with consumers and accelerate growth.
This trek showcased the vital role family businesses play in shaping the Italian economy and culture. Rummo’s evolution from a local pasta producer to an international brand exemplifies how tradition and innovation can coexist to drive success in new markets. These lessons are invaluable for companies in emerging markets strategizing ways to tap into new geographies.
About the author
Symeon Shaw-Wakeman is a first year MBA candidate and Emerging Markets Institute Fellow at the Cornell SC Johnson College of Business. Prior to Cornell, Shaw-Wakeman was an analyst in the investment-grade debt capital markets groups at Truist Securities and Siebert Williams Shank. He began his career at HSBC, providing financing to asset managers and hedge funds.
All views expressed are those of the author(s) and should not be taken as reflecting the views of Cornell University.