Parmalat Enjoys Support From Italian Shoppers
Too bad for shoppers seeking Parmalat’s Kyr yogurt in any flavor besides plain or pineapple at the Dimeglio supermarket chain in Collecchio, Italy. It’s Monday and the weekly shipment doesn’t come until Wednesday.
The store also is out of full-fat, long-life milk made by Parmalat, which continued operating after its parent filed for Italy’s largest bankruptcy last month.
“Look at these shelves and you can see customers are choosing Parmalat over other products,” said Vittoria Zanolli, director of the Collecchio franchise of the 750-store chain. “People feel very close to the company’s workers. Almost every house here has a relative who works in some way for Parmalat.”
Loyalty to Parmalat isn’t just a local phenomenon in the company’s hometown. Sympathy for what was Italy’s largest food producer has boosted sales of Parmalat goods at Eurofind’s 37 Auchan hypermarkets and 211 SMA supermarkets across the country. That support may help the company survive in Italy, where Parmalat Chairman Enrico Bondi has found that the business can finance itself as long as it doesn’t have to honor any debt, a person familiar with the matter said.
“Bondi has been very good at turning around companies from an industrial point of view and has a reputation for cutting jobs,” said Alessio Gioia, who helps manage $700 million at Financial Consultants & Brokers Sim in Mantua, Italy, and owns no Parmalat securities. “But Parmalat is a different story. It has financial, not industrial, issues.”
“If he’ll manage to set things right and keep Parmalat in business, he would become a hero for the Italian business community,” Gioia said.
Italy last year accounted for about a fourth of the $9.7 billion of revenue that Parmalat reported. Parmalat employs 4,000 people in the country, of whom about 1,100 work for Parmalat in Collecchio. It also indirectly employs 4,000 people in the Parma area in northern Italy through its suppliers and distributors.
In December, sales of yogurt made at the Collecchio factory rose 29% from a year ago and milk sales were up 1.5%, according to labor union figures. In the first week of January, fruit juice sales rose 14%, milk rose 8% and yogurt was up 4% from a year earlier. To meet demand, the plant has added a Saturday shift the last three weeks.
Parmalat filed for bankruptcy protection Dec. 24 after the company revealed that a $4.9-billion bank account didn’t exist. Italian police have arrested 11 former Parmalat managers and auditors, and are working to find what else was falsified. So far, the team working with Bondi, a turnaround expert, has found barely any cash and as much as $12 billion of debt, people familiar with the company said.
Prosecutors are scheduled to question Lorenzo Penca, the former Italy president of auditor Grant Thornton, and his partner Maurizio Bianchi, on Thursday.
A spokesman for Bondi wouldn’t give sales or profit figures, saying the firm wouldn’t announce any financial data until it completed an internal audit.
The collapse of the maker of Archway cookies and Santal fruit juices has been treated as a national disaster. Prime Minister Silvio Berlusconi pledged to make sure jobs wouldn’t be lost at Parmalat. His government passed an emergency decree that gave Bondi broader powers as sole commissioner to restructure the company.
Politicians also are trying to keep people’s confidence in Parmalat’s brands as well as in Italy’s financial system.
“Parmalat products are good and the public buys them,” European Affairs Minister Rocco Buttiglione said recently. “Financial activities led to the collapse; it wasn’t caused by the company’s industrial activities.”
