Suzy Bibko is Editor-in-Chief of Families in Business magazine.
Robert and Alexander Barth discuss the natural progression of their business – and how they became one of the largest, and most respected, soft drinks companies in Switzerland
If someone were to offer you a natural, carbonated beverage made from milk, what would you say? Truthfully, you'd probably wrinkle your nose at it – unless you were Swiss. Rivella is Switzerland's biggest selling soft drink, second only to Coca-cola. And the company was recently named one of the most respected in the country. So, how does a family business achieve such status, recognition and success in only 50 years? Believe it or not, like its products -– naturally.
Recipe for success
How exactly do you start manufacturing a carbonated, lactose-based beverage? As Robert Barth, founder of Rivella, tells it, with a lot of inspiration, and maybe a little luck.
The idea for Rivella came about in 1948 when Robert's brother met a lacto-biologist in Germany who had worked at the Institute of Industry during the war. There, the biologist had developed different uses for lactose, as sugar had been rationed during World War II. One of these uses was as a sugar-substitute in either beer or soft drinks. But the biologist hit a snag – he couldn't get the flavour right, though he thought this problem could be remedied using herbs and tea.
When World War II ended, however, the procedure was worthless, as sugar was no longer being regulated. The scientist was left with nothing more than an idea, and he was looking for someone to develop it further. Robert heard from his brother about the meeting with the German biologist and Robert knew there was something there.
"I said to my brother, 'That's a fabulous idea. Nothing like that has been done in the world'," recalls Robert. And Robert knew something about the Swiss palate that the German didn't: the Swiss were already drinking a lactose-based product – fresh whey. On top of that, they were also fond of herbal tea. If there was a market for a soft drink made with lactose, Switzerland certainly seemed to be it.
"So, we decided to arrange a process and a recipe," says Robert of their first steps on this new journey. "The idea was to make a soft drink that was based on whey and would have all the qualities that we thought people would be interested in. We said we must make a drink with the right flavour that is non-alcoholic. We wanted it to be drunk at any time, with a meal or without. We wanted a soft drink that was acceptable to adults with a flavour that wouldn't offend the palate of a wine drinker. And we wanted a name that could be used in all languages because we were already thinking about international franchises back then."
These were certainly big ideas for brothers with no experience in the beverage industry. But they went about it methodically, almost naturally. "We first developed the flavour which is still the same today – tea-like, almost like a wine. Then we developed the name Rivella, which comes from Italian and means 'revelation'. Then we developed the label. The label carried a signature (Barth, the family's surname) because when we first started we called the company an "institute", so it was a scientific thing – people want to know who is behind the product. And we said the bottle must be brown." Indeed, the first bottle recalls more of a 'tonic' than soft drink.
However, there was more to it than just packaging. The brothers were insistent that the product be natural. "It had to be the best of what we were envisioning," says Robert. Which meant that no chemicals could be used. All well and good (and good for you!), but the implication was that, unlike Coke and most other soft drinks, Rivella had to be pasteurised. One more step in the process, which the brothers still didn't know much about.
But they learned by trial and error. Robert bought an old winery and got eight people on board to help him. They started to produce Rivella at a rate of 900 bottles a day with a hand-filling machine. Robert confirms their naïveté: "None of us knew anything about beverages. But we were learning by doing and by doing things wrong, and avoiding the same error twice. But we learned. We met people. And we could find people to help us follow this wild idea of ours."
Passion for the product
With 2002 turnover exceeding €98 million, the company has evolved into one of Switzerland's bigger family businesses. To keep open its options for corporation with other companies on different levels Rivella formed a second corporation in 1953, which owns the rights to make the products, how to handle the whey, the brand and the know-how in bottling such a delicate product. This facet is extremely important in the beverage industry, as you cannot have a patent on soft drinks themselves, only the procedures. "Our protection [in this sector] is a strong brand, secrecy and confidentiality," explains Robert.
There was more to Rivella than just keeping the competition out, however; they wanted to grow. Luckily, the product was gaining popularity outside of Switzerland. "In 1962 I had someone very interested in bringing Rivella to Australia," recalls Robert. "We started in Melbourne and had a very good manager there. But the company that we had given the franchise to was sold to Coca-cola who was not interested in this venture." Despite this setback in internationalisation, the company was left with some good contacts in that part of the world, one of whom produced passion fruit juice in Kenya and the Fiji Islands. When the friend passed away, Rivella took over his factory. And what potentially could have been a brief dabble abroad led to the family's other big industrial asset: fruit juice concentrates sold as raw material to the industry.
Indeed, today fruit juice concentrate makes up two-fifths of the Barth family's business (the other three-fifths comes from its consumer items: the Rivella brand drink and other juice drinks). And the company ranks number one in the world in the production and marketing of passion fruit juices. Robert's son, Alexander, admits that it's rather niche, but not that far from the company's roots. "This arm of the business came about by Rivella introducing a passion fruit-based drink. We had to secure the raw materials for it and therefore got involved in production of passion fruit concentrate, which was an unknown thing at the time (1964). And from this, we started selling concentrate to other industries. So the business actually started from the need of securing the raw material for a product we had in the market."
"When we decided to get involved in the fruit juice arm of things, we bought a very old and well known Swiss brand, Michel," explains Robert. "Now, Rivella began developing soft drinks, fruit juices, nectars and functional drinks as a sideline. It was very successful because with Rivella, we had a lot of credibility for being natural, being high quality. So when we came into fruit juice, we could use the public recognition for what we are." Once again, a seemingly natural progression for this company.
There's no doubt that this family business has flourished in just 50 years. But the family realised early on that it was going to need the help of others to make it as successful as they wished. While still 100% family owned (by Robert, his wife, and his two sons and daughter), the family has a 'philosophy' of sharing the success – but not the shares. What that means is that the company values non-family members and needs them to be successful. In fact, the two main branches of the company (consumer goods and juice concentrates) each have a non-family CEO. Admittedly, the chairman of all the companies is Alexander (chairman of the supervisory board). But, as Robert says with a smile, "That is how we keep the empire together."
In theory, Alexander, as chairman of the board, could also be CEO. And indeed, many family businesses operate under this model because it keeps control 'close to home'. So why not in Rivella? Natural selection sums it up quite nicely. "For my generation," says Alexander, "there are only three of us. So, naturally we needed to bring in outsiders. Also, it's quite obvious that you can attract different types of people if they know they can also have a career in the family business. And if you want to attract quality people, you have to be able to give these roles to some of these people. You can do this better if you withdraw yourself as a family to the role of board members. But interested board members – not just members who sit there and talk about the company twice a year. You may lose formal control, but you always know what is happening."
What this open attitude results in is a close rapport between the family and its employees. It's a mutually respectful atmosphere that is felt throughout the company. While the family does not feel the need to write down its philosophy, there is no doubt that the employees know what the family values and what went into building the company. "What happens is that by having people working with us for a long time, they know how we do things," says Alexander. "How we look at social aspects, how we look at treatment of our personnel, how we look at behaviour within the company, and they feel it. And very often they come and say to the family, 'Look, how do you feel about X?' As management we would propose this, but you might have other feelings as shareholders. How do you want us to do it?' So, they have a good feeling that there might be some strictly non-monetary interests at work."
Robert concurs. "We have a very good crew. They love to work here. People are always amazed at how carefully the employees inform the board. But the fact is that they're proud that they get the time to tell us who they are and what is going on. People are happy we are interested in what others have to say. It means that they can develop at work. We can only hope that our employees remain proud to work here. We hope that what we've done here so far is meaningful to others. We are very strong believers in what we do. We want to convince our staff and our workers to work with us and hope they are happy to do so when they see the success of the company."
Are there any plans to change this successful recipe in the future? Father and son both agree that now is not the time to decide. "As shareholders, we obviously have an idea of how the business should be run," says Alexander. "But this is only the vision of the present shareholders and we all know we have to die sometime. What the next shareholders decide is up to them. We can only hope that we can show them the way we live and work and that our values will transpire to them."
Robert heartily agrees. "It's not that we feel the next generation should do it as we do it now, because we realise that we also learned along the way. I think they should be prepared, but nothing is forever." Naturally.