Profile: Family business Dr Schär: “We’re driven by our actions, not our financial results”

You can’t accuse family businesses of rushing things. But self-reliance and risk aversion pushes their survival rate well beyond venture capital, where two-thirds of companies collapse in their first ten years. 

Family-owned Dr Schär has spent a hundred years surviving war, recessions and Covid to become a leader in the gluten-free market. Under co-owner Ulrich Ladurner (pictured above on the right), its sales rose 16% to $600 million in 2023. It has 1,800 staff in 12 countries and expects revenues of $640 million this year.  

I know about the benefits of working for a family company because I used to work for Kraft Foods, now Mondelez, which is driven by quarterly results. Ours is a company driven by a long-term vision for health conditions…

Dr Schär could have grown faster using third-party capital. But the odds would be against any VC company surviving long enough to reap its current rewards. And chief executive Hannes Berger (pictured above on the left) has absolutely no appetite for the tyranny of the P&L account.  

“I know about the benefits of working for a family company because I used to work for Kraft Foods, now Mondelez, which is driven by quarterly results. Ours is a company driven by a long-term vision for health conditions. We want to provide the best quality, and top choice in our market. We’re driven by our actions, not our financial results.”

Dr Schär will attract bids in a sector where acquisitions are multiplying. But Berger expects to sit tight: “We have been a management-driven company for some years. But that doesn’t mean the owner is not involved in the business. I see him in the office once a week. 

“We have a very close relationship. He is our president. He is in no sense stepping back. He has children and they are not in the business. But they have a firm commitment to the management of the company and want to keep it.”

Their enthusiasm may be explained by the way interest in food nutrition has spiralled since the pandemic. According to a survey sponsored by VC firm Manna Tree, 80% of millennials now consider health benefits when buying food. Manna Tree’s managing partner Ellie Rubenstein, daughter of the co-founder of Carlyle group, says the food revolution has a lot further to travel, now people are discovering the risks to health produced by ultra-processed food. 

Dr Schär nutrition was there at the start, in 1922, when it was co-founded in Italy’s South Tyrol province by doctor Anton Schär and his brother-in-law Gottried Untertrifaller, a mill owner. They saw potential in supplying food to meet the nutritional needs of children, initially through semolina, which addressed calcium deficiency, then rice, sago and tapioca puddings.  

Dr Schär survived the war. And Ulrich Ladurner saw potential in the brand to develop his family’s chemist and health food business. He took control in 1979, at the age of 23, and started to build a gluten-free business to address growing concerns over celiac disease, which hits those individuals whose immune systems attack the gut on exposure to the gluten in wheat, barley and rye.  Ladurner owns 75% of the company, and the family of a relative, Walter Ausserhofer, has the rest. Ladurner’s conviction was essential to his company’s growth, as is often the case with family businesses.

Berger says: “For Ulrich the opportunity was a combination of intuition and vision. He was in contact with physicians and the medical community, and saw there was a specific need for the product.”

Until Dr Schär came along, Italian celiac sufferers were obliged to eat rice and potatoes. In 1985, it launched its first gluten-free pasta. By the 1990s, it was the market leader in Italy, boosted by government health prescriptions for celiac treatments. Gluten-free flour, biscuits, and other products followed.

Family businesses often struggle to expand their customer base. But Ladurner was an instinctive marketer, prepared to take a flexible approach to deals. Along the way, he drew on nutritional scientific research, adopting the slogan “We Care.” 

After striking deals in Italy, he went on to negotiate supply deals in France, Spain and Germany, and his wife took over the family’s retail operations. 

Much of the recent growth is down to Berger: delegation to trusted retainers is no bad thing in a family business. Berger says: “I joined the company in 2005, after it decided to get into the US. There was an effort to make an acquisition there, but it failed. So the company decided to start from scratch.” It bought Glutafin and Trufree brands and built a $12 million bakery in New Jersey for gluten and soy-free products.

“US sales are now more than $100 million. It’s rare for a newcomer to do as well as that. There was a risk in all this – but huge potential.” Dr. Schär products often get picked up at Walmart and Berger has ambitions for online sales. 

In 2022, Dr Schär went on to buy Glasgow-based GDR Food Technology, a maker of allergen-free bread, to expand in the UK. In 2023, it bought a gluten-free business in Norway from Hero Group to create leadership in the Nordic region. 

It is now seeking to expand in South America and the Middle East. Asia is a more obvious expansion target. But family businesses can be a bit rigid. Dr Schär is driven by exceptionally thorough five-year targets, and Asia needs to wait its turn: “It’s something for the next strategy period.”  

Dr Schär has a research laboratory staffed by 35 people, a scientific committee, and a recipe centre. It hosts tasting sessions and healthcare debates so people can enjoy its food products while understanding celiac disease. 

To improve manufacturing, Dr Schär has embarked on a project called Field 100, which grows old crops in new ways. Berger sees great potential for millet: “It’s not just gluten-free, but it is resistant to climate change because it can grow with less water than other cereals.”

Dr Schär’s quirky messaging, and social media, facilitates a community-based approach to consumers. In 2013, it extended its reach to low-protein products that fight kidney disease and drug-resistant epilepsy.

In global gluten-free markets, it competes in a universe of 20 gluten-free producers, ranging from Mondelez to Amy’s Kitchen. 

Research published by ResearchAndMarkets suggests the sector was worth $9.85 billion in 2022, set to rise  by a potential 8.15% a year to $15.6 billion by 2028.  Berger readily admits that competition in the sector is way beyond the 1980s, when Ladurner was first asking wary Italian pharmacists to stock his products. But is a pretty good moment for Dr. Schär to deal with the opportunity. Worth the wait, in fact.