The Nutella empire strikes again: how the Ferrero has conquered the world with sweet treats for all

News IT @it

11:04 am

27 November 2018

Italian confectionary has conquered the world. Ferrero’s products are present – either directly or through official distributors – in over 170 countries, with 23 production facilities and 91 companies around the world. The Alba-based company ended the 2016/17 financial year with consolidated revenue of €10.5 billion, a 1.5% increase on the previous year. These record-breaking numbers are the result of the intuition shown by the greatest Italian dynasty of the post-war period.


The beginnings and the move towards internationalisation

The founder Pietro Ferrero and his son Michele never fit with the stereotype of millionaires. Michele in particular, despite Forbes naming him one of the richest men in Italy and the world, always preferred the workshop to the spotlight. After studying accounting, he took over the family company at a very young age, following the death of his father in the summer of 1949.

Brought up by a humble family in one of the poorest areas of post-war Italy, he built his fortune by inventing confectionary perfect for children and local workers. Too poor to afford more sophisticated sweet treats, they were mad about Ferrero’s giandujot, a sweet that was cheap to produce because it was made from offcuts of cocoa and Swiss chocolate mixed with hazelnuts grown in the province of Cuneo. The result was a smooth paste that could be consumed in salami-like pieces or as a spreadable paste. After a few experiments, Nutella was born. The name sounded almost English (nut was taken from hazelnuts), hinting at the company’s desire to tap into bigger markets than the small Italian market.

“If we’re nobody in Europe, we’ll be nobody in Italy too,” said Michele back in the 1950s, when his company launched in Allendorf, Germany. It proved to be the perfect springboard to launch the company in the rest of the world, which Ferrero conquered a little piece at a time, thanks to some genius ideas like Mon Cheri (1956) to Tic Tacs (1969), Kinder Chocolate (1968), Kinder Surprise (1974) and Ferrero Rocher (1982). The keys to the success of Ferrero were good ideas, hard work and the ability to keep a low profile, combined with a focus on human values and respect for the company’s birthplace and employees (the company even bought a number of apartments in Liguria so workers could go on holiday).

Michele Ferrero was also the brains behind the Ferrero Foundation, founded in 1982. “Work, create, donate” is the motto of the foundation, which helps former employees and supports cultural and art initiatives. Ferrero’s Social Enterprises, launched in 2005, are a direct consequence of this philosophy. These are proper companies, based on the principles of entrepreneurship, but spurred on by a sense of social responsibility – their aim is to create jobs in unpopular areas of emerging countries such as India, South Africa and Cameroon.

After Michele’s death, in February 2015, the Financial Times paid tribute to him as the “Willy Wonka of real-life chocolate” and dedicated half a page to him, summing up the secret to his success in just a few, effective words: “His greatest skill was to know what children want.”
The era of acquisition and the third generation of the company

The man now at the helm of the company is Giovanni Ferrero. Born in 1964 and raised in Brussels, Giovanni studied in Europe before moving to the USA to specialise. Between 1997 and the spring of 2011, he and his brother Pietro served as CEOs of Ferrero International, the group’s holding company based in Luxembourg. However, when tragedy struck on 18 April 2011 and Pietro died suddenly, Giovanni took the reins and drove the company forward towards even loftier ambitions.

After purchasing Turkish company Oltan, one of the world’s biggest producers of hazelnuts, in 2014, Ferrero made waves in 2017 when it invested $115 million to buy Fannie May Confections Brand, the American confectionary colossus. The following year, Ferrero brought Nestlé’s US confectionary business for $2.8 billion. For once, it wasn’t an Italian company being absorbed by a foreign power, but the other way around. Ferrero took control of 20 historic US brands, including iconic chocolate brands like Butterfinger, BabyRuth, 100Grand, Raisinets and Wonka, as well as sole rights to the Crunch brand in the United States and sweets brands SweeTarts, LaffyTaffy and Nerds.

Ferrero is now the third-largest confectionary company in the world, but Giovanni is not satisfied with distributing 365,000 tonnes of Nutella around the world every year. “It’s a promising start,” he says. Quite.

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