U.S. Breakthrough

One Sweet Legacy

  • Why it matters

    Why it matters

    Ferrero is going for a bigger chunk of the U.S. market, and Chief Executive Giovanni Ferrero believes new acquisitions and strategics are the way to go. However critics say he should develop new products like his father.

  • Facts

    Facts

    • Ferrero SpA was started in 1946 as a confectioner and pastry shop by Giovanni Ferrero’s grandfather Pietro.
    • Giovanni’s mother, Maria Franca Fissolo, is the richest Italian with an estimated fortune of $22.1 billion, according to Forbes.
    • The business made €899 million in net profits in 2015.
    • In 2015, Ferrero acquired Oltan, the Turkish market leader for hazelnut production and British chocolate producer Thorntons. Rumor has it a deal for Belgian cookie maker Delacre is also imminent.
  • Audio

    Audio

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Italian CEO of Ferrero International Gio
CEO of Ferrero International Giovanni Ferrero is taking the family confectionery business on a new course. Source: Getty Images

Giovanni Ferrero looks more like a poet than a business magnate. The 52-year-old head of the Italian chocolate empire has had three novels published and might have been working on a fourth if he wasn’t busy running the family business.

His elder brother Pietro died in an accident in South Africa in 2011 and since his father, family patriarch Michele Ferrero, passed away in 2015, Mr. Ferrero has been the sole chief executive of one of the world’s largest chocolate producers.

Despite still being a family-owned company, Ferrero is a global enterprise with sales of €10 billion ($10.9 billion) in 2016, 35,000 employees and products sold in 160 countries. Giovanni’s mother, Maria Franca Fissolo, is the head of the family holding company, which includes 78 companies worldwide and 22 production sites. According to Forbes, the widow is Italy’s richest person with an estimated fortune of $22.1 billion.

“It will take a decade before we reach a critical mass.”

Giovanni Ferrero, Ferrero International chief executive

His father was an inventor who thrived on developing products. It started in 1964, with Nutella – the hazelnut cocoa spread that’s still slathered on toast and spooned into baking today – but then came Kinder Chocolate, Duplo, Hanuta, Rocher and Mon Chéri, which is made only in the winter months in the German state of Hesse by seasonal workers who are flown in specially from Sardinia.

Mr. Ferrero has been criticized for not launching any new products. But unlike his father, he has made investments and acquisitions. In 2015, Ferrero acquired Oltan, the Turkish market leader for hazelnut production, and British chocolate producer Thorntons.

And now, according to a report in Italian daily “La Stampa”, a deal for Belgian cookie maker Delacre is also imminent. There is no official confirmation, but the newspaper quoted management sources at Ferrero as saying: “This is an opportunity to explore a very interesting market where Ferrero currently is not active and where there is a great margin for growth.”

Ferrero’s biggest target, however, is the United States where the company has only a 2.3 percent market share, which is tiny compared to candy giants Mars and Hershey.

The ultimate goal: Mr. Ferrero wants to take on peanut butter with Nutella.

“It will take a decade before we reach a critical mass,” the Ferrero boss explained in a rare interview, for which he answered the questions in writing.

The Ferrero family has long been known as secretive and reserved, but that could also be changing. When Italian Prime Minister Matteo Renzi toured the factory in September for the company’s 70th anniversary, Mr. Ferrero became positively talkative, holding a speech in which he even aired some of the secrets of Nutella.

“In 1967, we produced 200,000 quintals [100 kilograms]; today we produce more than four million quintals of Nutella every year,” he said proudly in a speech. “We reach 120 million families around the world, are the most beloved Italian food brand in the world and have more than 31.5 million fans on Facebook.”

Mariachiara Marsella, co-founder of the online market research and web marketing institute BEM Research in Marino near Rome, confirmed that the brand was indeed going strong.

“Ferrero is definitely a digital company,” she said. “It’s active on Facebook, Google Plus, Instagram, Twitter, Pinterest and Youtube. There is a separate page for each product.”

The firm has achieved what so many have failed to do in Italy in the economic downturn that has hit the nation since the 2008 financial crisis: add jobs.

Mr. Renzi told reporters that Ferrero had created 400 jobs under his government’s labor market reform.

“To all those who say that Italy never succeeds, tell them the story of Signor Michele, tell them the story of Ferrero,” he said.

 

Regina Krieger is Handelsblatt’s correspondent covering Italy. To contact the author: krieger@handelsblatt.com

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