From the irresistible Nutella that we simply can’t get enough of to Ferrero Rocher, that's at the heart of moments that truly matter, Ferrero offers some of the most unique, premium-quality, and delectable treats on the planet earth – no we are not exaggerating one bit.
Following are a few facts and stats highlighting the tremendous success achieved by the Ferrero Group:
- Sales revenue of 12.7 billion Euros
- Number of employees: 38,767
- Selling in over 170 countries
- 32 production plants in 5 continents
- Produces over 1,374,224 tones of chocolate per year
Ferrero has come a long way from Alba, Italy, where a pastry shop was converted into a factory in the 1940s, to a multi-national company that’s renowned around the globe now, making its way into almost every home.
Let’s now take a detailed look at the impressive and inspiring journey of Ferrero, one of the pioneers in the chocolate and confectionery products industry…
A Piedmontese Family Gets To Work
The Ferrero fairy-tale began in the small town of Doglioni, North-western Italy, during the shadow of World War 1.
The Man Behind The Iconic Ferrero Company
Pietro Ferrero, a veteran with a humble background, opened a pastry shop in 1923, marking the dawn of a new era in the chocolate and confectionery products industry.
The very next year, he married his wife, Piera Cillario, and the subsequent year, they welcomed their son, Michele, into the world.
As life began to move quickly, the Ferrero family found itself moving between cities for close to a decade. All the while, Pietro worked on his craft and strived to make ends meet, working different jobs.
Discovery
In 1938, Pietro relocated to East Africa with the ambitious plan to sell biscuits to Italian troops based there. As the plan crumbled, he returned home just in time before the beginning of World War 2 and settled with his family in Alba, a small town in the Piedmont region in Italy, dating back to ancient Roman times.
This is where and when he took things to the next level and began materializing his years of experience and passion for delectable confectionaries. He tried and tested various recipes to develop a cheaper alternative to the luxurious chocolate that was being severely rationed during the war. A world without chocolate? Pietro couldn’t even imagine that. So, he got to work.
This specific idea was brought to the fore by his younger brother Giovanni Ferrero who highlighted the opportunity and gap in the market, where people craved chocolate but couldn’t afford and get their hands on it given the dearth of supply.
After working day and night and trying a plethora of recipes, Pietro finally hit the jackpot.
He stumbled upon a mixture consisting of toasted hazelnuts, cocoa, a blend of molasses, coconut butter, and vegetable oil that he knew would make an impact thanks to its scrumptious taste. He called the mixture Giandujot, similar to Gianduiotto – another confectionery item that became renowned during the rule of Napoleon.
The hazelnut paste, or Giandujor, as they called it, was brick-shaped. It was wrapped in wax and sold to chocolate-deprived Italians, who simply couldn’t get enough of this economical yet tasty chocolate.
Establishing The Company
Soon, word spread, and everyone wanted to try it – quite literally. Thus, Giandujor was selling as fast as Pietro could make it. At this crucial juncture, Pietro realized that he needed to amp up the production.
Hence, he teamed up with his brother, who had notable experience in wholesaling foods, to establish Ferrero in 1946.
They set up a plant and hired employees to cater to the growing demand of Giandujot and even worked with local farmers to increase the production of hazelnut crops so there was a sufficient supply of the inputs needed.
Tragedy Comes Unannounced
Unfortunately, Pietro couldn’t witness his brainchild making it big as he passed away in 1949 at the age of 51 due to a heart attack. However, the roots of the company he breathed life into were entrenched, and the company kept on setting the bar higher, following the vision of its founder. In the same year, Ferrero Co. launched a creamier and spreadable version of Giandujot, referred to as super crema gianduja, which was later named Nutella.
Key Takeaway 1: Pounce On Opportunities Without Thinking Twice
Pietro was obsessed with confectionaries and ever since the early 1920s had been trying to make a mark in the industry. From relocating and working odd jobs to bouncing back from failures such as the plan to sell chocolate biscuits to Italian troops, he went through it all.
However, he kept at it and stuck to his guns. When the opportunity came knocking on the door, with chocolate becoming a luxury in war-struck Italy, Pietro, along with the backing of his family, struck gold. He strived hard and came up with an economical yet high-quality alternative to chocolate, Giandujot.
The product was a huge success and it led to the birth of Ferrero – a company that needs no introduction today.
Life & Business Goes On
As unfortunate as it was, the founder of the company barely got to see Ferrero takeoff. However, his family continued to enhance the appeal of Ferrero's products and elevate the company to new levels. Luckily, the experienced Giovani was there to steer the ship and establish an effective sales network.
From using clever tricks such as selling Supercrema in jars and pots that customers could re-use to employing sales representatives for the company who would directly sell to the stores instead of distributing the products via wholesalers to keep the prices low, Ferrero did it all successfully. Hence, it was able to create an affinity for its brand and enhance the appeal of Supercrema.
But as fate would have it, just as Ferrero was growing, Giovanni suffered from a heart attack in 1957 and passed away.
Path To Global Footprint
Michelle, Pietro's son, took over the role of chief executive and he wasted no time in taking the company global.
Having played a decisive role in inventing the products with his father, staying by his side through thick and thin, and even renaming Giandujot to Supercrema, Michelle was well aware of the company's roots and the potential it had.
Hence, after success in Italy, he doubled down on expanding the company globally.
He played an integral role in convincing his relatives to enter and expand in the German market. This was after World War II and before his father's death. He saw empty German missile factories and realized that these could be converted into chocolate-producing factories.
The first plant was inaugurated in 1956, and a cherry liquor-filled chocolate named Mon Cheri was introduced in the German market. It was an instant success.
Expansion In Europe
Soon after, Michelle led the company in new markets – France, Belgium, The Netherlands, Austria, Sweden, United Kingdom, and Spain.
Commercial offices and production plants were set up in different regions of Europe, and Ferrero began exponentially growing.
Ferrero resorted to creative marketing campaigns, consisting of information about the healthy nature of its sweets and the high-energy they offered, hooking customers in new markets. Such marketing campaigns offered a high Return on Investment and enabled Ferrero to capture attention and boost sales.
Just after 1962, Italy had started to emerge from the devastation caused by war, and Italians were faring well economically. This was when Michelle enhanced the quality of Supercrema as he realized people could afford 'real chocolate.' Hence, the company tinkered with the composition of the ingredients and increased the proportion of cocoa and cocoa butter.
At the same time, the Italian authorities began cracking down on the use of superlatives in advertising, putting the name of Ferrero's main product – Supercrema – in jeopardy. However, Michelle and co. were quick to rebrand.
In a bid to evoke emotions and appeal to masses worldwide, the team came up with the iconic name – Nutella – and began selling under the new label in 1964. The rest we know is history. Such was the success that Ferrero never had to look back from there onwards.
New Markets, New Products, and New Direction
Continuing its merry way, Ferrero entered the Swiss and Irish markets before venturing into different continents and countries as far as Australia, Hong Kong, and Ecuador.
All along, under Michelle's leadership, Ferrero focused on diversifying the product line as well, emphasizing quality above anything else.
In 1968, the Kinder line was introduced. In 1969, Tic Tac was launched. And in 1982, the famous Ferrero Rocher was introduced to the market.
Michelle Leaving Nothing To Chance
Michelle was heavily invested in Ferrero. After all, why wouldn't he be? It was the brainchild of his father and a company he had been a part of all his life.
Hence, he did anything and everything that was required to safeguard the company's interests and help it blossom. From patenting Mon Chéri in Arabic to popping in retail stores to check out competitors' products and even installing statues of the Madonna of Lourdes to watch over Ferrero, he did it all.
Four decades after he was thrust into command, in 1997, Michelle handed over the charge to his sons, Giovanni and Pietro, with Ferrero being bigger and better than ever, having close to $5 billion in sales.
The Sons Carry On The Legacy
Michelle's sons were chocolate royalties. They were being groomed from a very early age to take over the thriving business.
By studying abroad, living in different parts of the globe, and working in various assignments within the company, the brothers were all set to carry on where his father left, who, by the way, began serving as the chairman of the company overseeing it. You didn't expect him to call it a day just like that, did you?
The brothers learned quickly and wasted no time in further growing the company as CEO, starting in 1997. Giovanni was the more creative one who worked in tandem with his brother, Pietro, who had a knack for business operations.
They primarily focused on strengthening the in-house native brands of Ferrero and making them the best in the world.
For 14 years, the brothers ran the company until 2011, when Pietro died of a heart attack. Giovanni then had no choice but to run the company himself. Another setback came four years later, in 2015, when Michelle passed away, leaving Giovanni alone.
The death of Pietro followed by Michelle ensued battles within the Ferrero ranks. While previously, Michelle had owned the business, now it had to be divided. Knowing that consolidated ownership would be critical to Ferrero's success, he left the majority of the stakes to Giovanni and the rest to his sons.
Bogged down by the new responsibilities as CEO and chairman, Giovanni hired Lapo Civiletti, the first outsider from the family, as CEO.
Turning away from what made Ferrero a huge success, Giovanni is now focused on fueling business growth through acquisitions and is fixated on the scale.
Key Takeaway 2: Expand Into Different Markets & Diversify the Product Line
After the passing of his father and uncle, Michelle took over the reins of the company with a singular focus: expand internationally.
While he strengthened the company's roots within Italy and even rebranded Supercrema, it was the expansion in Europe and then throughout the world as well as diversifying the product line, launching Kinder, Tic Tac, and Ferrero Rocher in addition to Nutella that helped pave the way to worldwide success.
Globalization, constant innovation, and diversifying the products portfolio were the core reasons why Ferrero became a world leader in the confectionery industry during Michelle's forty years at the helm.
Ferrero’s Product Line-up: The Planet’s Most Popular & Sweetest Treats
Ferrero's success is a result of its delicious and premium-quality products that people cannot get enough of. The four main brands of Ferrero include Nutella, Kinder, Tic Tac, and Ferrero Rocher.
Nutella – The Food Of Goddesses
Launched in 1964, Nutella was an instant hit and helped pave Ferrero's journey to global dominance.
When Michelle had no choice but to re-brand the Supercrema, the creamier and spreadable version of the Giandujot, the first product of Ferrero launched in 1946, Nutella was born.
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While initially, it was a source of joy for Italians who couldn't get their hands on chocolate given that it was short in supply and expensive, later on, it became the go-to choice of people worldwide who couldn't stop themselves from munching on the irresistible rich and buttery combination of cocoa and hazelnuts that spreads consistently like a French buttercream frosting.
According to Ferrero, over 150 families across the globe eat Nutella for breakfast and a quarter of the world's hazelnuts are used in the production of Nutella. Yes, that's right. Plus, it's widely used in different recipes and the ultimate choice for people of all ages, be it for whetting their appetite with a snack, celebrating with sweet, soft, and creamy chocolate, or salvaging their emotional wounds.
In 1996, Ferrero launched an art exhibition with those artists that had grown up with Nutella, and it didn't come as a surprise that many of the popular artists had grown up eating it. For instance, Kobe Bryant, may he rest in peace, grew up eating Nutella endorsed the brand in the early 2000s, and his face as well as the slogan "Try Kobe's favorite" appeared on the Nutella jars to enhance the appeal to kids in the U.S.
In 2005, the company created a Guinness world record by creating the largest continental breakfast ever in celebrating Nutella's anniversary. In 2007, an Italian blogger named Sara Russo mobilized all the lovers of Nutella and declared this as World Nutella day. In 2017, the brand opened its first café in Chicago where all the Nutella lovers can go and enjoy their unique experience from different recipes.
Kinder – Unique Product & Experience To Enhance Joy
The first new addition to Ferrero's products portfolio, consisting only of Nutella, was Kinder Chocolate.
Michelle Ferrero went to Germany to open the first-ever chocolate factory outside Italy, where the need to diversify the product line dawned upon him. The Kinder Chocolate was first introduced in the German market in 1968. Kinder means children in German. Hence, it didn't come as a surprise who this product catered to.
The purpose of this chocolate is to combine three things at once – tasty chocolate, fun games, and discovering new things. The main brand of Kinder contains all those three things and provides children with milk chocolate with a hollow capsule that has a toy as well.
Even though it was meant for the German market, the brand quickly spread to Italy and other Mediterranean regions because of its huge success. This brand also targets the parents who want their children to be happy and bring fun and enjoyment to their lives. After Kinder Chocolate came in Kinder Surprise in 1974 that enlarged the Kinder Family.
Since, then a number of other products, including Kinder Bueno; Kinder Joy; Happy Hippos; Kinder Delice; Kinder Pingui; Milk Bites; Country Crisp; and Kinder Maxi, have been launched.
Much more recently, Ferrero launched Kinder Joy eggs in the US, which were previously banned after being termed as a choking hazard. However, Ferrero modified the product and launched it again after FDA’s approval, bouncing back stronger than ever before.
Tic Tac – Refreshing Mints That Breathe Life Into A New You
The Ferrero company also has a unique brand in its lineup that doesn't resemble its other traditional brands at all. It is a breath mint brand that was launched in 1969 and went on to become one of the bestselling brands in the U.S. market.
When Ferrero was launching their brands in the U.S., it didn't rely just on the popular Nutella brand or Kinder, one of the most famous chocolates in Europe, but rather it diversified and launched Tic Tac. The company introduced the breath mint line by marketing it as a brand that is 1 and a half-calorie breath mint. This was done to cater to the health craze that was prevalent in the 80s.
Tic Tacs are sold in small transparent plastic boxes with a flip-action living hinged lid, differentiating it from products of other brands. The ease and style that it offers make it the foremost choice.
To stay ahead of the competition and continue to amaze as well as attract people, Ferrero continues to launch new flavors such as blueberry and donuts. The strong, creative flavoring and sugar-free versions are a huge attraction.
Ferrero Rocher – The Ultimate Bonbon
The world's most popular bonbon, Ferrero Rocher, was introduced in 1979 in Italy, in 1982 in Europe, and in 1988 in the U.S.
Over time, it has grown into one of the most premium chocolate category leaders. The name of the brand comes from a grotto in the Catholic shrines of Lourdes. The Rocher comes from French, which means rock. The precious gold packaging and high-quality ingredients contributed to the immense success of Ferrero Rocher.
It's marketed as a means of celebrating life's golden pleasures, including the joy of being with family, special love, and true friendship, among others. Hence, it doesn't come as a surprise that Ferrero Rocher is loved, gifted, and appreciated worldwide and in high demand during the holiday season in lieu of Christmas and the new year.
Key Takeaway 3: Build Brands That Stand The Test Of Time
The single most important reason for Ferrero's success ever since its inception is the quality of its products. But Ferrero isn't just about the products; it is about the stand-alone brands – Nutella, Kinder, Tic Tac, and Ferrero Rocher that are renowned worldwide.
Each of these brands is unique, with a specific target audience. People relate to these brands, love them, and turn to them in their daily lives to treat themselves. It highlights the essential nature of building brands that can drive business growth.
Doing Business With Purpose
Ferrero is highly ranked amongst the list of companies with a glowing reputation. It doesn’t come as a surprise given the emphasis the company puts on innovation, caring for people, doing right by the planet by encouraging eco-friendly agricultural practices, and protecting the environment.
Ferrero’s sustainability framework is built on the following 4 pillars:
- Protect the Environment
- Source Ingredients Sustainably
- Promote Responsible Consumption
- Empower People
Protect the Environment
Ferrero is increasing environmental efficiency in its operations and supply chain, reducing water consumption and emissions, and increasing the circularity of packaging and manufacturing.
Climate action, energy efficiency, water stewardship, packaging, and circular economy are at the heart of Ferrero’s strategy to protect the environment.
It is reducing its GHG emissions across the value chain, utilizing less non-renewable energy, using water responsibly, managing wastewater discharge, and minimizing waste from its operations.
Source Ingredients Sustainably
From cocoa and palm oil to hazelnuts and other ingredients such as eggs, milk, sugar, and Shea, Ferrero makes it a point to source sustainably.
Ferrero is committed to building a thriving supply chain from the point of origin to the point of destination.
It does this through robust due diligence, supplier management, traceability, and transparency right from the point of origin to destination, collaborating with stakeholders, devising policies, and upholding the Ferrero Supplier code, which includes three pillars: human rights and social practices; environmental protection and sustainability; and supplier transparency.
Promoting Responsible Consumption
Ferrero’s products are consumed in almost 170 countries worldwide by millions of people, providing them joy and pleasure.
Food plays an integral role in societies, and Ferrero leaves no stone unturned in ensuring its products meet the highest standards of quality and safety and are consumed responsibly by people as part of a balanced diet.
Ranging from responsible marketing and labeling of products to help individuals make informed choices to offering food education and encouraging active lifestyles, Ferrero does it all.
Empower People
Ferrero understands the importance of inclusiveness and diversity. Hence, it promotes people of all genders, backgrounds, religions, and cultures within the organization.
Its partnerships with the Consumer Goods Forum (GCF) Coalition on Human Rights, the International Labor Organization (ILO) and Save the Children help the company uphold human rights worldwide. That’s not all. The Ferrero Group also invests in developing and motivating its people.
Key social responsibility projects led by the Ferrero Foundation and others such as Kinder Joy of moving and Michele Ferrero Entrepreneurial Project continue to make a difference in developing human capital.
Plus, Ferrero also cultivates a culture of continuous learning so that the employees constantly grow and become better versions of themselves. There are different programs designed specifically for this initiative. There is a program named Welcome to Ferrero that helps employees in their onboarding processes. Another one is Ferrerita, which helps the employees understand the culture and the spirit of Ferrero.
Key Takeaway 4: Achieve Success By Focusing On The People, Planet, & Profit
Ferrero sets the bar higher by not only focusing on the profits but also on the planet and people.
By safeguarding the environment, sourcing raw materials sustainably, promoting responsible consumption, and empowering people, Ferrero continues to grow sustainably.
This approach has helped the company win customers’ trust and establish credibility while strengthening itself from within.
The Giovanni Way of Doing Business
After Michelle passed away in 2015, Giovanni took over as the executive chairman of the Ferrero empire as he wanted to focus primarily on the strategy. Having worked closely with his brother and father during his time at Ferrero, he was now alone in charge and wasted no time in spurring the growth of Ferrero.
It’s not a hidden fact that prior to 2015, Ferrero had expanded carefully by focusing internally and strengthening the native brands of the company with little debt and no acquisitions.
However, Giovanni had different ideas for the future. He made it crystal clear that Ferrero was not going to take a different path and grow through acquisitions as existing product lines won’t be sufficient to grow and compete with giants such as Mars and Mondelez.
Giovanni is targeting 7.33 percent of growth each year as that allows the Ferrero group to double in size in 10 years. According to him, there will only be one winner in the industry who will dominate – just like in the beer market. He knows that there will be no prizes for second place and hence, he is leaving no stone unturned in growing the company at a rapid pace through acquisitions, unlike ever done before in Ferrero’s illustrious history.
Mergers & Acquisitions
In 2012, Ferrero acquired the Italian hazelnut company, Stelliferi Group, and in 2014, it acquired the Oltan Group of Turkey, which is considered to be the largest hazelnut supplier globally. Given that Ferrer is the world’s biggest hazelnut buyer and hazelnut is an essential ingredient in Ferrero’s main products, it made perfect sense for Ferrero to acquire these companies. These acquisitions enabled Ferrero to create a vertically integrated supply chain and make itself immune to the price shocks and uncertainty as to whether or not the demand for hazelnuts will be catered to or not.
The first brand acquisition of Ferrero came in 2015 when it acquired the British chocolate company Thorntons for $170 million in order to expand its’ businesses operations in the U.K. and get a step ahead of its competitor Lindt.
In 2016, Ferrero acquired Delacre and Delichoc biscuit brands from United Biscuits in a bid to enter into the premium biscuit sector while reducing its reliance on chocolate products while also increasing its footprint in North America.
To further accelerate its growth in the U.S. and North America, Ferrero acquired Fannie May Confections Brands, Inc from 1-800-Flowers.com, Inc., one of the top floral and gourmet gift providers, in 2017 for $115 million.
In the same year, Ferrero acquired Ferrara Candy Company, expanding its footprint in the U.S. confectionery market. This deal allowed Ferrero to establish its presence in the gummy and seasonal candies market – both of which had high growth prospects. Plus, the established manufacturing and distribution network of Ferrara was also a huge attraction for Ferrero.
In 2018, Ferrero made its biggest purchase by acquiring Nestle’s U.S. candy business for $2.8 billion in cash, pocketing 20 American brands, including iconic brands such as BabyRuth, Butterfinger, LaffyTaffy labels, Raisinets, and Crunch. This deal made Ferrero the 3rd largest Confectionery company in the U.S. market. This particular deal allowed Ferrero to offer an extensive range of premium-quality products in the world’s largest confectionery market and opened up exciting new growth opportunities.
In 2019, Ferrero completed the acquisition of Kellogg company’s cookie, fruit, and fruit-flavored snack, ice cream cone, and pie crust businesses. It gave Ferrero a pathway into new strategic product categories and strengthened its position in the key North American market.
In 2020, Ferrero acquired the bulk of Fox’s Biscuits assets from 2 Sisters Food Group in the U.K. in order to further grow in the biscuits market and leverage Fox’s assets to boost its overall business.
To further enlarge its product offerings and become a leader in the sweet biscuits market, Ferrero acquired Burton’s Biscuit Company in 2021.
Key Takeaway 5: Grow Through Strategic Mergers & Acquisitions
Under Giovanni’s leadership, Ferrero has adopted a different strategy altogether.
Instead of doing what his father and grandfather did – focusing internally on the business operations and products – he is going on a buying spree and accumulating businesses around the globe in order to grow in different markets and regions.
From acquiring Thorntons in 2015 and Nestle’s candy business in the U.S. in 2018 to purchasing the Fox’s Biscuits assets and Burton’s Biscuit Company much more recently, Ferrero is fixating on the scale and growing exponentially.
Ferrero Today & Key Strategic Takeaways
Today, Ferrero is a name renowned around the globe.
From a tiny shop operating in Italy to a behemoth ruling the confectionary products industry in 170 countries, Ferrero has come a long way, and given the recent spurt in growth, it feels as though the company is only starting.
Giovanni is running the company successfully on solid family values just like it was before, setting as well as aiming to achieve ambitious goals.
Growth By Numbers
Strategic Takeaways
Don't Wait For Opportunities. Create Them!
Mired by World War 2, having had his fair share of moving between different cities while feeding a family, failing at his plan to sell biscuits to Italian troops in East Africa, and trying a number of different recipes with no success, Pietro was not a stranger to difficult times.
Sure, he could have thrown in the towel and given up rather than pursuing his passion for confectionaries, but he didn't.
In fact, when he realized that there was an opportunity to sell to chocolate-deprived Italians, he worked day in day out and came up with Giandujot, a delicious mixture of hazelnuts, cocoa, molasses, coconut butter, and vegetable oil that people couldn't get enough of.
Pouncing on this opportunity led to the birth of Ferrero, and well, the rest is history.
Expand & Diversify Come What May
After his father and uncle passed away, Michelle took over and instantly began focusing on expanding the company overseas. From Europe to penetrating the Australian, American, and Asian markets, Ferrero did it all. Michell understood the importance of tapping into new markets and popularizing Ferrero. Hence, he left no stone unturned in doing just that.
All this while, he also diversified the product line, launching one hit after the other, ranging from Nutella and Kinder to Tic Tac, and Ferrero Rocher. These high-quality products in addition to global expansion, helped the company achieve worldwide success.
Be Obsessed With The Triple Bottom Line – People, Planet, & Profit
Ferrero understands that today's customers' purchasing decisions are driven by a commitment to make a positive social, economic, and environmental impact. Hence, it has continued to improve the way it does business by adopting sustainable practices for the greater good.
From protecting the environment and sourcing ingredients sustainably to promoting responsible consumption and empowering people, Ferrero does right by the people and the planet while making a handsome profit for itself.
The Ferrero model can be used by companies across the globe to do business responsibly and sustainably, ensuring the greater good.
Don't Be Afraid To Reinvent The Wheel
At the helm, Giovanni Ferrero, the grandson of the founder of Ferrero and the son of the individual who made it a global success, is turning away from what powered Ferrero to the top and chasing growth through acquisitions.
If he gets it wrong, he'd be labeled as the billionaire successor and prodigal son who blew it all away while defying the views of his family.
But he isn't worried about that. In fact, he has set ambitious goals of achieving 7.33 percent growth every year and wants to dominate the global confectionery market through strategic mergers and acquisitions. So far, in just a short span of six years, he has multiple companies and shows no signs of slowing down.
This pro-active approach and ability to fearlessly pursue a plan to reinvent the wheel highlights the importance for entrepreneurs to not be afraid of failure and never back down if they want to achieve success.