Ferrero (Italy)

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Family-controlled Ferrero is one of world's biggest confectioners with a collection of international brands including Ferrero Rocher specialty chocolates, Nutella spread and Tic Tac mints. But its most important brand is Kinder, which encompasses a large number of different confectionery products, including Kinder Surprise chocolate toy eggs and a variety of bars, cakes and chilled desserts. Kinder is one of Italy's most international brands with global sales in excess of E2bn. At home the group markets a substantial range of additional products including beverages, and it also has an extensive presence in Germany, which is its second-biggest market. In 2013, it was reported that Nestle had made several tentative approaches to acquire Ferrero, all of which were firmly refused by the confectioners' family owners. Instead, the group has begun to slowly but steadily expand its footprint with a few carefully chosen acquisitions, including UK boxed chocolate specialist Thorntons.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 11th Aug 2016: Italian confectioner Ferrero is to acquire Belgian biscuitmaker Delacre for an undisclosed sum. Formerly part of the UK-based United Biscuits, Delacre has been owned since 2014 by Turkish group Yildiz, and is now part of that group's Pladis snacks arm. If the deal is completed, Ferrero will take charge of the Delacre and Delichoc biscuit brands.

Adbrands Weekly Update 25th Jun 2015: In a rare acquisition, the Italian confectionery giant Ferrero has agreed to acquire troubled British chocolate company Thorntons for £112m. It had already quietly acquired a 30% holding through the buyout of institutional and insider holdings, and has offered a 40% premium over the current share price to the remaining public shareholders. Thorntons specialises in premium boxed chocolates, and also operates its own retail network. Revenues last year were £222m, but the company has been struggling for several years with falling sales, missed profit targets, and most recently the resignation of chief executive Jonathan Hart.

Adbrands Weekly Update 26th Mar 2015: Italian confectionery giant Ferrero published financial results for its most recent year to August 2014. Revenues rose 4% to E8.4bn, and pretax profits were up 14% to E907m. A key factor was a 29% jump in global sales of Kinder eggs. Kinder Bueno also did well, with sales increasing by 10%. Strong growth in the Middle East and good performances in markets from Brazil to Poland offset weakness in southern Europe.

Adbrands Weekly Update 17th Feb 2015: Michele Ferrero, patriarch of the eponymous Italian confectioner, has died at the age of 89. His parents first developed a low-cost chocolate and hazelnut paste at the end of the Second World War, and sold it to customers from their bar and cafe in Alba in Northern Italy. But it was Michele who began packaging the product in jars and branded it as Nutella. He took control of the business after his father's death in 1949 and also developed the Kinder chocolate range which established the family business as Italy's biggest confectioner. Until recently the company was run jointly by his sons Pietro and Giovanni Ferrero. However Pietro died suddenly in 2011 in a cycling accident. His brother Giovanni Ferrero is now chairman and CEO of the group, and replaces his father as Italy's richest individual. The family's wealth is estimated at around $24bn. Ferrero Sr's demise is unlikely to prompt any change in the company's longstanding refusal to consider sale or floatation.

Adbrands Weekly Update 17th Oct 2013: Confectioner Ferrero awarded media in several global markets including the US, UK, Russia and Australia to Omnicom Media Group. The business moves from various agencies including ZenithOptimedia and MEC.


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Background

Free for all users | see full profile for current activities: The business was started in 1942 by husband and wife Pietro and Piera Ferrero as a small bar and patisserie in Alba, near Turin, northern Italy. The couple experimented with different confections in the kitchen of the patisserie, using hazelnuts to bulk out chocolate, which was a scarce commodity in wartime Italy. The Ferreros' first commercial product was Pasta Gianduja, a thick chocolate and hazelnut paste, introduced in 1944. The same year, the family opened their first factory, and the business was fully incorporated in 1946. A more spreadable version of Gianduja was introduced in 1948 as Supercrema, sold through food stores, where children could bring in a slice of bread and have it smeared with the delicious paste for a few lire.

Pietro Ferrero died suddenly of a heart attack in 1949, and the business was taken over by his brother Giovanni and son Michele, who pushed the company forward with a series of new products. In 1956 the family opened a factory in Germany; but a year later Giovanni died also, leaving Michele in charge of the business. He acquired a French factory in 1959, and relaunched an improved version of Supercrema four years later under the name Nutella. The Kinder brand was first launched in Italy in 1968 as a chocolate bar with a creamy filling. A year later, the company took its first steps into the US market. Wary of competing with well-established Hershey or Mars, Ferrero's first North American product was the tiny breath mint Tic Tac, a significant success. In 1974 the group launched Kinder Surprise in Italy, as well as a range of other Kinder brands. Ferrero Rocher was introduced in 1981.

In 1997, the company began an assault on South America with the opening of a $100m factory in Brazil, which now produces more than 20% of the chocolate used in Brazil by Ferrero. The group has around 4% of the country's chocolate market, which is dominated by Kraft Suchard and Nestle. At the close of 1997, with Michele Ferrero close to retirement, the company was rumoured to be discussing an outright sale to Unilever, but no deal was concluded. Instead, Michele Ferrero passed on control of the business in 1999 to his sons Pietro and Giovanni. Pietro was previously chairman of the company's European division, and in 1998 became the youngest-ever board member of Milan's powerful merchant bank Mediobanca, in which Ferrero is a major shareholder. Giovanni was previously responsible for marketing of the firm's products.

In 2004, the group launched a lawsuit against Chinese competitor Montresor which it accused of copying its gold-wrapped Rocher treats. A regional Chinese court found in Ferrero's favour in early 2006, but the country's supreme court subsequently bowed to international pressure and ordered a retrial, which commenced in January 2007. See full profile for current activities:


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