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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 €2bn. At home the group markets a substantial range of additional products including beverages, and it 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. Its most ambitious deal to-date was the purchase of Nestle USA's confectionery division in 2018 for $2.8bn.
Who handles Ferrero's advertising? Click here for agency account assignments for Ferrero. Nielsen estimated expediture of €446m in Germany in 2017. Kantar (in Strategies) estimated expenditure of €232m in France in 2017.
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Although Ferrero has an extensive global footprint, it has had some difficulty establishing much more than a marginal presence outside Europe, and especially Italy and Germany, which together account for almost two-thirds of sales. Despite its more grown-up Rocher brand, Ferrero is generally regarded in many other markets as a manufacturer of niche confectionery products, many of them for the children's segment. Recently it has begun attempting to broaden its appeal with the roll-out of more mainstream products.
Ferrero is active in more than 30 countries, with a major presence in Europe (especially Italy and Germany, where it is consistently among the leading advertisers) and South America. It operates around 14 factories worldwide, including four in Italy and three in South America. The company is the #4 chocolate confectionery business worldwide, and the #1 confectioner in Italy (with around 30% market share) and Germany (with around 22%).
The group's biggest brand is Kinder, the umbrella for an extensive range of products mostly targeting the children's market. The best-known of these is the Kinder Surprise (also known as Kinder Sorpresa or Kinder Egg), a milk chocolate egg containing a small plastic toy. Although they are designed for children, the toys contained in Kinder eggs also have a strong appeal in the grown-up collectors' market.
Kinder Surprise is available in most of the company's main markets, except the US, where a long-standing public health law prohibits the sale of food with "embedded" items for fear of choking hazards. In 2018, Ferrero finally introduced a substitute product in the US, Kinder Joy. However, this encases the toy in a plastic not chocolate egg, as well as a separate confectionery paste. Kinder Joy is also marketed in other countries where high temperatures are likely to cause the Kinder Surprise chocolate egg to melt.
The Kinder group is also home to numerous spin-off products, including chocolate bars Kinder Cereali and Kinder Maxi; sponge cakes Kinder Brioss, Kinder Colazione Piu and Kinder Delice; chilled confections Kinder Pingui, Kinder Fetta al Latte and Kinder Paradiso; and Kinder Happy Hippo moulded meringue and hazelnut wrapped white chocolates. Kinder Bueno is a chocolate bar targeted at a more adult market, which has gradually been rolled out across all of Ferrero's global markets. Boxed selection Kinder Friends launched in the UK and other markets in 2004.
However, the group's top-selling and most widely distributed product is chocolate and hazelnut Nutella, the world's #1 branded spread (according to the company), outselling all peanut butter brands combined. It is said to account for around 20% of the group's total sales, or around €2bn, and Ferrero is the world's biggest buyer of hazelnuts, gobbling up as much as a quarter of the global supply. In 2014, to feed that demand, it acquired Turkish company Oltan, the world's biggest processor of hazelnuts. The company opened a small chain of Nutelleria cafes in Italy and Germany in 2001, and the brand celebrated its 50th anniversary in 2014 with several honours, including its own postage stamp from the Italian postal service. It is also one of the few Ferrero brands with a significant presence in the US, though it has had great difficulty breaking the traditional stranglehold of peanut butter on American households. The group's next best-known brand in the US is Tic Tac, the world's #1 top-selling breath mint. The group introduced mint-flavoured candies into the US in 2000 as Tic Tac Silvers.
International adult brands include a variety of wrapped chocolates led by Ferrero Rocher (praline). Others include new dark chocolate variant Rond Noir, Raffaello (coconut), Mon Cheri (cherry in most countries except the US, where it is a hazelnut chocolate) and Pocket Coffee (coffee). For younger consumers there are also Noggy praline eggs, Hanuta wafer biscuits and Tronky and Duplo chocolate bars.
In a rare acquisition, Ferrero made an offer in June 2015 to acquire struggling British boxed chocolate and toffee company Thorntons for £112m. It is the UK's top-selling boxed selection with sales of around £104m in 2015 (Nielsen, The Grocer). A little over a year later the group announced plans to acquire Belgian biscuitmaker Delacre for an undisclosed sum.
Two new additions in 2017 were the US mail order boxed chocolate company Fannie May, also purchased for an undisclosed price, followed by Ferrara Candy, maker of Red Hots, Now & Later and the local license for Trolli. The price tag in the latter case was reported at $1bn. An even bolder deal followed at the beginning of 2018 with the purchase of Nestle USA's confectionery division for $2.8bn. Brands include Butterfinger, Baby Ruth, Raisinets, SweeTarts and Nerds, as well as the license for international brand Nestle Crunch. Once completed, that will establish Ferrero as the #3 confectioner in the US after Hershey and Mars.
In its domestic market the group has a larger collection of other brands including soft drinks including Estathe iced tea, and Ferrero Cacao hot chocolate mix. Among more recent innovations is the Snack e Drink, a pot which combines the company's Nutella spread with dipping biscuits and a compartment containing Estathe iced tea. The group moved into the ice cream segment in 2007 with the introduction of Ferrero Gran Soleil lemon sorbet, but sales have been disappointing.
The group traditionally creates most of its advertising in-house, at Turin-based subsidiary Pubbliregia. However some of the ads occasionally fail to travel across different markets. Famously, the Italian-made "Ambassador's Reception" commercial for Ferrero Rocher chocolates turned into a cult favourite in Britain because of its outdated style and unintentional humour, before it was finally dropped in 1998. Such was its appeal, however, that the idea was resurrected for a new, British-made campaign in 2003.
Wholly owned by the Ferrero family, the group guards its privacy with a level of secrecy equal to that of its similarly publicity-shy rival Mars. However it does reveal some financial information. For the year ending August 2015, group revenues were €9.54bn, up around 13% on the previous period. Around €2.7bn came from operations in Italy, and another 30% or so from Germany. Europe as a whole contributes around two-thirds of revenues. Pretax profits dipped 2% to €889m. For the year to 2016, revenues rose to €10.3bn, topping €10bn for the first time.
Ferrero stands firmly apart from the wider confectionery industry. It has never made a significant acquisition of a rival confectioner, though it entered into preliminary talks with Cadbury in 2009 when that company was seeking to evade the clutches of Kraft. Nothing came of those talks. It has also rebuffed approaches from Mars and most recently Nestlé, vowing to remain independent for the forseeable future.
Giovanni Ferrero is currently CEO of Ferrero and also owner. He and his brother Pietro Ferrero had been co-CEOs of the group for several years. However, Pietro Ferrero died suddenly in April 2011 in a cycling accident, aged just 47, leaving his brother in sole command. Their father Michele Ferrero remained chairman until his death in Feb 2015 at the age of 89. Bloomberg estimated the family's combined wealth at $25bn in 2014. In Sept 2017, Giovanni Ferrero moved up to executive chairman, to be succeeded as CEO by Lapo Civiletti, previously CEO of C&E Europe. Civiletti becomes the first ever non-family CEO of the company. Alessandro d'Este is CEO of Ferrero Italy. Former AB InBev marketer Paul Chibe was appointed as CEO of Ferrero North America in 2015.
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.
Last full revision 15th August 2016
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