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. Its most ambitious deal to-date was the purchase of Nestle USA's confectionery division in 2018 for $2.8bn.

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Adbrands Weekly Update 18th Jan 2018: As expected, Ferrero secured the deal to acquire Nestle's US confectionery division, comprising a collection of local brands including Butterfinger, Baby Ruth, Raisinets, SweeTarts and Nerds, as well as the license for international brand Nestle Crunch. (The US is the only market in the world where Nestle doesn't own KitKat; the license is held there by Hershey). Price tag was $2.8bn, or a little over three times annual sales. The purchase will catapult Ferrero into third place in US confectionery. The combination of Nestle's brands with Ferrero's existing Kinder and TicTac, and the Ferrara Candy business it acquired last year will give the Italian company around 9% market share, well ahead of Mondelez and Lindt (both around 5%), but still some way behind market leaders Hershey and Mars on 31% and 29% respectively. Separately, Lindt reported global sales of over $4bn for the first time, though declines at recently acquired US chocolate maker Russell Stover were a lag on otherwise strong performance elsewhere.

Adbrands Weekly Update 11th Jan 2018: The final bids for Nestle's US confectionery business were submitted this week. It looks set to be a contest between US giant Hershey, Italian interloper Ferrero (makers of Kinder, Nutella and Tic Tac) and the private equity fund Rhone Capital. Price tag is estimated at around $2.5bn. Most observers believe family-owned Ferrero has the edge, since it is likely to be more willing to pay top dollar to strengthen what is currently only a modest presence in US confectionery.

Adbrands Weekly Update 23rd May 2017: Confectioner Ferrero is dipping its toe into the catering industry with the launch of the first ever Nutella Cafe, not in its home country of Italy but in Chicago, Illinois. The store promises "an authentic Nutella experience", offering warm, grilled baguettes with Nutella, fresh-roasted hazelnut and blueberry granola with yogurt and Nutella, and Italian specialties like "Panzanella" fruit salad. There will also be a number of sandwiches and salads served without the famous hazelnut spread.

Adbrands Weekly Update 6th Apr 2017: Ferrero has named its first ever non-family CEO. Current head of C&E Europe Lapo Civiletti will take on the top job in September, with current chief Giovanni Ferrero moving to executive chairman. The group also reported an 8% increase in revenues for 2016 to E10.3bn. It is the world's 4th largest confectioner after Mars, Mondelez and Nestle, narrowly ahead of 5th-ranked Hershey.

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.


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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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