In the late 2000s, the Italian multinational Ferrero came under heavy criticism for the large amount of palm oil in its products. As a result, Ferrero's reputation plummeted. The company is still a great global success, despite its many difficulties in constantly expanding its internationalization. In order to expand its internationalization, it has managed to implement many strategies to always conquer new consumers.
The history of the company
Ferrero is an Italian multinational confectionery company founded by Pietro Ferrero in Alba, Italy, in 1946, after the end of the Second World War. The brand is known worldwide for its chocolate products such as Nutella, Kinder, Ferrero Rocher, Mon Chéri, etc. On 14 May 1946, with the construction of the first factory, the company Ferrero was officially born.
Later, Pietro's son Michele decided to expand the company's horizons by opening laboratories abroad. Ferrero became one of the leading international confectionery groups. In 1956, the first foreign factory was established in Germany, followed by other sites in Belgium, the Netherlands, Luxembourg, Denmark, Sweden, Switzerland, the UK and France in the 1960s. Then, in the 1970s, Ferrero opened its first office in the United States, in New York.
With the fall of the Berlin Wall, new offices were opened in Eastern Europe: Hungary, Russia, Czech Republic and Poland. Gradually, others have opened in Argentina, Brazil, Mexico, Puerto Rico, Ecuador, Australia and New Zealand.
In the years that followed, the development of branches and factories in Asia and America around the world confirmed the brand's internationalization.
The group is currently expanding to Yaoundé in Cameroon, Paramathi in India and Johannesburg in South Africa.
Nowadays, Ferrero belongs to the tertiary sector and is a leader in the field of chocolate.
https://twitter.com/ferrero_eu/status/1052544898392629248
The 2000s, Ferrero was accused of being negligent towards the health of its consumers
These were the worst years for the company, which nevertheless managed multiplying its sales without any problems. About three years ago, the Italian newspaper il Fatto alimentare declared war on palm oil, which is said to be "unhealthy" and "unsustainable". Ferrero, which uses palm oil mainly for its flagship product Nutella (maximum 20% according to the company), was thus highlighted by the media. This use directly provoked upset and questions among consumers. Palm oil has serious consequences for the health of consumers and for the environment, as it encourages deforestation.
Ferrero claims that palm oil is essential for the consistency of the product, but the international non-governmental organization WWF believes that the company uses unsustainable palm oil in large quantities. The widespread use of this raw material is due to both its extremely low cost and the fact that it has butter-like characteristics.
This controversy has really had an impact on Ferrero's balance and integration in foreign countries, as consumers have really turned to organic or palm oil-free spreads, which has had a big impact on its turnover and sales. Nutella sales fell by 4.4% in 2019 to €307 million.
https://nutellabyferrero.tumblr.com/post/48215631361/the-composition-of-nutella
Ferrero's challenge: re-convincing its consumers
The company has said that it is aware of its impact on deforestation, so it is committed to leading by example in the sustainable transformation of the palm oil supply chain and was one of the first companies in the world to implement a segregated palm oil supply chain certified by the Roundtable on Sustainable Palm Oil (RSPO). The palm oil used in Nutella is 100% sustainable and comes from a certified segregated supply chain. All of this information is available on the official Nutella website to inform consumers that the brand is aware of its impact on the environment and people, and is working to address it.
In order to create a greener image, Ferrero has decided to switch to 100% sustainable packaging by 2025. The company has also reached the goal of sourcing 100% sustainable cocoa beans and 100% certified cane sugar. Ferrero's green strategy continues, with the goal of halving all emissions from its operations by 2030. It is also about attracting people who care about environmental impact.
Its strategy has worked because, for example, the French remain the world's biggest consumers of Nutella. Every second, 2.7 kilos of Nutella are devoured by French consumers, which is 230 tons of Nutella and 1 million jars per day in France.
https://www.dw.com/en/france-to-tighten-regulations-after-nutella-frenzy/a-42380027
Audrey B.
References:
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Opinion Act. 2021. Top 14 du chocolat : qui est le leader du secteur ? - Opinion Act. [online] Available at: <https://www.opinionact.com/ressources/analyses-sectorielles/top-14-du-chocolat-qui-est-le-leader-du-secteur>
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Hello Audrey,
ReplyDeleteThank you for your article, it was really interesting to read and to get informed of a company such as Ferrero that we often see during the Christmas season.
I would like to ask you a question. Although Nutella is criticized for its impact on the environment with deforestation in order to cultivate palm oil, it is the best-known product of Ferrero which is sold throughout the year.
Do you think that new chocolate spreads which are eco-friendly and palm oil free for instance, might compete with Nutella? Or will Nutella still remain an undisputed product?
Thank you in advance for your answer!
Estelle L.
Hello Estelle,
DeleteI am very happy that my article interested you and thank you very much for your question!
Since the crisis that Nutella experienced for its use of palm oil, many people have turned to organic and eco-responsible spreads, although today Nutella assures that it no longer uses bad products for consumers and the environment. Consumers are getting used to their spreads, some continue to consume organic, and some have never stopped consuming Nutella because it remains for them an unavoidable and inimitable product! In my opinion, Nutella will always be consumed as much, despite similar spreads.
I hope I have answered your question!
Audrey B.