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Ferrero unwrapped: Italy's secretive confectioner

opens its doors

First glimpse inside factory that makes the world's best selling boxed chocolates
John Hooper
The saletta (little hall) is on the upper floor of a small office block surrounded by manufacturing plants, from
which sprout undulating pipes and towering silos. It is here, in the Italian town of Alba, that Willy Wonka meets
with his helpers to think up new and delicious treats.
Well, not really the Roald Dahl character, but the nearest thing to him in real life - a silver-haired 86-year-old,
even wealthier than Silvio Berlusconi, who founded a company that is now the world's fourth biggest
manufacturer of confectionery. Michele Ferrero, the 32nd richest person on the planet according to Forbes
(Berlusconi ranks 118th), shuttles each week by helicopter between his chocolate factory in north-west Italy and
his home in Monte Carlo, where he has another saletta for testing recipes.
"We eat all day," said one of his executives. It involves starting at 8am and working - or munching - till at least
7pm at a table fitted with pull-out spittoons.
Ferrero's passion for devising sweet temptations has led him to launch more than 20 products since joining his
family's business in 1949- Among them are Ferrero Rocher, the world's best selling boxed chocolate, Nutella,
Tic Tacs and the Kinder range of bars and snacks. For every 100 hazelnuts grown on Earth, 15 end up in a
Ferrero product.
Last year, the firm considered, then abandoned, a plan to join the takeover battle for Cadbury, reportedly after
Michele overruled his sons, Pietro and Giovanni, the then joint chief executives.
Despite Ferrero's global presence, it has remained one of the world's most secretive organisations. It has never
held a press conference and its owner, usually seen in public wearing dark glasses, has never given an interview.
This week, however, I and three other journalists became the first to be allowed into the company's Alba plant
where we were able to speak to Ferrero employees on condition that only those from its UK subsidiary be
quoted by name.
First-hand contact with the firm suggests it has little to hide. Two years ago, Ferrero was named the world's most
reputable corporation by the US-based Reputation Institute and though it has since fallen to 21st place, no one
can see it at work without being impressed by its dedication to the production of goods that can be sold on
quality rather than price (executives say that, on average, Ferrero products cost 50% more than those with which
they compete). The company directly sources its raw materials to control quality and even builds its own
machinery, including a vast device that roasts hazelnuts without singeing them on a belt running between two
giant electric heaters.
Industrial relations at the Alba plant are such that it has never had a strike, and the firm claims an outstanding
record of social and environmental responsibility. It is known for its philanthropy around Alba, and recently
gave up buying vegetable oil from Indonesia. Because of sustainability concerns.
Ferrero's policies are bound up with the fervent Catholicism of its owner. He has a special devotion to the
Madonna of Lourdes; executives say he visits her shrine at least once a year and that every Ferrero plant and
office in the world has a statue of the Madonna.
It is even rumoured that the company's Rocher pralines were inspired by the Rocher de Massabielle, the craggy
rock formation in which Catholics believe the mother of Jesus made a miraculous appearance in the 19th century. It is the only Ferrero product that bears the family's name.
Ferrero Rocher will be at the centre of the company's UK strategy on 6 November, when it launches a new
advertising campaign aimed at ditching its old ambassador's-reception image in favour of something that chimes
with the more informal lifestyle of its fortysomething target consumers. The TV commercial features a party
among friends, rather improbably set in what seems to be a treehouse.
Britain is a relatively undeveloped market for Ferrero. Christian Walter, its UK managing director, said it had a
share of only 4%, compared with 45% in Italy. Britain was also the scene of one of the group's rare flops. A
liqueur chocolate, Mon Cheri, failed to make inroads because the British (alone among Europeans, eurosceptics
might be pleased to hear) like biting into their boxed chocolates instead of eating them whole. Mon Cheri was

swept out of the market on a tide of soiled shirt-fronts.

Ferrero's aim of doubling its market share in the next five years may be one reason British journalists were
chosen to break the company's 65-year media silence. But this week's visit clearly forms part of a wider strategy.
Walter said a change of approach had been made inevitable by the "transfer of power to consumers, particularly
since the advent of social media."
Last Saturday, the Italian daily Corriere della Sera carried a long interview with Giovanni Ferrero, who became
sole chief executive in April this year, following the death of his brother. The change at the top of the firm may
be another reason for greater openness, especially if it points to a new strategy of acquisitions funded by cash
raised in the markets.
But Giovanni Ferrero denied that it did. He told the Corriere: "We have always grown by means of internal
[financing], and for the moment we do not have other plans." For the moment.

Let us praline
1942 Pietro Ferrero opens a confectionery workshop in Alba at a time when chocolate is scarce, but hazel-nuts grown in the surrounding area - remain accessible
1946 Company founded. Launch of Ferrero's first product, Giandujot, a spreadable chocolate and hazelnut paste,
the forerunner of Nutella
1949 Death of Pietro. The firm is taken over by his younger brother, Giovanni, who creates a fleet of vehicles to
deliver Giandujot directly to retailers, cutting out wholesalers
1954 Ferrero opens its first foreign factory at Stadtallendorf in Germany
1957 Michele Ferrero inherits the company on the death of his uncle
1964 Launch of Nutella and milk-filled Kinder bars
1968 Pocket Coffee launched
1969 Tic Tac introduced
1982 Ferrero Rocher pralines make their first appearance
1994 Alba plant flooded, halting production for two weeks
1997 Pietro Jr and Giovanni Ferrero, sons of Michele, become joint chief executives
2011 Pietro Jr dies while cycling in South Africa

Source: The Guardian, 29 October 2011