Ferrero Group in Packaged Food (World) : January 2017

FERRERO GROUP IN PACKAGED FOOD (WORLD)
January 2017
SCOPE OF THE REPORT
Scope
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies’ opinions, reader
discretion is advised.
Ferrero continues to
experience incredible growth in
China and perform solidly in
many other of its core focus
markets, while gradually
expanding in previously weak
areas such as the US and the
UK. There is also more room for
the company to develop,
particularly via its new Nutella
products, its expansion of
Kinder SKUs and the
broadening out of its retail
ambitions. The company is also
looking to deal with the growing
challenge of negative health
perceptions regarding its
products.
© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 2

STRATEGIC EVALUATION
COMPETITIVE POSITIONING
CONFECTIONERY
CHOCOLATE CONFECTIONERY
SUGAR CONFECTIONERY
SPREADS
BRAND STRATEGY
RECOMMENDATIONS
2016 represents an extremely solid year for Ferrero
Ferrero Group Fourth largest global confectionery player

Alba, Piedmont,  Ferrero is the world’s fourth largest confectioner. Its two key
Headquarters: categories are confectionery and spreads, which combined made up
Italy
Regional 90% of its packaged food sales in 2016. In confectionery, the Ferrero
Global Rocher, Tic Tac and Kinder Surprise brands are its best sellers.
involvement:
Confectionery,  The company’s strong reliance on Western Europe has diminished
Category bakery (cakes), recently, as a result of experiencing phenomenal success in China.
involvement: spreads, dairy Ferrero’s chocolate confectionery market sales rose by 15% CAGR
(chilled snacks) between 2011 and 2016.
World
 There have been some rumours that Ferrero will partner with
packaged food
0.7% Hershey, or indeed be taken over by Mondelez after that company’s
value share
acquisition of Hershey fell through. Both seem unlikely - Ferrero is
(2016):
World proudly private and these rumours have persisted for years, if not
6.7% (CAGR decades, in some form or other.
packaged food
2011-2016)  The company has made several acquisitions over the past two years,
value growth:
2015 turnover* €9,452 million representing an increased willingness to inorganically grow in those
markets where Ferrero sees an opportunity but has a reduced
Turnover
13.4% presence. Interestingly, the company also completed the acquisition
growth*
Belgian premium biscuit manufacturer Delacre late in the year. While
Note: *Taken from Company Report.
this is a relatively modest sized acquisition, there may be plans to
internationalise the brand.

SWOT: Ferrero Group

STRENGTHS WEAKNESSES
Gifting categories Pricing strategies US chocolate segment India and the Middle East
 Ingeniously, Ferrero has  The company has  Ferrero has failed to  As with many of its
managed to reposition proved flexible with make huge inroads in rivals, Ferrero struggles
Nutella as a seasonal product SKUs, rolling the US, despite the in India, where
gifting product, and this out a range of miniature popularity of premium Mondelez has a
prevalence for gifting is products that appeal to chocolate there. dominant market share.
a source of continued more health-conscious Increasing Nutella and Alongside the Middle
growth for Ferrero in consumers. Ferrero Raffaello visibility in the East, where it is similarly
China, recording Rocher, Kinder and market could work. weak, these are some of
phenomenal growth. Nutella are all moving the last remaining
into small pack sizes. pockets of growth for
OPPORTUNITIES THREATS
the company to tap.
UK and US Premium biscuits Lindt, Mondelez, Nestlé Decline of sugar
and Hershey confectionery
 Recent investment in  The acquisition of  Mondelez is looking to  As with many
marketing, and the premium Belgian biscuit expand its footprint in confectionery
acquisition of Thorntons, brand Delacre from Yildiz two key target markets manufacturers, Ferrero
has significantly ramped is an interesting one. for Ferrero - the US and faces a threat as
up Ferrero’s presence in While it is a relatively China - and this could consumers become
the UK, where it small investment, there hamper Ferrero’s more conscious of
performed far above the is certainly scope for growth prospects if the indulging in sugary and
market in 2016. growth. former is successful. fatty foods.

Ferrero’s challenges and objectives
Continued expansion in China, UK, US and India

• The company continues to go from strength to strength in China. While the overall chocolate
market saw a slowdown in 2016, Ferrero was the only company to actually see a sales rise.
The Ferrero Rocher brand has been particularly successful, tapping into a gifting segment that
competing brands have simply failed to emulate. Elsewhere, the UK is a market that Ferrero
has ramped up investment in, while brand share continues to be relatively poor in the US and
India.
Repositioning of portfolio as health trends percolate through food industry
• Ferrero has been proactive in creating miniature servings of its flagship products and initiating
calorie pledges for its range. This may not be enough to divorce Ferrero from the negative
perception that currently embroils confectionery, in particular relating to confectionery products’
excessive sugar content. For a company that focuses on four flagship brands that it would be
difficult to argue are healthy, this could be a growing challenge for Ferrero, and other
confectionery companies, in the West.
Developing commercially viable retail arm
• The acquisition of Thorntons in 2015 signifies a bold, but sensible movement by Ferrero into
the UK. More importantly, it shows that the company is considering increased investment in the
retail sector. This is sensible as revenues from chocolate sales slow down in Western Europe
particularly. The company is now experimenting with pop-up stores for Nutella and Ferrero
Rocher. The challenge will be to make this venture financially lucrative, rather than simply a
marketing gimmick.

CONFECTIONERY
SUGAR CONFECTIONERY
SPREADS
BRAND STRATEGY
RECOMMENDATIONS
UK focus increases overlap with Mars and Mondelez
 Ferrero’s acquisition of Thorntons

has seen its overlap with the likes of
Mars and Mondelez increase
significantly, as the UK represents a
key battleground for these
companies.
 Although Mars and Mondelez are
the largest companies in terms of
sales overlap, Lindt is a spiritual
rival as it is Ferrero’s most direct
competitor in the premium
landscape. Lindt’s geographical
focus has recently diverged from
that of Ferrero’s by entering the US.
 Another company that has
attempted to encroach on Ferrero’s
gifting space is Hershey, which has
invested heavily in China,
specifically with its “Kisses Deluxe”
range. In the US, Hershey has
launched a chocolate spread in the
US, directly competing against
Nutella.

Sharp growth in saturated and unsaturated markets helps Ferrero
 By all accounts, Ferrero has accomplished a solid performance over the past decade, owing to its
successful mission in China. The company has seen sales growth of US$250 million between 2011 and
2016; its market share is eating directly into that of Mars.
 Ferrero’s geographical portfolio is less extensive than that of its two largest rivals, and so it is easier for the
company to achieve growth. Yet that should not diminish the success the company has had. The company
has successfully balanced growth in saturated food markets, such as confectionery within the UK and other
Western European countries, with growth in unsaturated ones, particularly Russia, Brazil and China. New
product launches such as Nutella Bready and Nutella & Go! have largely complemented sales growth from
its flagship brands.
 The company may see more competition from Mondelez in China, as it seeks to ramp up investment here.
However, the company can still rely on its chocolate spreads sales to grow around the world.

CONFECTIONERY
SUGAR CONFECTIONERY
SPREADS
BRAND STRATEGY
RECOMMENDATIONS
CONFECTIONERY: CHOCOLATE CONFECTIONERY
Lindt the star performer in chocolate; Ferrero solid
 Lindt has been a star performer in chocolate, successfully tapping into the growing premium chocolate
segment that has developed in saturated chocolate confectionery markets. Lindt has seen particularly good
success in the US, and its acquisition of Russell Stover leaves it well positioned to capitalise on any future
growth. That said, the chocolate market has performed poorly in 2016, and Lindt appeared to suffer the
same weak growth as many of its counterparts. This could point to a backlash against premium chocolate
as that segment grows more saturated.
 While Ferrero does have a strong presence in premium chocolate via Ferrero Rocher, it has a diversified
portfolio which is growing via its mass-market Kinder range as well as the development of Nutella
countlines. It will be interesting to see if Ferrero can continue to generate such strong growth in chocolate if
China continues to struggle. Two other markets where Ferrero has performed well - Brazil and Russia - are
anticipated to perform poorly in the future as a result of economic headwinds.

Ferrero arguably remains too reliant on Western Europe
 Some 56% of all Ferrero’s

chocolate sales come from Western
Europe. As the next slide reveals,
the company has been
outperforming the market in the core
regional markets here, such as
Germany, France and the UK. Yet
given how poor growth prospects
look in Western Europe, the reliance
on this market needs to be
addressed.
 To an extent, this has been, with
the company ramping up investment
in India and China in the last two
years, increasing factory capacity.
Sales from Asia Pacific have
increased to US$1.2 billion in 2016 -
around 13% of total sales.
 More could be done in North
America and the Middle East;
Eastern Europe and Latin America
are likely to suffer as Russia and
Brazil experience slowdown.

Bright lights may dim over the course of the next five years
 Ferrero’s strong performance in

Western Europe stands out against
the vast majority of its competitors
- achieving a 5% CAGR in France,
and almost 10% in the UK, is an
impressive return. It owes these
successes to ramping up
investment in advertising and
distribution, as well as diversifying
the number of SKUs it offers in
these markets.
 Its presence in the US remains
small in comparison to its
competitors, but the results have
been encouraging over the last five
years, with the company achieving
over 15% CAGR to bring its sales
to US$439 million. The company
should seriously consider investing
more in a Nutella Bready or Nutella
& Go! countline in the market,
which would directly compete with
Hershey Snacksters.

Gaps in fast-growth markets present opportunities for company

Focusing on Kinder in India a sensible option
 As with many of its rivals, Ferrero’s market share in India is underwhelming, at 8%. This doubled between
2011 and 2016 and the company has significantly outperformed its rivals over that time frame.
 The focus for the company has been on Kinder and Ferrero Rocher, and continuing to focus on the former
in particular makes sense. This is because the potential for a premium chocolate market in India - where
Ferrero Rocher would target - is severely limited due to the poor distribution and retail networks within the
country, as well as the high temperatures that force companies to alter recipes and cause much chocolate
to melt.
 As the graph below demonstrates, one of the main drivers of growth over the next five years within India
will be GDP per capita, which accounts for five percentage points of overall chocolate sales growth. This
suggests that more of the population is becoming wealthier, and so more people can buy chocolate.
However, consumption of chocolate is extremely low - at just 0.2kg per person - and is too expensive for
many. Kinder, Ferrero’s mass-market brand, would do better given these circumstances.

Ferrero’s unique portfolio should help develop share in US
 Ferrero has performed commendably in the US

over the past five years - sales have doubled to
US$439 between 2011 and 2016. That said, the
company still languishes far behind the majority of
its global rivals, and Mondelez is now entering the
market in a more concerted fashion, launching
Milka with Oreo - a unique product in the market -
and with a solid distribution network.
 However, while the market is relatively saturated at
the top, Ferrero’s chocolate portfolio is more
unique than Mondelez’s, and certainly more so
than the leading competitors - the Ferrero Rocher
brand could do better to tap into the popularity of
premium chocolate in the country, while Nutella
Bready and Nutella & Go! are unique propositions
within the chocolate market that could easily
leverage the popularity of Nutella in the market
(which has sales of US$224 million in 2016).
 Although value sales of chocolate within the US
are expected to post a CAGR of just 2% between
2016 and 2021, Ferrero should be aiming to make
significant inroads in market share in the country.

CONFECTIONERY
SUGAR CONFECTIONERY
SPREADS
BRAND STRATEGY
RECOMMENDATIONS
CONFECTIONERY: SUGAR CONFECTIONERY
Western European greatest market in terms of overlap
 Sugar confectionery competition

is far more fragmented and
regional than that of chocolate
confectionery. It is also much less
of a priority for Ferrero,
accounting for just over 10% of
total food sales. This is nearly
entirely generated by Tic Tac.
 The outlook for sugar
confectionery is not particularly
optimistic, with consumers in
Western Europe beginning to
move away from these products
as they become aware of the risk
of excessive sugar consumption.
 In terms of competitive overlap,
the majority of this stems from
Perfetti’s strong presence in Italy
and the Netherlands makes it
Ferrero’s key competition; the
majority of Ferrero’s competitive
overlap stems from Western
markets.

Ferrero may lack the portfolio for increased growth…
 As with chocolate confectionery, Ferrero has performed solidly in the sugar confectionery world. In truth, its
performance against Perfetti and Mondelez should not be lauded too loudly - the company makes around a
quarter of the sales of its rivals, and so its growth is from a much lower base. Indeed, part of the reason for
its relatively strong growth in the chart above is that it has more markets to expand into than its
counterparts. In particular, Ferrero has made more of a footprint on the Latin American and Asia Pacific
markets, particularly over the last five years.
 In the future, growth may not be so easy to come by - the Brazilian market will experience an US$81 million
contraction in sales between 2016 and 2021. In addition, the company’s portfolio - which is largely
dedicated to the Tic Tac brand - does not align particularly well with the Asian sugar confectionery market,
which has much more focus on toffees and boiled sweets than Western countries. At present, many Asian
countries have not yet made a transition from consuming gum to consuming mints, further limiting sales
potential. However, this strong presence in mints may help growth in the West in the next five years.

…but there are many geographic opportunities
 Around 60% of Ferrero’s Tic Tac

sales occur in North America and
Western Europe. It is likely to be
reliant on these two markets for
some time to come, due to the
mismatched nature of its portfolio
for the Asian market as well as an
anticipated decline in sugar
confectionery sales in Eastern
Europe and a very modest
performance in Latin America,
posting a value CAGR of under 1%.
 In North America and Western
Europe, Ferrero must focus on the
mint strand of its Tic Tac range
rather than its chews. Mints are an
almost direct replacement for gum,
which is falling out of favour with
many consumers as smoking
prevalence declines and gum is
seen as an antisocial nuisance.
Chews are more typically regarded
as an unhealthy snack.

Limited revenue potential means company should focus elsewhere
 The graph opposite arguably

emphasises why sugar
confectionery should remain a
secondary priority for the
company after chocolate and
spreads. Ferrero does not
generate significant sales via
sugar confectionery in many
markets and growth is poor.
Russia and Brazil will both
contract in the next five years.
 Although it has a poor portfolio
for Asia Pacific, increased
investment in the market may
be warranted given that sugar
confectionery sales are
anticipated to grow by US$2.9
billion between 2016 and 2021.
Given the company’s growing
warmth to acquiring where it has
a small geographic presence, it
could potentially enter the
market with an acquisition.

Gaps in fast-growth markets present opportunities for company

US mint sales should be a priority given gum’s decline
 With gum experiencing a seemingly terminal decline in the West (with the exception of the UK), mint sales
will pick up some of the slack. Mint sales will increase by US$346 million in Western Europe and North
America between 2016 and 2021. Ferrero could leverage its Tic Tac mints further, particularly in the US, to
gain additional market share - at present, the brand has a 12% market share, but this has remained stable
while brands such as Hershey’s Ice Breakers have grown substantially.
 The most significant driver of growth in the US is likely to be population increases, which accounts for 0.8
percentage points of the anticipated 1.5% CAGR between 2016 and 2021. This could suggest that a focus
on improving distribution of the brand is most important for Ferrero - the brands that perform well will be
those that are sold in regions of faster population growth. Improving distribution of Tic Tac could work
alongside increased exposure for the Kinder chocolate range in such markets.
 Although the company should not phase out its Tic Tac chews range, overall category growth is expected
to be poor in Western Europe, at 1% value sales CAGR between 2016 and 2021. These products have
negative associations which mints do not; more focus on mints would be a securer bet in the long run.

Could Tic Tac take precedence over chocolate in India?
 Elsewhere, the Middle East and Africa as well as India have all been fast-growing markets for Ferrero
within sugar confectionery. Company value sales CAGR has neared 40% between 2011 and 2016 in Saudi
Arabia; the equivalent figure is over 30% in India. The sugar confectionery market is expected to grow
significantly in both markets, achieving CAGRs of 4% and 8% in Saudi Arabia and India, respectively,
between 2016 and 2021. Indeed, one could make the case that sugar confectionery should be prioritised
over chocolate confectionery in India, given that sugar confectionery is more affordable to more consumers,
has fewer difficulties in terms of transportation and production (much chocolate melts and often contains
high volumes of vegetable fat in the country), and there is less of a stranglehold on the competitive
environment by one competitor (Cadbury has a 45% market share of chocolate confectionery sales; the
leading sugar confectionery brand, Alpenliebe, has a 15% market share).
 As in the US, the aim will be to
improve distribution of Tic Tac
within both India and Saudi Arabia.
Increased availability, particularly
of mints, will be a key factor of
growth. Habit persistence - the
cumulative lag effect of all drivers
in a previous year - will also be a
strong growth driver, suggesting
that consumption of these mints
and chews is becoming more
deeply embedded in both Saudi
Arabia and India.

CONFECTIONERY
SUGAR CONFECTIONERY
SPREADS
BRAND STRATEGY
RECOMMENDATIONS
SPREADS
Nutella marches to its own beat in spreads
 The geographic reach and

market size of Nutella is
relatively unprecedented in
spreads. Though there are
some local brands with a similar
positioning, nothing really rivals
Nutella in multiple markets.
 Indeed, Nutella’s largest rivals
are non-chocolate spreads,
such as jams, peanut butter and
speculaas. Companies such as
Andros and SAS make the vast
majority of their business via
France, Germany and other
Western European countries;
JM Smucker competes with its
peanut butter brands in the US.
 The difficulty for Nutella will be
to achieve additional sales
revenue where the brand is
already extremely popular -
something that it is attempting to
curb by moving into gifting.

SPREADS
Nutella will need to begin focusing on improving market share
 Ferrero has experienced great success with the Nutella brand, which has seen sales post a 5% CAGR
between 2011 and 2016. Particularly strong performing countries have included Brazil and Turkey, where
acquisition of local hazelnut producer Oltan Group could help improve distribution of the brand in the latter
country.
 The company has also performed strongly in the US, achieving a 7% CAGR. There is real potential for the
brand to grow further by leveraging foodservice options, particularly Nutella cafés, in the country. The
company has already been pursuing this through Eataly stores, but this is small in scale. The company saw
an initial loss in market share as Hershey entered the market in 2012, but has since battled back.
 The forecast for chocolate spread sales is relatively modest - worldwide value sales growth is expected to
be 2% CAGR, equating to an additional US$406 million over 2016-2021. Yet given Nutella owns 55% of
this market, Ferrero should aim to boost its market share where possible. At present, its strategy appears to
diversify through gifting and pursuing healthy messaging for its products.

SPREADS
Room to grow in Middle East and Africa as well as Western Europe
 In terms of future growth, Western

Europe will see over a quarter of all
additional spreads sales. With this
in mind, the company’s reliance on
the region does not seem ill
advised - the majority of other
regions will see slow growth.
 One area where Ferrero ought to
consider increasing its presence -
and one that it could do if it
increases production in Turkey -
would be the Middle East and
Africa. Chocolate spread sales
here are anticipated to grow by
US$111 million between 2016 and
2021.
 Not only that, but Ferrero’s market
share is low (36%) compared to
regions such as Western Europe
and North America where share
averages around 60%. Small local
players occupy a very high market
share that Ferrero should target.

SPREADS
When Nutella sneezes, chocolate spread growth catches a cold
 It is perhaps unsurprising that

Nutella is performing roughly in
line with the market in its top 20
countries by value sales -
Nutella’s market share is so vast,
particularly in Western European
markets, that the health of the
chocolate spreads industry more
or less depends on the success
of Nutella.
 The threat for Nutella is if many
of these Western markets begin
identifying the brand as unhealthy
and a contributor to their excess
sugar consumption. This would
likely threaten the health of the
entire industry. In recent years,
Ferrero has attempted to
reposition Nutella as a healthy
breakfast product, and has failed
to do so - at least legally. As a
result, turning to the gifting
segment has been its Plan B.

SPREADS
Some space for consolidation, but little to improve upon

SPREADS
Gifting and retailing provide great opportunities for Nutella
 Ferrero appears to have two strategies for Nutella -

firstly, as discussed in the chocolate confectionery
section, it will expand Nutella more deeply into a
chocolate brand with products such as Nutella &
Go! and Bready. Given that it has also acquired
Delacre, it may look to use Nutella in some
biscuits, although given that much of Delacre’s
previous management remains in place this is a
more remote prospect.
 Nutella, then, is becoming a more ubiquitous
brand. However, there has also been a much more
concerted effort to promote Nutella as a gifting
product, with seasonal pushes particularly
prominent. The company has also taken to
allowing consumers to enter personalised
messages on Nutella jars.
 A third strategy for the company could be to
leverage its new-found retail enterprise and convert
some of its Thorntons stores into Nutella cafés.
This is something the company has already
experimented with by launching pop-up versions in
high-end department stores across Western
Europe.

CONFECTIONERY
SUGAR CONFECTIONERY
SPREADS
BRAND STRATEGY
RECOMMENDATIONS
BRAND STRATEGY
Kinder dominates in Western Europe; Ferrero Rocher in Asia

BRAND STRATEGY
Four core brands, but some diversification under way
 Ferrero’s portfolio is largely focused on four main brands - Kinder, Ferrero Rocher, Nutella and Tic Tac.
Recently, the company has made efforts to diversify slightly, in particular by pushing its Raffaello brand -
which had previously been very strong in Russia - to more Western European markets, particularly the UK
and France. The brand has subsequently seen a 10% CAGR in the last five years - though it is growing
from a much lower base than the big four.
 Ferrero Rocher has performed particularly well in China, where in conjunction with Kinder, Ferrero has
been eating into Mars’s dominant market share. While the company remains focused on improving
Thorntons’s standing within the UK, it is not beyond the realms of possibility that Thorntons could become
an international brand. UK brands are highly popular within China and India, with many of them bought via
e-commerce platforms such as Alibaba. Ferrero could establish a proof of concept for the brand
internationally via these retailers.

BRAND STRATEGY
Wrigley’s global performance highlights need to transition to mints
 Although Kinder has performed phenomenally well in Russia, it is unlikely to enjoy a similar period of
growth over the next five years as Russia’s chocolate market experiences a significant slowdown. The
brand has continued to perform well in Western Europe despite the slowdown of chocolate growth in the
likes of France and Germany, and has also performed well in the UK, especially between 2011 and 2016.
 The reason for this strong performance in Western Europe is an expansion of Kinder SKUs - Kinder
Schoko-Bons have proven extremely popular and have moved Ferrero into chocolate pouches; Kinder
Bueno SKUs have been extended to include 25g products. These miniature products tap into growing
health consciousness regarding overconsumption of chocolate.
 It should also be noted that Ferrero has not oversaturated its Kinder range - the taste portfolio of the
products remains relatively unchanged even if the product format does. The company should try and
maintain this balancing act if possible.

BRAND STRATEGY
How should Ferrero approach its retail strategy?
 2016 was the first full year that UK chocolatier Thorntons was part of Ferrero Group. The company has
rationalised the portfolio of Thorntons stores drastically and has worked on changing consumer perceptions
of the brand, looking at ways to improve recipes and engaging in substantial promotional activity.
 The acquisition of Thorntons should primarily be seen as a chance for Ferrero to improve its presence in a
market where its share was previously lacking - Ferrero’s share in the UK chocolate confectionery market
more than doubled as a result of the acquisition. However, it can also be regarded as an opportunity for
greater experimentation with a retail network.
 Many of Ferrero’s premium competitors - notably Lindt and Godiva - have extensive retail strategies. The
former has committed itself to becoming the world leader in chocolate retailing by 2020. These stores are
moving from marketing gimmick to legitimate business concept. By converting some Thorntons stores into
Nutella cafés or Ferrero Rocher stores, Ferrero can conduct a controlled experiment in the UK - a high food
consumption market - that could be emulated elsewhere in Western Europe and North America.

CONFECTIONERY
SUGAR CONFECTIONERY
SPREADS
BRAND STRATEGY
RECOMMENDATIONS
RECOMMENDATIONS
Ferrero has struck a winning formula, but more bold steps needed
Leverage unique portfolio in US Focus on cheaper product portfolio in India

 Ferrero is growing from a much lower base than  While Ferrero Rocher market share has doubled in
Mars and Hershey in the US. The advantage of this India between 2011 and 2016, the company should
is that it has a unique portfolio of chocolate instead focus on developing the Kinder and Tic Tac
confectionery products that, if distribution grew ranges. This is because it is extremely difficult to
significantly, could enjoy continued rapid expansion. envisage a substantial premium market in India in
The company could adopt a similar strategy to that the next five to 10 years as a result of logistical
it has explored in the UK - dramatically increasing issues and general lack of affordability among most
the number of SKUs to tackle health-conscious consumers. Kinder and Tic Tac can be sold
consumption, and a significant increase in product cheaply and, in the case of Tic Tac, are less
visibility. Leveraging brands such as Nutella in perishable. A more even focus on Tic Tac, Kinder
countlines, as well as Raffaello, would provide a and Ferrero should be used in China.
genuine alternative in a saturated market.
Further experimentation with retail required Continue expansion of Nutella range
 If the company wishes to make its retail segment a  Nutella has few places to go in terms of gaining
legitimate business venture rather than simple more market share in chocolate spreads - it is the
marketing gimmick, it should be bolder in trying out leading brand in the majority of countries and, as
new concepts with its existing Thorntons portfolio such, future growth is bound up in how well the
as well as create more pop-up outlets similar to the chocolate spreads market performs. This is why
Nutella cafés it has recently opened in major cities the company should leverage the brand’s iconic
worldwide. This will require more trialling but, given nature to greater effect within chocolate
that Lindt has announced that it will focus on confectionery. Nutella Bready and Nutella & Go!
retailing more in the next five years, retail is should be rolled out to more markets, and further
becoming an important battleground. expansion in foodservice should also be
considered.

FOR FURTHER INSIGHT PLEASE CONTACT
Jack Skelly
Senior Analyst - Food
jack.skelly@euromonitor.com
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Ferrero Group in Packaged Food (World) : January 2017

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Ferrero Group in Packaged Food (World) : January 2017

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FERRERO GROUP IN PACKAGED FOOD (WORLD)

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 2

2016 represents an extremely solid year for Ferrero

Ferrero Group Fourth largest global confectionery player

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 4

SWOT: Ferrero Group

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 5

Ferrero’s challenges and objectives

Continued expansion in China, UK, US and India

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 6

UK focus increases overlap with Mars and Mondelez

 Ferrero’s acquisition of Thorntons

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 8

Sharp growth in saturated and unsaturated markets helps Ferrero

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 9

Lindt the star performer in chocolate; Ferrero solid

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 11

Ferrero arguably remains too reliant on Western Europe

 Some 56% of all Ferrero’s

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 12

 Ferrero’s strong performance in

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 13

Gaps in fast-growth markets present opportunities for company

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 14

Focusing on Kinder in India a sensible option

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 15

Ferrero’s unique portfolio should help develop share in US

 Ferrero has performed commendably in the US

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 16

Western European greatest market in terms of overlap

 Sugar confectionery competition

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 18

Ferrero may lack the portfolio for increased growth…

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 19

…but there are many geographic opportunities

 Around 60% of Ferrero’s Tic Tac

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 20

Limited revenue potential means company should focus elsewhere

 The graph opposite arguably

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 21

Gaps in fast-growth markets present opportunities for company

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 22

US mint sales should be a priority given gum’s decline

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 23

Could Tic Tac take precedence over chocolate in India?

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 24

Nutella marches to its own beat in spreads

 The geographic reach and

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 26

Nutella will need to begin focusing on improving market share

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 27

Room to grow in Middle East and Africa as well as Western Europe

 In terms of future growth, Western

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 28

When Nutella sneezes, chocolate spread growth catches a cold

 It is perhaps unsurprising that

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 29

Some space for consolidation, but little to improve upon

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 30

Gifting and retailing provide great opportunities for Nutella

 Ferrero appears to have two strategies for Nutella -

© Euromonitor International PACKAGED FOOD: FERRERO GROUP PASSPORT 31

Kinder dominates in Western Europe; Ferrero Rocher in Asia