Page 32 - Forbes - Asia (June 2018)

FORBES ASIA
FERRERO

and is now worth an estimated er, a er Michele’s death, rumors swirled competitors, it likely throws of more
$2.1 billion. that Nestlé might acquire Ferrero, which than $1 billion a year in proit. Even with
Despite his massive windfall, Giovan- Ferrero strongly denied. the ongoing spending spree, it has not
ni was overwhelmed. “You have a lot of If his goal is simply scale, Giovanni taken on a lot of debt.
pressure,” he says. He spent more than is succeeding. Following the Nestlé pur- And there are other, clearer bright
two years juggling dual roles as CEO and chase, Ferrero became the world’s third- spots. Ferrero launched its popular Kin-
chairman and was le with little time largest confectioner, according to data der Joy eggs in the U.S. last year. hey
to address corporate strategy. “You get from Euromonitor. And he’s not inished had been banned as a choking hazard,
dragged down by the nitty-gritty,” he buying. Giovanni’s theory is that, as with since the chocolate shells contained a
groans. Lapo Civiletti’s appointment as the beer market, a few key players will hidden plastic toy. A er modiications,
CEO in September 2017 made him the come to dominate the confections trade. the product got the FDA’s blessing and is
irst outsider to hold the role.
With Civiletti minding the shop, Gio-
van ni is concentrating on making acquisi-
tions, which his father had iercely resist-
ed. When asked what his dad would think
of the buying spree, he laughs: “I am 53. I
have already totally freed myself.”

TODAY FERRERO’S NERVE center is
in Luxembourg. hanks to friendly taxes,
the tiny state is a buzzing hub of glob-
al enterprise. It’s a stark contrast to life
in sleepy Alba, a metaphor, perhaps, for
how Ferrero has changed. By virtue of
its ownership it’s still technically a family
business. Yet Giovanni is really running
a multinational, with 25 factories scat-
tered around the world—and a mandate At Ferrero’s Alba factory, jars of Nutella are lined up for boxing. The company claims
to expand. “I feel like we are duty-bound 150 million families regularly eat the chocolaty spread for breakfast.
to grow,” he says.
He elaborates, with characteris- he rest will be relegated to niche status. already “overperforming expectations,”
tic wonkishness: “We are in love with a “Somebody out there will [emerge] as a Giovanni says. Ferrero has unveiled
growth algorithm of 7.33 periodic be- front-runner,” he says. other new products of late, mainly deriv-
cause, organic or nonorganic, that would Some outsiders are skeptical of his atives of existing lines, like Tic Tac gum.
double the company in a ten-year time plan. he obvious criticism is that unlike he company is also on safer ground
horizon.” his father, who spurred growth through with its hazelnut business. A few years
Translation: Giovanni’s plan is to in- innovation, Giovanni is just buying his ago it purchased two of the world’s big-
crease revenues by at least 7.33% per way to scale. And Ferrero is diving into gest hazelnut traders, Oltan Group in
year in order to double turnover in a de- the North American market just as con- Turkey and the Italian Stelliferi Group,
cade. Ferrero’s native product lines prob- sumers are shi ing to more premi- and is further investing in plantations in
ably couldn’t expand that quickly, so um sweets and healthier foods. Fintan Australia, the Balkans and South Amer-
Giovanni is buying sales to compensate. Ryan, an analyst at Berenberg Bank, calls ica in a bid to increase yields and avail-
Hence the acquisition of horntons Nestlé’s former products “very much ability throughout the year. Ferrero,
in 2015. At the time, the British chocola- mass-market, high-sugar, unhealthy con- which buys about a third of the planet’s
tier was seen as a declining business. fectionery,” though he notes that they hazelnuts, is also now the world’s largest
Yet Giovanni evidently saw value there. weren’t “given TLC” by the Swiss irm. hazelnut supplier.
He next bought U.S. candy makers Fan- Jean-Philippe Bertschy of Vontobel is hat statistic underscores the compa-
nie May ($115 million in May 2017) and less charitable. Nestlé was “a weakish ny’s spiraling size. In just three genera-
Fer rara, maker of Red Hots and Trolli business which lost market share year tions, Pietro’s tiny shop has become a be-
gummies (about $1.3 billion, in Decem- a er year.” Ferrero, he says, “has made hemoth that sells goods in more than
ber). Finally came the Nestlé deal, in- some questionable acquisitions.” 160 countries, employs 40,000 people
cluding its Crunch, Raisinets and Lafy- Lucky for Giovanni, he has a com- and makes 365,000 tons of Nutella per
Tafy labels, for $2.8 billion. It was an fortable margin of error. If Ferrero’s i- year. Giovanni waves all this away:
ironic twist of fate. Two years earli- nancials are in line with those of its main “Well, it’s a promising start.” F

30 | FORBES ASIA JUNE 2018