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Ferrero investing for success in the U.S.

October 1, 2019
Food & Drink

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Consumer trends and strategic investments are propelling confectionery company Ferrero’s footprint in the United States. The maker of Nutella, Tic Tac and Ferrero Rocher is set to build out its North American headquarters in New Jersey, adding more than 100 jobs, among other expansions in the coming months, said Paul D. Chibe, president and chief executive officer of Ferrero North America.

“We’ve been the fastest growing confectionery company for several years, and it has given us the opportunity to grow and expand our business,” Mr. Chibe told Food Business News. “We’re growing; we’re hiring; we’re promoting.”

A key driver of growth was the stateside debut of Kinder Joy two years ago. The product topped the 2018 New Product Pacesetters list compiled by Information Resources, Inc. with $124.4 million in first-year sales. Kinder Joy includes a small toy and a layered confection of milk and chocolate cremes and two crispy wafer bites filled with cocoa creme. Last October, the company announced a $9 million expansion of a facility in Somerset, N.J., to expand production of Kinder Joy.

“Kinder Joy has been an enormous success, with just over $200 million in retail sales by year two,” Mr. Chibe said. “It’s the only innovation from a major confectionery company that has grown in year two. Most of the time people launch innovation, and it will do well for a year and then decline. We’re continuing to perform well and grow the business.”

To build on the success of Kinder Joy, Ferrero is readying the nationwide launch of Kinder Bueno, which features crispy wafer, creamy hazelnut filling and milk chocolate.

Kinder Bueno“I think it’s going to be even more successful than Kinder Joy because of the broad appeal of the product,” Mr. Chibe said.

Ferrero also is benefitting from investments in increased marketing and recipe improvements for the chocolate brands formerly owned by Nestle USA. Last year Ferrero Group acquired Nestle USA’s confectionery business. The chocolate brands Butterfinger, Baby Ruth, Crunch and others are being integrated into Ferrero North America’s portfolio. Other non-chocolate confectionery brands including SweeTarts, LaffyTaffy and Nerds are managed by Ferrara Candy Co., a Ferrero Group related company and maker of Brach’s, RedHots, Trolli, Black Forest and Sathers candy brands.

Butterfinger sales have grown by as much as 7% following the introduction of a new recipe featuring higher quality ingredients and fewer preservatives, plus new packaging and a marketing campaign. Crunch sales are up 4% since the acquisition, fueled by the first broadcast advertising investment in 10 years.

Baby Ruth will have an updated recipe beginning next year, including a switch from oil-roasted medium runner peanuts to dry-roasted whole jumbo peanuts and new packaging that preserves the product’s freshness. Investments also will include the brand’s first consumer marketing effort in a decade.

“We’ve seen the trends on the business are moving in the right direction,” Mr. Chibe said. “We’ve invested in media; we’ve invested in product improvements. We’re focused on quality, and it’s paying off. I’m very pleased about where we’re at with introduction on the new flavor on Butterfinger and how that’s going, how Crunch is responding to advertising, the first time it has received advertising in years. We’re seeing an improvement in performance there. I’m excited about Baby Ruth and the things we’re doing to that brand.”

Butterfinger updated recipeFormer Nestle plants in Bloomington, Ill., and Franklin Park, Ill., will come under Ferrero Group management in January. Additionally, the company will open a new distribution center in Jonestown, Pa. Next spring, the company plans to open an office in Washington, D.C., where a small team will report to Gerald R. “Chip” Kunde II, senior vice-president of government and institutional affairs for Ferrero North America.

“It’s important for us to be a participant in the conversation on topics like labeling, being part of the discussions on trade, being an active participant in the industry agenda — the National Confectioners Association is based there; the Grocery Manufacturers Association is based nearby, as well as many other trade associations we participate in,” Mr. Chibe said. “We want to make our sure voice is heard because of our growth but also because we believe in the opportunity in the United States. The United States is the No. 1 confectionery market in the world. We believe there is still significant opportunity to grow the business here as people look for quality. Our company is known for quality. And that’s where the megatrend is.

“People are looking for better products in every class of food, beverage and at home. We happen to be a company that has a 70-year legacy of being maniacally focused on quality, and it’s playing to our strengths right now.”

The Ferrero Group, based in Luxembourg, is the third-largest global confectionery company with nearly $12 billion in annual revenues and distribution in more than 170 countries. In April, the company announced an agreement to acquire Kellogg Co.’s selected cookie, fruit snack, pie crust and ice cream cone businesses, which generated sales of approximately $900 million in 2018. In September, a Ferrero affiliate acquired cookie maker Kelsen Group A.S. from the Campbell Soup Co.

By Monica Watrous

Source: Food Business News

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