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Ferrero S.p.

A
Indulge in Layers of
Delights
Presented by: Faiz Zihuna

Contents
Introduction of Confectionary
Civilisation of Confectionary
Brand Portfolio
New Products
Strategic Planning
Mission
Core Values
Principles
Code of Business Conducts
Code of Ethics

Contents
Orgnizational Structure
Leadership Style
Ferrero Value-Chain
Corporate Responsibility
Resech and Development
Marketing Mix
SWOT Analysis
PESTLE Analysis
Competitve Analysis
Financials
Theory
Recommendation
Personal reflection

Confectionery is the art of making of confections, which are food items


that are rich in sugar and carbohydrates.
Confections include sweet foods, sweetmeats, digestive aids that are
sweet, elaborate creations, and something amusing and frivolous.
Sugar confectionery includes sweets, candied nuts, chocolates, chewing
gum, sweetmeats, pastillage, and other confections that are made
primarily of sugar.

Civilisation-History of Confectionary Industry


Confections date back more than 3000 years back to
the time of egyptians. During this early time confections
consisted products made from various dried fresh fruits,
nuts, spices and herbs. Honey was the main
confectionary sweetener with the coming of the middle
age. Sugar based confections arose first in europe and
spread. Only sold by apothecaries , their sweet taste
created a consumer demand that quickly grew supply.

(Olver, 2014)

Civilisation-History of Confectionary Industry


In the 14th and 15th century venetians started
importing sugar from Arabias and sugar confections were
made available to common people. In the 15th and 16th
century variety of hand prepared high boiled sweets,
molded sweets and long established fruit and nut
containing products were offered by confectioners to meet
the growing consumer demand

(Olver, 2014)

Civilisation-Timeline of Confectionary Industry


1850 -1899
1854 The first packaged box of Whitman's chocolate
debuts.
1868 Richard Cadbury introduces the first Valentine's Day
box of chocolates.
1884 Thomas Adams creates Black Jack, America's first
flavoured gum.
1880s Wunderle Candy Co. of Philadelphia creates candy
corn.
1900 Milton S. Hershey of Lancaster, Pa., introduces the
(DeseretNews.com, 2002)
first Hershey milk-chocolate bar.

Civilisation-Timeline of Confectionary Industry


1910-1932
1912 The Whitman's Sampler box of chocolates is born,
the first boxed chocolates to include an index showing the
filling in each candy.
1913 Goo Goo Clusters, a Southern favourite, is the first
bar to combine milk chocolate, caramel, marshmallow and
peanuts.
1912 The Whitman's Sampler box of chocolates is born,
the first boxed chocolates to include an index showing the
filling in each candy.
1923 The Mars Milky Way Bar is the first candy from the
Mars family.
(DeseretNews.com, 2002)

Civilisation-Timeline of Confectionary Industry


1910-1950
1939 Hershey's Miniatures chocolate bars
1941 M&M's chocolate candies are introduced in response to slack
chocolate sales during the summer.
1946 Official opening of Ferrero company
1949 El Bubble Bubble Gum Cigars are the first 5 cent bubble gum.
1980 Goelitz introduces the first American-made gummy bears and
gummy worms.
1992 DOVE Dark Chocolate Bar and DOVE Milk Chocolate Bar
introduced nationally by M&M/MARS.
1999 Sound Bites Lollipops from Cap Candies is the first radiolollipop combination.
2001 M&M's Dulce de Leche Caramel Chocolate
Candies tap into
(DeseretNews.com,
2002)

The Story of a Family


Pietro Ferrero began his career as a pastry maker in Dogliani and later
moved to Turin where he opened his own pastry shop. During World War II, however,
Ferrero was forced to move his shop, to Alba. His wife Piera, took over operating the
family pastry shop and Ferrero himself began experimenting with recipes.

Ferrero sought to develop new products to overcome the short supply of many

traditional pastry ingredients, and particularly cacao, during the period. By the end of
the war, Ferrero's efforts had paid off with a new frosting-like spread that combined
roasted hazelnuts with cocoa butter and vegetable oil. Ferrero called his new paste
"pasta gianduja," which he began selling in 1946.
(Referenceforbusiness.com,
2014)

The Ferrero Timeline

1942
Pietro Ferrero begins to fulfil his dream of selling
fine chocolates to the masses by opening his
laboratory in Alba. Some of his first products are
made with base ingredients of hazelnut and cocoa.

(Ferrerorocherusa.com, 2014)

The Ferrero Timeline

1946
Ferrero begins industrial production and is
recognized as an official company by the Italian
Department of Commerce.

(Ferrerorocherusa.com, 2014)

The Ferrero Timeline

1950 - 1970
Ferrero develops a wide variety of confections that are
sold first in Italy and other European countries, then to
other countries throughout the world. Among the brands
that are launched in this period are Nutella hazelnut
spread, Kinder chocolates and Tic Tac mints.

(Ferrerorocherusa.com, 2014)

The Ferrero Timeline

1982
The Ferrero Rocher brand is launched and is sold in
various European countries. Ferrero Rocher grows in
popularity throughout the decade as the brand becomes
known for its distinctive gold foil wrapper, unique premium
packaging and high quality hazelnut chocolates.
The introduction of Ferrero Rocher
point for Ferrero.

is the first Tipping


(Ferrerorocherusa.com, 2014)

The Ferrero Timeline

1985
Ferrero Rocher chocolates are first distributed regionally in the United States.
1988
Ferrero Rocher chocolates are launched nationally in the United States. Over
the next several years the brand grows into a premium chocolate category
leader.
The second Tipping point for Ferrero
(Ferrerorocherusa.com, 2014)

The Ferrero Timeline

2000 - 2006
Rocher continues to attract new consumers nationwide
with its high quality premium image and "Fine Hazelnut
Chocolates." In 2001, the Ferrero Prestige brand is launched
in the US to introduce a wider assortment of Ferrero
confections to a growing premium chocolate category.

(Ferrerorocherusa.com, 2014)

The Ferrero Timeline

2007
After more than seven years of perfecting the dark
chocolate recipe, Ferrero launches Ferrero Rondnoir dark
chocolates in the US. Ferrero Prestige confections are relaunched with two new delectable flavors in addition to
Rocher chocolates, Rondnoir dark chocolates and Ferrero
Garden Coconut confections.

(Ferrerorocherusa.com, 2014)

The Ferrero Timeline

2008
Ferrero Prestige becomes Ferrero Collection, however, the
successful flavor mix remains unchanged. Ferrero Collection
combines the savory array of rich, sumptuous and creamy
confections of Rocher chocolates, Rondnoir dark
chocolates and Ferrero Garden Coconut confections the
ultimate treat for your senses.

(Ferrerorocherusa.com, 2014)

The Ferrero Timeline


2009 & Beyond What the Future Holds
Ferrero entered new territories with a new iced and
creamy coffee flavored milk beverage called Ferrero
Cappuccino in 2011.
Ferrero continues to innovate in the premium
chocolate category by satisfying the growing consumer
demand for high quality confections.

(Eagle, 2014; Ferrerorocherusa.com, 2014

Ferrero Brand Portfolio

Kinder was
Founded in Alba
created 60 years
in 1944
ago.
Introduced
in
The first version
Success
factors
1989.
of what would
- Quality
ingredients,
Unique
becomeand
the
trusted
name,
small
delicate
taste.
revolutionary
in size
that
is perfect
Whole
almond
invention
of theis
forplunged
children.into a
century.
delicious
creamy
Success factors:
filling and recipe
- Inimitable
enclosed
a
- its
genuineinand
crispy selected
shell,
carefully
covered in flakes
ingredients
of coconut.

Introduced in
1974.
1982.
1956.
By combining
Today
it's
Marks
the the a
chocolate
egg,
world
leader
its
beginning
of in a
surprise,
and
a
toy
category.
Ferrero
history in
30 world
billion
eggs
Success
factors:
the
of
boxed
have been
sold all
Refined
packaging,
chocolates.
over the factors:
world
ground-breaking
Success
with
more
than
advertising
- The
recipe
8,000
campaigns
andofits
- Thedifferent
choice
surprises
innovative shape
colour
- The name

(Ferrero.com, 2014)

Mission
Our mission has been the passion for excellence
and reliability of our products

Core values
High quality, crafted precision, product freshness,
careful selection of the finest raw materials,
respect and consideration for our customers
(Ferrero.com, 2014)

Principles
Loyalty and Trust
Respect and Responsibility
Integrity and Sobriety
Passion for Research and Innovation
Work, Create, Donate
(Ferrero.com, 2014)

Loyalty and Trust:


Constant attention towards consumers needs is the
foundation of the company policy, inspired by
maximum transparency and excellence in quality.
The loyalty towards consumers and the trust they
put in the products with their everyday purchases are
at the core of the long-lasting relation that the
company enjoy with them.
The Company practices are based on mutual trust
between colleagues, full dedication and transparency
towards the Group, as well as towards all civil society
stakeholders with whom they interact daily
(Ferrero.com, 2014)

Respect
and Responsibility
Support the protection of human dignity, as well as the
absolute and unconditional respect of human rights,
wherever the Ferrero Group companies operate.

Ferrero support the abolition of the exploitation of child


labour and of forced and coercive labour, within their
sphere of influence and along the entire production chain,
through specific legal means and close relations with local
Communities.
Promote the professional and personal development of our
human resources, based on our respect of the principle of
equality of treatment.
Work to avoid any form of discrimination in the
(Ferrero.com, 2014)
employment practices

Integrity and Sobriety


The companys communications with consumers, including
advertising, respect the values of human dignity, family and
children, in line with Ferreros moral and ethical principles.
Ferreros advocacy practices towards International, National
and Local Institutions are based on solid scientific
knowledge and always inspired by intellectual and
behavioural integrity, as well as transparency.

(Ferrero.com, 2014)

Passion for Research and Innovation


The goal is to create unique products, developing
innovative research and production processes and using
companys own technologies.
Applying consolidated quality and traceability procedures,
in order to preserve the organoleptic and nutritional
characteristics of the raw materials.
A fundamental element of their success is the accurate
selection of highest quality raw materials, sourced in full
respect of a strict ethical code concerning their origin,
harvesting and manufacturing.
(Ferrero.com, 2014)

Work, Create, Donate

Ferrero identify the company with the motto: Work,


create, donate, conceived which was introduced by
Michele Ferrero from the very beginning of his business
pursuits. In essence, the company favour the ethics
of doing over the practice of appearing.

(Ferrero.com, 2014)

Code of Business Conduct


The Code of Business Conduct is enforced to business to
business relations, in compliance with the Ferrero Code of
Ethics and it is based on 5 priorities:
1) Excellence of product quality and safety
2) Human rights commitment
3) Environmental protection and sustainability
4) Conditions of workplace environment
5) Business integrity

(Ferrero.com, 2014)

Code of Ethics
The Ferrero Code of Ethics, in force since January 1, 2010,
is intended to serve the following purposes:
To identify the guiding principles for the resources that operate
in the Company and for the Company;
To define the fundamental obligations that the Company
assumes with its associates and vice-versa;
To state the Company position with regard to its stakeholders.
(Ferrero.com, 2014)

Organizational Structure

(Ferrerocareers.com, 2014)

Management

Junior Product Manager


(Bijoern R)

Senior Controller
(Tine D.)

Tic Tac Product Manager


(Jos M. J.)

Planning Manager
(Salvador M.M)

Logistic Manager
(Dave V.)

Sales & Administrative Manager

(Selma C.F)

National Key Account Manager

(Detlef L.)

Area Manager
(Matthieu L.)

Junior Product Manager


(Marjolaine G.)

(Ferrero.com, 2014)

Leadership
Control of the company has always remained in the hands of the
Ferrero family.
After the death of the older Pietro Ferrero, his brother, Giovanni,
took over before passing control to Michele, the son of the founder
and the father of the younger Pietro.

(Ferrero.com, 2014)

Leadership Style- People-oriented leadership


A man of few words who shuns publicity, Ferrero senior has turned a
Piedmont-based chocolate factory into a world giant. He is known for
running Ferrero with an iron fist but is also loved by locals for a tendency
to give back to his community and by employees for the companys
generous working conditions.
People-oriented leadership: The people-oriented leader is the one
that, in order to comply with effectiveness and efficiency, supports, trains
and develops his personnel, increasing job satisfaction and genuine
interest to do a good job).

(Fiedler, 1967; Sylvers, 2014

Women in workforce

(Fiedler, 1967; Sylvers, 2014

Ferrero Value-Chain

(Corporate Responsibility, 2012)

Corporate responsibilities

(Ferrero.com, 2014)

Corporate responsibilities

(Ferrero.com, 2014)

Corporate responsibilities

(Ferrero.com, 2014)

Research and development


One of Ferreros strengths is its ongoing research, aimed at
creating ever more innovative and unique products.
The Ferrero Groups Research and Development department
is
locate
at
a
company
within
the
Group
Soremartec(Socit de recherche de marketing et
technique).
It assigns a group of specialist engineers with the task of
examining the taste and appearance of products and
monitoring the food industry so as to detect and examine
new and unusual systems, often borrowed from other
(Ferrero.com, 2014)
manufacturing sectors.

Marketing Mix
Product
Raw
cocoa
quality
productquality.

guarantees

chocolate

Packaging of the product also secure the quality


and image.
Spherical with gold wrapper

(Fiedler, 1967; Sylvers, 2014

Marketing Mix
Price and Place
Premium Pricing strategy
Supermarkets, Malls, Grocery stores
Company owned outlets/counters

(Fiedler, 1967; Sylvers, 2014

Marketing Mix
Promotion
Excellence, Style and Expertise
Word of mouth
Television, print ads and Social medias

(Fiedler, 1967; Sylvers, 2014

SWOT Analysis

(Euromonitor International, 2012

SWOT Analysis

(Euromonitor International, 2012

PESTLE ANALYSIS

Price of cocoa: It can


Economical
Political & Legal
fluctuate
daily, depending on
and affectingsupply and
Tax: The threat of taxes being
demand around the world.
imposed on the confectionery
industry in some countries
Inflation rate: if the
An increased emphasis on healthy
consumers are under pressure
lifestyles is an imperative for
to cut-down on their
governments
facing
rising
expenses, they would not
healthcare costs, particularly in
want to buy unnecessary
developed economies that are
'products.
battling childhood obesity.
Rising incomes in

International trade and


emerging markets and an
food labelling policy.
economic recovery in the rich
North, are predicted to lead to
a 30%
in demand by2014)
(KPMG LLP, 2012; Goodyear,
2013; growth
Thestoryofchocolate.com,
2020.

PESTLE ANALYSIS
Current trend of snacking:
Technological
Social
& has
Environmental
Snacking
become a major
of
new
trend, due to the changing Development
technology and innovation
eating habits of consumers.
leads to opportunity for new
Health-consciousness:
The
products and markets.
increasing health and wellness
trend may limit the growth As consumers become ever
more demanding, innovation
potential.
is crucial to market share.
Adverse
weather
or
tree
disease can shrink supply of
Cocoa.
Increasing concern for CSR calls
for company to be more
responsible.

(Angelis, 2013; Thestoryofchocolate.com, 2

Competitive Analysis Major competitors


Net Sales 2013: 17,640 (US$ millions)

Net Sales 2013: 7,043 (US$ millions)

Net Sales 2013: 11,760 (US$ millions)


(Ferrero.com, 2014)

Competition in different markets


In 2013, The Hershey Co and Mars are expected to account for a combined
65% share of overall value sales in the US.
In UK, Cadbury UK Ltd maintains a strong leading position in chocolate
confectionery during both 2012 and 2013 with Mars UK Ltd remaining close
behind in second position.
The most important player in chocolate confectionery in Italy in 2013 is
Ferrero, which is expected to reach a 35% value share, with sales of
831million. Also international players such as Lindt and Nestl also have a
very important role
Mars Foods (China) is in leading position in China, Ferrero Rocher enjoy
unqualified success in the gift-giving segment of Chinas emerging chocolate
market.
(Euromonitor.com, 2014)

Competition in different markets


In US, over the forecast period 2013-2018, chocolate
confectionery is expected to register constant value
growth of 7%, to reach sales of US$18.6 billion.
Higher prices and smaller pack sizes are expected
to drive retail volume sales down by 1% over the
forecast period.
In UK, Chocolate confectionery is expected to increase
in both retail volume and constant value terms over the
forecast period.
Chocolate confectionery is expected (Euromonitor.com,
to experience
2014)
ongoing healthy constant value growth over the

Financials
The Ferrero Group financial statements for the year
ended 31 August 2013 indicates a turnover of 8.1
billion Euros up 5.6% over the previous period with a
total of 7,670 million Euros.
There was an increase in operating income, with a
profit before tax of 795 million Euros, the result for the
year decreased by 9.5% over the previous year,
because of a drop in financial results due to the
adverse effects of exchange rate fluctuations.
(Ferrero.com, 2014)

Financials
Financial improvement due to dynamic growth attained in the new
markets:
Ferrero product sales confirmed and in some cases even improved over the
outstanding results recorded in 2012 in Asia, Russia, the U.S., Australia,
Canada, Brazil and Argentina. Sales rose strongly in Mexico and Turkey,
where new production plants came on stream in the course of the year.

The investments made by Ferrero during the year came to 525


million Euros, of which 473 million (5.8% of turnover) went to
strengthen the Groups industrial and production activities, mainly in
Germany, Italia, Poland, Canada, Russia, Mexico, Turkey and Brazil.
(Ferrero.com, 2014)

Theory- Maslows Hierarchy of


needs
Self-actualisation need:
Ferreros key objective is to nurture the talents of its
employees through numerous career and training
opportunities.
Provides employees with the opportunity to take on
challenging and stimulating responsibilities.

(Ferrero.com, 2014)

Theory- Lean Production Theory


The point of lean production is to eliminate all waste in an
organization, using only what the firm needs at the moment.
Manage their factories byusing energy, materials and natural
resources in an efficient manner, with the aim of reducing
their environmental impact, reducing waste and refuse and,
where possible, using renewable energy sources.
Ferrero is highly concerned about its Corporate Social
Responsibility and the sustainability of its supply chain.
Organise projects and operational programs that respect the
environment.

(Ferrero.com, 2014)

Recommendations
Asia has the worlds booming economies. Ferrero should promote their
products more in Asia markets especially in China and India which
has an emerging upper middle class which will amount to half of the
worlds population.
Localize the advertisements and promotions, Ferrero should look in
to the culture, values, norms and trends of the markets which they cater
and then design the adverts and promotions.
The market which Ferrero caters is relatively inelastic to the price. They
should try to increase the prices and improve the profits.
Ferrero can use price differentiation in the markets by increasing prices in the
markets which has high purchasing power.

(Ferrero.com, 2014)

Personal reflection
Importance of family and keeping the values we learnt from
them.
Being successful in the long run requires the considerations
of all the parties involved in the business.
As a company contributing to society and nature increases
value of the company as people will develop more trust with
the company.
Creating a strong premium brand requires the constant
research and development and understanding of the
customer requirements.

(Ferrero.com, 2014)

References
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

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http://www.ferrerorocherusa.com/history-timeline.php. [Accessed: 6 July 2014].
Eagle, J. (2014).McDonalds and Ferrero announce partnership. [Online]. 2014. FoodProductionDaily.com.
Available from: http://www.foodproductiondaily.com/Markets/McDonald-s-and-Ferrero-announce-partnership.
[Accessed: 7 July 2014].
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July 2014].
Ferrero.com, (2014).Integrity and Sobriety. [Online]. 2014. Available from: http://www.ferrero.com/ferreroprinciples/integrity-and-sobriety/communication-principles. [Accessed: 9 July 2014].
Sylvers, E. (2014).Pietro Ferrero, 47, Food Company Scion. [Online]. 2014. Query.nytimes.com. Available
from: http://query.nytimes.com/gst/fullpage.html?res=9404E3DE1F38F933A15757C0A9679D8B63.
[Accessed: 9 July 2014].
Ferrero.com, (2014).Ferrero - Group Mission. [Online]. 2014. Available from: http://www.ferrero.com/thegroup/mission/Ferrero-values. [Accessed: 9 July 2014].
Olver, L. (2014).TheFood Timeline: history notes-candy. [Online]. 2014. Foodtimeline.org. Available from:
http://www.foodtimeline.org/foodcandy.html. [Accessed: 9 July 2014].
DeseretNews.com, (2002).A timeline of confectionery. [Online]. 2002. Available from:
http://www.deseretnews.com/article/945518/A-timeline-of-confectionery.html?pg=all. [Accessed: 9 July
2014].

Thank you!

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