A Progressive Digital Media business

COMPANY PROFILE

Ferrero Group

REFERENCE CODE: 6C22C197-94A9-42DC-BBCF-A8D7BEE3A326

PUBLICATION DATE: 14 Jul 2017
www.marketline.com
COPYRIGHT MARKETLINE. THIS CONTENT IS A LICENSED PRODUCT AND IS NOT TO BE PHOTOCOPIED OR DISTRIBUTED
Ferrero Group
TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview ........................................................................................................3

Key Facts ......................................................................................................................... 3
Business Description .....................................................................................................4
History ............................................................................................................................. 5
Key Employees ...............................................................................................................8
Major Products & Services ............................................................................................9
SWOT Analysis .............................................................................................................10
Top Competitors ...........................................................................................................14
Company View ..............................................................................................................15
Locations And Subsidiaries ........................................................................................16

Ferrero Group Page 2

© MarketLine
Ferrero Group
Company Overview

Company Overview

COMPANY OVERVIEW
Ferrero Group (Ferrero or 'the group'), through its subsidiaries, is engaged in the manufacturing of
chocolate and other confectionery products. The group offers its products under well-known brands that
include Nutella, Kinder, and Tic-Tac, among others. Ferrero operates in Europe, the Americas, Africa,
Asia and Oceania. It is headquartered in Alba, Italy.

The group recorded revenues of EUR10,300 million in the financial year ended August 2016 (FY2016).
Ferrero is a privately-held group and does not publish its financial results.
Key Facts

KEY FACTS

Head Office Ferrero Group

Via Vivaro 49
Alba
Cuneo
Piemonte
Cuneo
Piemonte
ITA
Phone 39 0173 295259
Fax 39 0173 363274
Web Address www.ferrero.com
Revenue / turnover (EUR Mn) 10,300.0
Revenue (USD Mn) 11,397.3
Financial Year End August
Employees 32,990
Ticker

Ferrero Group Page 3

© MarketLine
Ferrero Group
Business Description

Business Description

BUSINESS DESCRIPTION
Ferrero is one of the world's largest chocolate manufacturers. The group produces a wide range of food
and beverages, including chocolates and chocolate products, bakery products, snacks, mints, and
beverages, among others. At the end of FY2016, Ferrero operated through 86 consolidated companies
and 22 production plants worldwide.

The group markets its products in over 170 countries throughout the world through direct sales force or
authorized retailers. Ferrero’s key brands include: Kinder Chocolate, Kinder Joy, Kinder Surprise, Kinder
Bueno, Kinder Pingui, Ferrero Rocher, Ferrero Rondnoir, Ferrero Manderly, Pocket Coffee, Raffaello, Tic-
Tac, and Nutella, among others. Additionally, the group manufactures a range of iced tea in peach, lemon
and natural flavors, under the brand name Estathe.

In 2015, Ferrero established Ferrero Hazelnut Company, which combines the group’s entire hazelnut
supply chain activities, including cultivation of Ferrero farms, development of core cultivation among
farmers, agronomic research and development (R&D), sourcing, industrial processing and sale of semi-
finished and finished hazelnut-based products. Ferrero Hazelnut Company has presence in countries
such as Italy, Turkey, Chile, Australia, South Africa, Canada, Spain, UK, and Serbia, among others.

Ferrero Group Page 4

© MarketLine
Ferrero Group
History

History

HISTORY
Ferrero was founded by Pietro and Giovanni Ferrero in the northwest Italian town of Alba.

Pietro's son, Michele Ferrero, took over and began to expand operations throughout Europe.

The group built new factories in Germany.

Ferrero built new factories in France.

The group expanded operations outside Europe, opening offices in the US. This phase of strong
expansion saw Ferrero starting operations in Canada, Australia, Brazil and Japan.

Ferrero launched Nutella brand.

The group established the US subsidiary and began marketing Tic-Tac in that market.

Ferrero used Kinder brand to market chocolate confectionery.

The group launched six new products, including Ferrero Rocher.

Ferrero constructed a confectionery product factory in Poland.

The group opened new USD100 million confectionary production facility in Brazil.

Ferrero launched a new ready-to-drink tea beverage, Estathe.

The group began the operation of its photoelectric plant at the Balvano factory, Italy.

Ferrero started the construction of EUR200 million confectionery production and storage facility in the
Vladimir region, Russia. This plant produces branded products such as Raffaello and Kinder Chocolate.

The group announced its plans to double its total investment in Georgia's nut production sector to EUR20
million.

Ferrero entered into a supply agreement with New Britain Palm Oil, for significant quantities of
sustainable palm oil.

In an effort to reduce its carbon footprint, Ferrero US, a subsidiary of Ferrero announced the roll-out of
new packaging for the entire line of Tic-Tac mints.

The group opened its new industrial plant in Vladimir, Russia.

Ferrero inaugurated its first boutique in Milan.

Ferrero Group Page 5

© MarketLine
Ferrero Group
History

The group launched Merendine (chilled dairy slices with a chocolate coating) under the Kinder Fetta al
Latte brand name in the Italian market.

Ferrero announced its plan to establish a new production facility in Maharashtra, India with an investment
of over USD125 million.

The group launched Liberty mints under the Tic-Tac range to the duty-free and travel-retail channel.

Ferrero opened a new plant in Baramati, Maharashtra, India.

The group's French plant in Villers Ecalles was granted the International Organization for Standardization
(ISO) 22000 certification, by the international Bureau Veritas certification agency.

Ferrero started its first wind farm with an expected annual production of over 40,000 kilowatt hour at
Belsk factory, Poland.

The group opened a new plant at the Parque Opcon industrial park, in San Jose Iturbide in the State of
Guanajuato in Mexico. This new production plant will manufacture the Kinder and Nutella products for the
local market and for export to North America (the US and Canada). The facility has installed capacity for
35,000 tons of products.

Ferrero opened a new plant in Turkey for the production of Nutella and Kinder chilled products. The
facility initially had a production capacity of 30,000 tonnes per year.

The group opened the Pietro Ferrero Kindergarden, a child care center, in Baramati, India.

Ferrero announced plans to launch its fifth brand in India, called Schoko Bons Crispy, a chocolate wafer
bar.

Ferrero India announced a partnership with Disney India to introduce a new range of surprise toys, the
Disney Princess and Marvel's The Avengers, in its confectionery product Kinder Joy.

The group launched a new limited-edition Kinder Bueno Dark variant, exclusively for the impulse channel.

Ferrero purchased all of the equity interest in the Oltan Group, a company engaged in supply, processing
and sale of hazelnuts.

The group completed the acquisition of Thorntons, a UK-based company operating in the chocolate
confectionery industry.

Ferrero established Ferrero Hazelnut Company, with an aim to develop the hazelnut industry on a
worldwide scale and create a benchmark for innovation, best farming practices and environmental
sustainability.

The group launched its Tic-Tac confectionery brand in Spain.

Ferrero Group Page 6

© MarketLine
Ferrero Group
History

Ferrero rolled out four flavors: mint, orange, cherry passion and strawberry mix.

The group announced that it will double the amount of cocoa it purchases from Fairtrade farmers to
40,000 metric tonnes over the next three years.

Ferrero announced a new collaboration with Fairtrade on cane sugar, with plans to source 20,000 metric
tonnes of Fairtrade cane sugar between mid-2016 and 2019.

Ferrero International, the parent company of Ferrero, completed the acquisition of Fannie May
Confections Brands and the Harry London chocolate brands from 1-800-FLOWERS.com. The acquisition
includes all operations of Fannie May, and the production plant in Ohio and two warehouse and
distribution facilities, located in Ohio and Illinois. With this acquisition, the group plans to expand its
product portfolio within the premium chocolate category.

The group opened the new Ferrero Innovation Center in Singapore, its first innovation center in Asia. With
this opening, Ferrero expects to strengthen its position as global innovation leader. The new innovation
center will house various strategic innovation functions in the areas of health and nutrition, new raw
materials and product R&D, consumer insight and foresight activities.

The group collaborated with Sedex, which is one of the largest collaborative platforms in the world for
sharing responsible sourcing data on supply chains, to enhance its supply chain transparency. Ferrero
will use Sedex’s global platform and its tools and resources to gain further visibility of its global supply
chain and engage with its suppliers to improve standards.

Ferrero Group Page 7

© MarketLine
Ferrero Group
Key Employees

Key Employees

KEY EMPLOYEES

Name Job Title Board

Giovanni Ferrero Chief Executive Officer
Aldo Uva Chief Officer Operating, Supply
and Strategic Business Platform
Paul Chibe President and Chief Executive
Officer, Ferrero North America
Senior Management
Senior Management
Senior Management

Ferrero Group Page 8

© MarketLine
Ferrero Group
Major Products & Services

Major Products & Services

MAJOR PRODUCTS & SERVICES

Ferrero, through its subsidiaries, is engaged in the manufacturing of chocolate and other confectionery
products. The group's key products include the following:

Products:

Chocolates and Chocolate Products

Bakery Products
Snacks,
Pralines
Mints
Drinks

Brands:

Nutella
Kinder Chocolate
Kinder maxi
Kinder Surprise
Kinder Joy
Kinder Bueno
Kinder delice
Kinder Pingui
Ferrero Rocher
Raffaello
Tic-Tac
Ferrero Rondnoir
Ferrero Manderly
Ferrero Tenderly White
Ferrero Cappuccino
Ferrero Tenderly Torroncino
Pocket Coffee
Mon Cheri
Ferrero Prestige
Estathe

Ferrero Group Page 9

© MarketLine
Ferrero Group
SWOT Analysis

SWOT Analysis

SWOT ANALYSIS
Ferrero, through its subsidiaries, is engaged in the manufacturing of chocolate and other confectionery
products. It has diversified business operations both in terms of product portfolio and geographic reach.
This gives a competitive advantage to the group as it protects Ferrero from cyclical downturn in any
particular product segment and geography. However, volatility in raw material prices could materially
affect the group's profits.

Strength Weakness

Initiatives to Strengthen its Position in the Hazelnut Lack of Scale

Industry
Diversified Business Operations Coupled with Strong
Brand Portfolio
Opportunity Threat

Health and Wellness Trends to Drive Demand for Dark Fluctuating Raw Material Prices
Chocolate Varieties Increasing Labor Costs across Europe
Growing Global Chocolate Market Increasing Competition from Private Labels
Strategic Acquisitions

Strength

Initiatives to Strengthen its Position in the Hazelnut Industry

Ferrero aims to strengthen its leading position in the global hazelnut market by efficiently meeting the
growing demands of the consumers worldwide. As part of this, the group has implemented a strategy to
develop new production opportunities in the hazelnut market under its Hazelnut Business Development
(HBD) initiative. Over the past few years, Ferrero has been implementing this initiative with focus on three
major areas: managing pilot farms that are purchased and controlled by the Ferrero HBD; operating
nurseries by allowing the cultivation of selected varieties of seedlings produced by Ferrero/HBD nurseries
and sold to local farmers at affordable prices; and conducting research by collaborating with national and
international institutions on various issues related to technical management of hazel farms. Ferrero
operates its hazelnut agricultural companies in various countries, including Chile (since 1991), Argentina
(since 1994), Georgia (since 2007), South Africa (since 2009) and Australia (since 2011).

To further strengthen these efforts, Ferrero established Ferrero Hazelnut Company in 2015. This new
company combines the group’s entire hazelnut supply chain activities: Ferrero own agri farms, hazelnut
outgrowing development, agronomic research and development, sourcing, industrial processing, and sale
of semi-finished and finished hazelnut-based products. Strong focus on establishing its presence in the
hazelnut industry helps Ferrero to expand its scope of business.

Ferrero Group Page 10

© MarketLine
Ferrero Group
SWOT Analysis

Diversified Business Operations Coupled with Strong Brand Portfolio

Ferrero has diversified business operations both in terms of product portfolio and geographic reach. The
group's product portfolio includes chocolates, bakery products, snacks, mints, and beverages, among
others. These products are distributed across Europe, the Americas, Asia, Oceania and Africa. Ferrero
operates through 86 consolidated companies and 22 production plants worldwide.

Further, the group has a portfolio of globally recognized brands such as Ferrero Rocher, Raffaello, Kinder
Chocolate, Kinder Pingui, Kinder Surprise, Kinder Bueno, Tic-Tac, Nutella, Kinder delice, Kinder maxi,
Ferrero Rondnoir, Pocket Coffee and Estathe, among others. These brands have enabled the group to
garner leading market position in several countries. For instance, in 2016, Ferrero was ranked among top
100 of most reputable companies worldwide by an industry source specializing in brand valuation.

Hence, strong brand recall and recognition enables Ferrero to generate an increased amount of repeat
purchases. The wide variety of product offering enables the group to cater to a diverse range of
customers whereas product marketing and distribution across the globe allows Ferrero to serve both
matured and emerging economies. Thus, a diversified business operation hedges the group against
downturn in any particular product segment as well as economy.

Weakness

Lack of Scale

Ferrero derives its revenues from almost all the regions of the world. However, the group lacks scale
when compared to its competitors in the market. Many of its competitors are much larger in size and in
terms of revenues and therefore have access to better financial resources. This limits Ferrero's ability to
compete on one hand and expand its operations compared to its competitors on the other.

The group generated EUR10,300 million in FY2016, which is relatively lower than that of its competitors
like Mars and Nestle. Mars' net sales are estimated to be more than USD35,000 million, whereas Nestle
recorded revenues of CHF89,469 million in the financial year ended December 2016. Ferrero's small size
proves to be a disadvantage as it limits its potential to compete against these larger players with greater
economies of scale and financial strength. Therefore, the group's limited scale compared to its
competitors affects its expansion plans and margins as well.

Opportunity

Health and Wellness Trends to Drive Demand for Dark Chocolate Varieties

Despite health concerns surrounding consumption of high-calorie and sweetened foods rising across the
globe, certain varieties of chocolate are gaining prominence due to their apparent health benefits. For
instance, dark chocolate that is free of milk, contains flavonoids, or anti-oxidants, which are considered to
be beneficial for a healthy heart. Due to the perceived health benefits of these chocolate variants, dark
chocolates are typically priced at a premium, offering additional revenue per unit sales from these

Ferrero Group Page 11

© MarketLine
Ferrero Group
SWOT Analysis

products. The group offers dark chocolates under Ferrero Rondnoir brand name. Therefore, Ferrero is
well positioned to gain from the growing preference for such healthy variants in chocolates.

Growing Global Chocolate Market

The global chocolate market has been growing at a steady pace in recent years. The global confectionary
market includes products like chocolate confectionary, sugar confectionary, and gum confectionary.
According to industry sources, the global chocolate market is expected to grow at a compound annual
growth rate (CAGR) of more than 4.5% during 2017–21.

Ferrero offers a wide product portfolio of chocolates under the brand names Kinder Chocolate, Ferrero
Rocher, Ferrero Rondnoir, Raffaello, Kinder Joy, Kinder Surprise, Kinder Bueno, Kinder Pingui, and
Pocket Coffee, among others. With a market presence across the world, Ferrero can leverage its broad
product portfolio and distribution network to enhance its market share in this growing confectionery
market. It will also enable the group to improve its revenue as well as profit margins.

Strategic Acquisitions

Ferrero has acquired certain businesses in the recent past, which complement its operations. For
instance, in 2015, the group purchased the entire equity interest in the Oltan Group, a company engaged
in supply, processing and sale of hazelnuts in Turkey. Oltan Group accounts for approximately 33% of
Turkey’s hazelnut exports and has an annual turnover of USD500 million. This acquisition aligns with the
group’s strategy to expand its presence in the growing Turkish market and reach new buyers in North
Africa and the Middle East. Further, the acquisition also supports Ferrero’s Nutella manufacturing
operations in the country. In 2015, the group completed the acquisition of Thorntons, a UK-based
company operating in the chocolate confectionery industry. This acquisition further expanded the group’s
presence in the UK.

In 2017, Ferrero International acquired Fannie May Confections Brands and the Harry London chocolate
brands from 1-800-FLOWERS.com. With this acquisition, the group plans to expand its product portfolio
within the premium chocolate category. Thus, acquisitions such as these enable the group to strengthen
its footprint in growing markets.

Threat

Fluctuating Raw Material Prices

The group's products are manufactured with raw materials that are subject to strong price fluctuations due
to climatic conditions, seasonal variations, demand fluctuations and market speculation. Ferrero relies on
the regular supply of cocoa and sugar to develop its products. The prices of the group's key raw materials
such as milk, dairy products, cocoa beans and nuts experience volatility.

For instance, the international price of cocoa beans, used in chocolate has been volatile in the recent
years. According to industry estimates, the price of cocoa beans decreased from USD2195.8 per tonne in
January 2017 to USD2034.08 per tonne in February 2017. It increased to USD2057.8 per tonne in March

Ferrero Group Page 12

© MarketLine
Ferrero Group
SWOT Analysis

2017 and then decreased to USD1961.1 per tonne in April 2017. The price of cocoa beans was increased
to USD1983.4 per tonne in May 2017 and to USD1998.25 per tonne in June 2017. In addition, the
international price of sugar has been fluctuating in the recent past. According to industry estimates, the
price of sugar decreased from 20.87 US cents per pound in November 2016 to 18.83 US cents per pound
in December 2016. It increased to 20.54 US cents per pound in January 2017 and then decreased to
20.35 US cents per pound in February 2017. The price of sugar further decreased to 18.06 US cents per
pound in March 2017 and to 16.4 US cents per pound by April 2017. The price of sugar was decreased to
15.69 US cents per pound in May 2017 and 13.75 US cents per pound in June 2017. Volatility in raw
material prices could materially affect the group's profits.

Increasing Labor Costs across Europe

The labor wages in Europe have been increasing in the recent years. According to Eurostat, the hourly
labor costs in the euro area (Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus,
Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia, Lithuania, Latvia and Finland)
and EU28 zone (Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece,
Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands,
Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the UK) increased by 1.5%
and 1.7%, respectively, in the first quarter of 2017, compared with the same quarter of previous year.
Ferrero operates manufacturing facilities in Belgium, France, Germany, Ireland, Italy, Poland, Russia and
Turkey. Therefore, rising labor wages in Europe could impact the margin expansion adversely and affect
the group's profitability.

Increasing Competition from Private Labels

The tightening economic conditions, especially in the developed and matured markets in the West are
prompting consumers to increasingly choose lower-priced private label food products over established
national brands. There has been an increase in the number of people who opt for private label brands
and generic non branded products of grocery chains and wholesale cooperatives in certain categories,
which typically are sold at lower prices, in the recent years.

As private labels offer a value proposition by providing quality products at lower prices, more consumers
are attracted towards them. According to industry estimates, among all major US retail channels, private
label sales increased by more than three times in 2016 compared to national brands. Further, it is
reported that, among all major US retail channels, private label sales surpassed a value of USD115 billion
in 2016. In supermarkets, unit and dollar shares stood at nearly 18% and 22%, respectively. A similar
trend was noticed in the European market. According to industry sources, private label brands gained
volume market share in 15 countries across Europe in 2016.

In future, if consumers reduce their spending due to economic uncertainty or unfavorable economic
conditions, private labels are expected to score even more over the group's branded products due to their
lower price points. Additionally, if the group's competitors increase levels of promotional activity for lower-
priced products, the group may lose its market share to its competitors as Ferrero is known for its
premium priced offerings. This could, in turn, lead to decline in sales volumes that might prompt Ferrero
to focus on its lower margin products.

Ferrero Group Page 13

© MarketLine
Ferrero Group
Top Competitors

Top Competitors

TOP COMPETITORS
The following companies are the major competitors of Ferrero Group

Chocoladefabriken Lindt & Sprungli AG

Mars, Incorporated
Mondelez International, Inc.
Nestle SA
The Hershey Company

Ferrero Group Page 14

© MarketLine
Ferrero Group
Company View

Company View

COMPANY VIEW
Ferrero is a privately-owned group and has not released its Annual Report. Hence, the Company View is
not available.

Ferrero Group Page 15

© MarketLine
Ferrero Group
Locations And Subsidiaries

Locations And Subsidiaries

LOCATIONS AND SUBSIDIARIES

Head Office

Ferrero Group
Via Vivaro 49
Alba
Cuneo
Piemonte
Cuneo
Piemonte
ITA
Phone:39 0173 295259
Fax:39 0173 363274
www.ferrero.com

Other Locations and Subsidiaries

Ferrero Ardennes S.A. Ferrero Asia Ltd

Rue Pietro Ferrero 5 21/F., World Trade Centre 280
6700 Arlon Gloucester Road
BEL Causeway Bay
Phone:32 63 211211 Causeway Bay
Fax:32 63 220670 HKG
Phone:852 852 27221234
Fax:852 852 29563983
Ferrero Australia Pty. Ltd. FERRERO B.V.
Level 18 Westbroek 58
168 Walker Street Breda
North Sydney Noord-Brabant
New South Wales Breda
North Sydney Noord-Brabant
New South Wales NLD
AUS Phone:31 76 5482660
www.ferrero.com.au Fax:31 76 5482670
Ferrero Canada Ltd. Ferrero Ceska S.r.o
100 Sheppard Avenue East Karla Englise 6/3201
Suite N°900 Praha
North York Praha
Ontario M2N 6N5 CZE
CAN Phone:420 225 020111
Phone:1 416 5900775 Fax:420 224 220576
Fax:1 416 5900709 www.ferrero.sk

Ferrero Group Page 16

© MarketLine
Ferrero Group
Locations And Subsidiaries

http://www.ferrero.ca/
FERRERO D.o.o. FERRERO Deutschland GmbH
Radnicka cesta 39 Hainer Weg 120
ZAGREB Frankfurt
ZAGREB Hessen
HRV Frankfurt
Phone:385 1 2355000 Hessen
Fax:385 1 2355038 DEU
FERRERO FSC LUXEMBOURG S.A. FERRERO IRELAND LIMITED
Findel Business Center Kinsale Road
Complexe B, Rue de Treves CORK
Findel Cork
Findel CORK
LUX Cork
Phone:352 3497111 IRL
Fax:352 349411 Phone:353 21 4917600
Fax:353 21 4917699

Ferrero Group Page 17

© MarketLine
 A Progressive Digital Media business

John Carpenter House, John Carpenter Street, London, United Kingdom, EC4Y 0AN
T: +44 (0) 203 377 3042 | F: +44 (0) 870 134 4371 | E: reachus@marketline.com | W: www.marketline.com
Copyright of Ferrero SWOT Analysis is the property of MarketLine, a Progressive Digital
Media business and its content may not be copied or emailed to multiple sites or posted to a
listserv without the copyright holder's express written permission. However, users may print,
download, or email articles for individual use.