Synopsis

Ferrero Group (Ferrero) operated in the chocolate confectionery industry. The industry was facing
challenges related to changes in consumer needs and uncertainties in terms of price volatility and scarcity
of raw ingredients, primarily hazelnuts and cocoa. To achieve its ambitious economic goals in this
environment, Ferrero integrated various sustainability initiatives in its supply chain and grew the company
through vertical and horizontal integration. Advocating a vision of “sharing values to create value,” the
company set sustainability goals for 2020, which included controlling and being able to trace the supply of
raw ingredients, especially cocoa, palm oil, hazelnuts, and sugar. Could Ferrero maintain its leading
position in the industry and achieve its sustainability goals? To what extent could the sustainability goals
strengthen the company’s competitive position and move it toward achieving its financial goals?

LEARNING OBJECTIVES

This case allows students to understand the role of corporate social responsibility (CSR) and sustainability
in strengthening the competitive position of a company in a highly competitive and mature industry. In
particular, students will learn how a company should effectively implement such socially responsible
activities throughout its supply chain (e.g., vertical integration) and among its employees and other
stakeholders. The students will also have an opportunity to evaluate the impacts of an initial public offering
(IPO) on a non-market CSR and sustainability strategy, and its performance consequences.

1. What were the key success factors of the Ferrero Group? How was the company able to maintain its
leading position in the global chocolate industry?

2. What were the main challenges and the competitive situation in the chocolate industry? How did these
challenges affect the companies in the industry?

3. What were the benefits of integrating CSR activities and the goal of sustainability in the supply chain?
How would such integration affect Ferrero’s competitive advantages?

4. Was the vertical integration a successful solution for Ferrero? How was it going to change its
competitive positioning?

5. There were rumours that Ferrero would go public; if the company really did go public, would it be able
to achieve its 2020 goals? How?