Michele Ferrero, creator of chocolate-like spread Nutella and Italy's richest man with a fortune estimated at about $23.4 billion, has died after a long illness just two months short of his 90th birthday.
Ferrero, who created Nutella, Tic Tacs and Kinder Eggs, was in many ways the Willy Wonka of real-life chocolatiers, with a personal mythology that evokes the protagonist in Roald Dahl’s children’s tale. At home in his personal laboratory in northwest Italy, the legend goes, Ferrero took five years to discover how to bend the wafers that go into his Ferrero Rocher chocolates.
Publicity shy Ferrero spoke in the dialect of his native Piedmont region and died having never given a newspaper interview. Yet while avoiding the world's gaze, he built a multinational company with revenues in 2013 of €8.1 billion that competed with Nestlé, Mondelez and Kraft.
He was born in 1925 in Alba where the business still has its headquarters and the smell of Nutella from the factory perfumes the air. The town is near Turin, where Gianni Agnelli built the Fiat empire, and in a region known for its gastronomy. Barolo, Italy’s “king of wines”, comes from vineyards on the surrounding hills and in Alba’s woods in October you can find white truffles.
It was Ferrero’s father, Pietro, who laid the foundations of a business that would later become an international powerhouse, equalling Fiat in international reach, bigger than Hershey and only slightly smaller than Nestlé’s confectionery business by revenues.
Pietro’s great idea in the scarce postwar years was to create a chocolate-like sweet using cheaper hazelnuts, which were abundant in the countryside around Alba, instead of expensive cocoa. A kilo of so-called “pasta gianduja” cost the equivalent of 30 cents in today’s money compared with €1.50 for a kilo of chocolate.
By 1950, he had 200 trucks delivering gianduja to all of Italy. A few years later the number had quintupled, making it the biggest fleet outside of the Italian army.
Ferrero started in the family business when he was 20 and was leading it by 32. People who knew him say he added to his father’s idea of undercutting the fine chocolates market with products that boasted “more milk, less chocolate”. It was a neat marketing trick that kept costs down but also played to an emerging health-consciousness among consumers.
He also brought an innate understanding of how to sell internationally. The company launched in Germany in 1956 with Mon Cheri, cherry liqueur chocolates. The group now employs 21,600 people in 18 factories in Europe, Australia, Latin America and the US. It is the market leader in most of western Europe outside the UK.
But Ferrero’s greatest skill was knowing what children want. “Never patronise a child,” he is quoted as saying in the 2004 book Nutella, an Italian Legend by Gigi Padovani.
Ferrero’s aversion to publicity and risk led him to veto the idea of a bid for Cadbury in 2009, which was ultimately taken over by Kraft. His only acquisition was a Turkish hazelnut factory last year, aimed at securing supply of the ingredient precious to his Nutella.
Latterly, though, the business has been hit by the tragedy and uncertainty Ferrero always sought to avoid. His eldest son Pietro was killed in a cycling accident in April 2011, leaving the business without its anointed heir. His second son Giovanni, who once said he wrote poetry and novels in his spare time, has since taken over.
Giovanni took out full page interviews in Italian newspapers in 2013 stating that he did not intend to sell the business. Bankers in Milan said the newspaper advertisement followed an approach by Nestlé, which was duly rejected. Still, bankers do not rule out that with the death of his father more suitors will be making their way to Alba.
– Copyright The Financial Times Limited 2015
