4 Feb 2022
As you stock up on a jar to open on February 5th, World Nutella Day, it’s worth considering the impact the hazelnut and cocoa spread has had on our eating habits and how it’s become one of the most successful business stories ever. Ferrero, which owns the Nutella brand, has a fascinating history. How it’s grown and managed should be considered an object lesson in sound management and growth for many business students.
Ferrero, the company, has been a leading confectionery-maker for over seventy-five years. The Ferrero story began in 1946 with a small factory in the northern Italian town of Alba, Piedmont.
After World War II, cocoa became highly scarce. Ferrero solved this problem by creating a sweet-tasting paste made from hazelnuts, sugar, and small amounts of rare cocoa. The paste eventually became the original version of Nutella.
The first recipe paste was launched in 1946, shaped into a small loaf that could be sliced and spread on bread. The loaf was called ‘Giandujot’, named after a local carnival character. In 1951, the Giandujot paste transformed into a spreadable creamy new product known as SuperCrema.
In 1964 the SuperCrema identity was dropped, and Nutella was born. The original recipe was improved, creating the first-ever hazelnut and cocoa cream in a jar. The iconic pot, still used today, was launched in 1965 in Germany. By 1966 even sophisticated French palates began to develop a taste for the combination of nuts and cocoa.
By 1978 the Nutella product had become a worldwide phenomenon. A plant to create the paste was built and opened in Lithgow, Australia, near Sydney.
In 2005 the brand entered the Guinness Book of World Records. On May 29th, 27,854 people in Gelsenkirchen, Germany, took part in the “Largest Continental Breakfast Ever”.
On February 5th, 2007, an Italian American blogger Sara Russo mobilised worldwide Nutella lovers to celebrate the iconic breakfast hazelnut spread. Since then, World Nutella Day gets celebrated each year.
In 2011 Nutella reached the milestone of hitting ten million Facebook followers inside a year. The following year, 2012, Nutella breadsticks were launched in the USA.
In 2014, to celebrate 50 years, the website nutellastories.com was launched, and over 76,000 fans shared their stories and memories. Nutella is such a vital Italian product and export that Italy issued a commemorative Nutella stamp in 2014.
By 2015 the number of Facebook followers reached thirty million. Finally, in terms of epic milestones, the firm opened its first café in Chicago in 2017.
Ferrero SpA, commonly known as Ferrero Group or simply Ferrero, is now the second biggest chocolate producer and confectionery company globally.
Ok, so now we’ve covered the potted history (please excuse the pun), what can we learn from Nutella as an incredibly successful product?
How has it grown from a simple idea born out of providing tasty nutrition during scarcity and hardship to become one of the globe’s favourites and most recognisable brands and snacks?
A weighty thesis could get written on this fascinating business success story. Therefore, we’ve concentrated on aspects relevant to the businesses you might run today.
So here are a few observations that may provide a light bulb moment of inspiration for your business idea, its launch, and its growth.
The owner of Nutella, Ferrero, hasn’t tried to expand the range of the Nutella recipe. Since its first creation, it has remained true to its origins.
Ferrero hasn’t tried to develop a peanut butter version, replaced the cocoa with white chocolate, or created a hot drink version.
The founders experienced their Eureka moment back in the 1940s and built on the early success by concentrating on perfecting the taste, consistency and quality of their original breakthrough product. Nutella’s owners focused on quickly marketing its unique appeal locally and finding new overseas markets throughout the decades.
The various iterations of the product have been incredibly well-curated. Imagine the audible gasps in the boardroom when the firm considered launching a plastic pot of Nutella with breadsticks as an accompaniment. But that slight modification and addition to the tight range proved to be a massive success.
A small range of confectionery remains in place today. Nutella, Kinder Surprise, Tic Tacs and Ferrero Rocher are still the most prized assets.
Nutella was created by Pietro Ferrero in 1946. With his brother Giovanni’s help, Pietro initially sold the product locally in the solid loaves previously mentioned.
Once Pietro’s eldest son Michele took over the running of Ferrero SpA, Nutella took off internationally, and he relaunched and tweaked his father’s original secret recipe in 1964 into its easy-to-spread form. Michele’s new recipe was fiercely guarded. The company never held a press conference or allowed the media to visit a factory.
Seventy-five years after its beginnings, Ferrero SpA manufactures a niche product range, including Ferrero Rocher and Kinder. Michele, often regarded as the world’s most enigmatic Candyman, invented Kinder Surprise, Ferrero Rocher, and mint Tic Tacs.
In 2008 Michele Ferrero surpassed Silvio Berlusconi as Italy’s richest man, and his estimated wealth of $26billion at the time made him the 20th richest person in the world.
Tragedy struck when Michele’s son Pietro, who had taken over as Ferrero SpA’s CEO, died after suffering a heart attack in South Africa in 2011. Michele Ferrero died in 2015, aged 89. The current heir of the Ferrero dynasty is Giovanni Ferrero, Michele’s second son and the company’s acting CEO.
Despite being an attractive takeover target for multinational corporations, Ferrero has fiercely defended its independence and family heritage. Rather than be a target, it aggressively bought other competitors. In 2018 Ferrero became the third-largest confectionery company in the U.S. market after buying Nestlé’s confectionery business for $2.8 billion in cash.
Now there can be problems with family-run businesses. However, no one can deny that if the heirs are fully invested in the legacy and have grown up in the industry, they’ll be considerable and powerful assets. No one will protect the heritage more vigorously than family if they have the vision, pride and enthusiasm.
If not through family, you can create a similar relationship with senior management who share the same vision and values. Can you build that fierce loyalty at the top with a small team that pulls in the same direction?Sign up today
We’re all in a rush to get to market when we know we have a unique product or USP (unique selling point). But patience at the outset can reap the rewards.
Put yourself back in the 1940s, consider how the Ferrero family calmly and effectively pieced together a plan without all the modern tools at our disposal.
They relied on instinct, vision and hard work. But here’s an example of one issue the brothers got right from day one, which may have been through accident rather than design; they concentrated on their local market first.
They used their local area customers as a focus group while limiting the transportation and distribution costs. Any feedback would be immediate, giving them every opportunity to alter the recipe quickly.
Once convinced with the quality of the final product, the firm expanded to other cities in Italy, Europe and America. But this expansion took decades, and it’s worth noting the original SuperCrema spread that launched in 1951 only became Nutella in 1964.
If Coca Cola only manufactured cans of Coke, they’d still be successful. It’s 130 years old as a drink, but a staggering 2 billion servings of Coke are sold each day across 200 countries.
Sure, as a corporation Coca Cola is now a behemoth. However, the firm effectively invented the soft drink market, and over a century later, their original product is still the market leader.
Nutella also has impressive metrics. A jar of Nutella gets sold every two seconds, about 12 million bottles get sold each year, and over a quarter of the hazelnuts farmed and produced globally end up in a jar of Nutella. And the spread still accounts for over 20% of Ferrero’s sales.
We can learn key lessons from the history of brands such as Nutella and Coca Cola. If you only make one product, but it’s so ground-breaking and brilliant that consumers buy it between seventy and a hundred and thirty years later, you might not need to expand the product range to thrive.
Let’s take it down to practical levels. You might want to build the most outstanding restaurant in your city or the most exclusive salon employing the best stylists in the country. Or you might reinvent the wheel and have an industrial widget that will revolutionise an industry. A single venue or a one-product business might be the ceiling of your ambition.
Not everyone dreams of global dominance through multiple outlets and products. Creating that perfect salon or restaurant environment through building a fantastic reputation won’t happen overnight.
Pulling the entire process together to create a successful and profitable business is an incredible achievement that shouldn’t be overlooked or underestimated.
Nutella is one of the most recognisable global brands on planet earth, and it ranks in the top fifty according to a reputable brand ranking firm.
The jar is the simplest of designs and hasn’t changed much since 1965. Since the first launch, the name, font, and colours have hardly altered.
The new Nutella name announced in 1964 was an attempt to appeal to an international audience; nuts for an Anglo-America coolness and ‘Ella’ to give it a soft, Italian ending. There’s no strapline, just bold lettering on the jar.
Nutella’s marketing push has been discreet. The brand sponsored the Italian national football team in the late 1990s, helping to cement the link between Nutella and Italian national pride.
Finding a simple, unique name that can be your corporate identity and eventually extol the virtue of your brand shouldn’t be a painful process. There are many free to use name generators on the internet, and you can quickly do searches to determine if the domain names you want are unregistered.
Keeping family close
Limited product range
Getting the branding values right from day one
There are many textbook lessons we can take from this massive success story. But let’s not lose sight of practicalities; most businesses also require capital to grow. And that’s where our expert team of finance specialists come in.
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