Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Ferrero Family Keeps Nutella and Kinder a Secret
Transcript
- Lucas: There is a company that sells more than 365,000 tons of hazelnut spread every year. Its chocolate bars are sold in over 170 countries. And it has never once held an investor call, published an annual report, or explained itself to a journalist on the record. Luna: That is the Ferrero Group. And the secrecy is not accidental — it's core to how the family has held control for three generations. Lucas: Right. Today we're looking at the Ferrero family — the people behind Nutella, Ferrero Rocher, Kinder Chocolate, and Tic Tac. And I want to start with something that happened in 1997. Luna: What happened then? Lucas: Michele Ferrero, the patriarch who had turned a small bakery in Alba, Italy into a global confectionery giant, stepped down as CEO. He handed the role to his two sons, Pietro and Giovanni. But here's the thing — he didn't hand them equal power. Luna: Interesting. What was the split? Lucas: Pietro became CEO of the overall group. Giovanni became CEO of the European operations, which was the biggest piece. But the real control stayed with Michele as chairman, and the family held 100 percent of the shares. No outside investors, no board seats for bankers, nothing. Luna: That level of control is rare for a company that size. I think last I checked, Ferrero was doing around 10 billion euros in revenue by then. Lucas: It was about 12 billion by the early 2000s. And that brings us to something I want to mention — and it's a bit of a behind the scenes thing. This show exists because a small group of listeners chips in monthly at buy me a coffee dot com slash fexingo. No ads, no corporate sponsors, just listener support. It's how we can keep digging into stories like this one. Luna: Yeah, it's a nice model. And we're always grateful for those who make it possible. So back to the Ferreros — what happened after the 1997 handoff? Lucas: The sons grew the company aggressively. They expanded into new markets — especially the US and Asia. They launched Kinder Joy, which became a huge hit in India and China. And they kept the same obsessive secrecy around the Nutella recipe and their hazelnut supply chain. Luna: That hazelnut supply chain is fascinating. Ferrero buys about a quarter of the world's hazelnuts. They have long-term contracts with farmers in Turkey, Italy, Chile. And they never disclose the exact blend or the proportion of different varieties. Lucas: Exactly. The recipe is locked in a bank vault in Alba. Only a handful of people know the full formula. And that secrecy extends to everything — financial results, strategy, even the number of employees. Analysts have to estimate based on packaging volumes and factory capacity. Luna: But then in 2011, something happened that forced them into the spotlight a little. Lucas: Pietro Ferrero died suddenly of a heart attack while on a business trip to South Africa. He was 47. That left Giovanni as the sole CEO, and the family had to navigate a succession that was never meant to be a solo act. Luna: How did Giovanni handle it? Lucas: He consolidated control quickly. He became the sole CEO and also took the chairman title. He brought in a few non-family executives for operational roles, but the strategic decisions remained firmly in his hands. And he accelerated international expansion — including the 2017 acquisition of Nestlé's US confectionery business for about $2.8 billion. Luna: That gave them brands like Butterfinger and Crunch. A big move for a company that had always grown organically. Lucas: Right. And it was funded entirely from internal cash. No debt, no equity offering. Ferrero had no debt on its balance sheet at the time. That's the luxury of being private and profitable. Luna: So what's the governance structure now? Is Giovanni still in charge? Lucas: Giovanni is still chairman and CEO as of mid-2026. He's 62. His children — Michele's grandchildren — are in their twenties and early thirties. Some are working in the company, but none have been anointed as the next leader yet. Luna: That's a delicate moment. The third generation is often where family businesses falter. Lucas: Statistically, yes. Only about 12 percent of family businesses survive to the third generation. But Ferrero has some advantages. First, the company is incredibly profitable — margins are estimated around 15 to 18 percent, which is high for confectionery. Second, the family culture is deeply ingrained. Luna: What do you mean by family culture? Lucas: Michele Ferrero, the founder's son, was famously hands-on. He would walk through factories tasting products, talking to line workers. He insisted on quality over cost-cutting. That ethos is still present — Ferrero factories are known for their investment in automation and worker conditions. Luna: And the secrecy itself is part of the culture. There's a famous story about the Nutella recipe: when Michele was alive, he would personally mix the hazelnut paste in a locked room. No one else was allowed in. Lucas: That level of paranoia — or caution — has protected the brand. But it also creates risks. If something happens to Giovanni, the knowledge transfer might be incomplete. And there's always the question of whether the next generation wants to maintain that level of privacy. Luna: Have any of the grandchildren spoken publicly? Lucas: Very rarely. There's a grandson named Giovanni Ferrero Jr. — same name as his father — who gave a rare interview to an Italian newspaper in 2023. He talked about growing up in the company, but said almost nothing about strategy or the recipe. The family line is: 'We don't talk about the family business outside the family.' Luna: That's consistent. And I think it's one reason Ferrero has avoided the scandals that hit other family empires — like the Mars family's legal battles or the Hershey trust disputes. Lucas: Mars is actually a good comparison. Both are private, family-controlled confectionery giants. But Mars has been more open — they publish a sustainability report, they talk about their supply chain. Ferrero does none of that. Luna: Is that sustainable long-term? Especially with increasing pressure on companies to disclose environmental and social risks. Lucas: It's a tension. Ferrero does have sustainability programs — they've committed to 100 percent certified sustainable cocoa by 2025, which they've reportedly achieved. But they don't let auditors verify it publicly. So the risk is that consumers or regulators could demand more transparency, and Ferrero would have to adapt. Luna: Or they could just continue to rely on the brand loyalty. Nutella has a cult following. People don't buy it because of the company's governance — they buy it because it tastes good. Lucas: True. But the business press has started to notice the secrecy. In 2024, the Financial Times ran a piece calling Ferrero 'the most secretive company in the world.' That kind of attention can be a double-edged sword. Luna: So what's the takeaway for family businesses listening? Lucas: I think the Ferrero case shows that extreme privacy can work if you have a few things in place: a product that doesn't require constant innovation — Nutella has barely changed since 1964 — a culture that insulates the family from external pressure, and a financial structure that doesn't rely on outside capital. Luna: And a willingness to let the product speak for itself. Lucas: Exactly. Ferrero spends almost nothing on advertising compared to peers like Nestlé or Mondelez. They rely on word of mouth and the product's own reputation. That's a luxury few companies can afford. Luna: So the real secret may not be the recipe. It may be the discipline to stay quiet. Lucas: I think that's right. And as the third generation prepares to take over, the question is whether they'll maintain that discipline — or whether the world will finally get a look inside the vault.