Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Ferrero Family Built a Nutella Empire Without Going Public
Transcript
- Lucas: You know the Nutella jar in your pantry? The one with the red lid and the white label? Luna: I literally just had some on toast this morning. So yes. Lucas: Good. Now imagine that the company behind that jar — Ferrero — has never once reported its earnings to the public. No quarterly calls, no annual reports, no SEC filing. They are one of the largest private companies in the world, with revenue north of $15 billion, and they operate like a ghost. Luna: It's remarkable. They make Nutella, Kinder, Tic Tac, Ferrero Rocher — all household names — and yet you can't look up their profit margin on Yahoo Finance. Lucas: Exactly. And that secrecy is very much a family decision. The Ferrero story begins in 1946 in Alba, a small town in Piedmont, Italy. Pietro Ferrero was a pastry maker, and he created a paste made from hazelnuts, sugar, and a little cocoa — because cocoa was expensive after the war. That paste became Nutella. Luna: So the origin story is actually a supply chain hack. Use hazelnuts to stretch the cocoa. Lucas: Right. And that pragmatism runs through every generation. Pietro died in 1949, just three years after starting the company. His brother Giovanni took over, but it was Pietro's son, Michele Ferrero, who truly built the empire. Michele ran the company from 1957 until his death in 2015. Luna: Michele is a fascinating figure. He was famously reclusive — rarely gave interviews, insisted on total privacy. But he was also a product genius. He invented Kinder Surprise, Nutella's spreadable format, Tic Tac mints. Lucas: He was also paranoid about secrecy. Ferrero's factories are designed so that different production lines are separated. Employees only know their own part of the process. The recipe for Nutella is locked in a bank vault. Michele used to say, 'The company must be as secret as the Vatican.' Luna: And that secrecy extends to the ownership structure. Ferrero is held through a complex web of holding companies, mostly in Luxembourg. The family owns virtually all of it. Lucas: That structure is key. When Michele passed away in 2015, his son Giovanni Ferrero took over as CEO. Giovanni was 39 at the time. But here's the twist: Michele had planned the succession meticulously. He had groomed both of his sons — Giovanni and Pietro Jr. — for decades. But in 2011, Pietro Jr. died suddenly of a heart attack while on a cycling trip in South Africa. Luna: That must have been devastating. And it left Giovanni as the sole heir. But Michele didn't panic. He had already put governance structures in place. Lucas: Exactly. By the time Michele died, the company had a board with independent members, a clear ownership structure through the Luxembourg holding, and a family council that separated ownership from management. Giovanni became CEO, but he doesn't own the company outright — it's held by the holding company, which is owned by the family. Luna: And Giovanni has continued the strategy. He made a big move in 2017, acquiring Nestlé's US confectionery business for $2.8 billion. That gave Ferrero brands like Butterfinger and Crunch. Luna: But even with that acquisition, they remained private. No IPO, no debt from the deal — they paid cash. Lucas: That's the Ferrero way. They almost never borrow. They grow slowly, reinvest profits, and avoid the pressure of quarterly earnings. Compare that to a public company like Mondelez, which owns Cadbury and Oreo. Mondelez has to constantly manage expectations, cut costs, buy back shares. Ferrero doesn't have to do any of that. Luna: But isn't there a downside? I mean, staying private means you can't use stock as currency for acquisitions. You can't attract top talent with equity. And you have no liquidity for family members who want to cash out. Lucas: All true. And Ferrero has addressed some of those concerns. They pay dividends to family shareholders. They have a strong family office that manages wealth. And for acquisitions, they use cash and debt from banks — they just don't issue stock. As for talent, they pay high salaries and offer bonuses. Not everyone needs stock options. Luna: So the trade-off is control. The family keeps 100 percent ownership, no activist investors, no hostile takeovers. They can think in decades, not quarters. Lucas: And that long-term thinking shows in their supply chain. Take hazelnuts. Ferrero uses about 25 percent of the world's hazelnut supply. They've invested heavily in Turkey, where most hazelnuts are grown, and they've even started buying farms in Chile and Georgia to diversify. That's not a quarterly move — that's a 50-year plan. Luna: It's also a hedge against climate change. Hazelnuts are sensitive to temperature and disease. By controlling the supply chain, they ensure consistency. Lucas: Right. And they've done the same with cocoa. They source from their own programs in West Africa. It's vertical integration, but quietly — they don't brag about it. Luna: I think that's the Ferrero brand in a nutshell. Quiet competence. No drama. Just selling billions of little chocolates. Lucas: And that raises an interesting question for today, July 2nd, 2026. As more family businesses consider going public — we've seen IPOs from companies like Arm and Instacart in recent years — Ferrero stands as a counterexample. They've proven you can build a global empire without ever ringing a bell. Luna: But is that model replicable? Most businesses don't have a product as iconic as Nutella. And most families don't have the discipline to stay private for three generations. Lucas: I think it's rare. But it's a useful thought experiment. If you're a family business owner, would you trade growth for control? Ferrero's answer is clearly yes. They could have gone public anytime in the last 30 years and made billions. But they chose privacy over liquidity. Luna: And that's a choice we don't talk about enough. The default assumption in business is that bigger is better, and that the path to scale involves public markets. Ferrero challenges that. Lucas: Exactly. And you know, it's conversations like this that remind me why we do this show without any ads. We don't have to answer to sponsors or chase listener numbers for ad revenue. It's just the story and its value. Luna: Yeah, and that's a choice we're proud of. If these discussions have given you a new angle on your own work or just made you think differently, that's the goal. If you want to support that independence, there's a link — buy me a coffee dot com slash fexingo. No pressure, just an option. Lucas: Absolutely. And now back to the Ferrero story. One more thing that's often overlooked: how they handle the next generation. Giovanni Ferrero has three children, but none of them are in the business yet. The oldest is in her early 20s. Giovanni has been clear that they must work outside the company for at least a few years before joining. Luna: That's a common rule in family businesses. It builds credibility. But it's also risky — what if they decide they don't want to join? Lucas: Then they don't join. The family has a saying: 'The company does not belong to the family; the family belongs to the company.' If a family member isn't capable or willing, they can be a shareholder but not a manager. That's a healthy separation. Luna: And they have a strong board to enforce that. The board includes independent directors like Francesco Caio, a former CEO of Poste Italiane. So there's oversight. Lucas: Right. So the Ferrero model isn't just about staying private. It's about building an ownership structure that can survive family drama, death, and changing markets. That's the real lesson. Luna: I think that's what makes this story so compelling. It's not just about chocolate. It's about how to design a business that lasts. Lucas: And that's the question we'll leave you with. Is your business designed to outlive you? The Ferrero family has been asking that question for 80 years. And so far, the answer is yes.