Nutella lovers around the world have no doubt heard of the death of Italy's chocolate king, Michele Ferrero. Even my daughters, who seldom read the business pages, knew the sad news before me. The man who invented Nutella, the yummy chocolate-hazelnut spread loved by children and disliked by dieticians and dentists, died in February leaving behind a fortune of NZ$33 billion and a story that will hopefully form the basis of business textbooks of the future.
Michele Ferrero took over his family's confectionery business in 1957 and, over a 60-year period, turned it into a giant multinational, generating annual revenue of NZ$12 billion from the sale of 365 million kilos of Nutella and more than 20 other confectionery lines (including Kinder Surprise eggs, Tic Tac mints and my favourite, Ferrero Rocher chocolate pralines). How could a simple sweets business generate so much wealth, making its owner the richest man in Italy?
Ferrero's success story is particularly appealing because it is based on some simple and timeless beliefs. When Michele first took over the business, he wrote a letter to his employees pledging to "devote all my activities and all my efforts to this company" and assuring them that he would only feel satisfied once he had managed "with concrete results, to guarantee you and your children a safe and tranquil future". He insisted that the company should "always do something different from the others" and that nothing should be rushed - he recognised good things take time.
His people were everything to Ferrero and they rewarded him accordingly. He sacrificed profit margin in order to pay them well, arranged transport to and from his workers' villages; he kept them employed during cyclical downturns and provided free medical care and other welfare services including regular company outings. Under Ferrero's leadership, there has never been a strike or any union strife, somewhat unusual for an Italian business. Many of his staff would work around the clock alongside Michele, experimenting and tasting new formulas and products until they were perfect (well, somebody had to do it!).
Many business owners talk about doing things that are "different"; Ferrero walked the talk. The basic paste that is Nutella - ground hazelnuts mixed with cocoa - was a well-known product that had been produced in northern Italy since Napoleonic times. It was traditionally made into a candy called gianduia which was like a large loaf of hard butter.
After World War II, with chocolate shortages and a lack of money for luxury items, Ferrero set about creating a new product by adding enough vegetable oil to the gianduia to make a spread. This spread, Nutella, was unlike anything on the market and has never been replicated due to its recipe remaining as secret as Coca Cola and KFC's fried chicken. It was sold in jars, so a little could be spread on a piece of bread and feed a family of six for weeks.
Another innovation came later with Mon Cheri, a range of cherry-liqueur chocolates. In marketing these delicacies in post-war Germany, he realised that selling them in their usual boxes made them too expensive. So he looked for a way to give chocolate to the most people in the most economical way possible. The solution? Each Mon Cheri was sold singly - as a delectable cherry and chocolate mouthful.
As for taking his time, he certainly maintained his own pace, doing things only when the time was right. He waited decades before launching Nutella into the US, knowing that he would be competing directly with national favourite, peanut butter. He reportedly spent five years perfecting the crunch and the curve of the wafer inside Ferrero Rocher chocolates and he was prepared to wait years for the concept of Kinder Surprise - little chocolate eggs with a plastic toy inside - to catch on in a market that expected chocolate eggs to be large and available only at Easter.
Taking your time, finding your competitive advantage and caring for the people who work with you - a simple recipe for a sweet success.
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