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How Nutella maker Ferrero is spending billions to build a candy empire in America
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00:0218 million pieces of chocolate roll off production lines every day at this factory in Illinois.
00:08How many times a day do you get to try chocolate?
00:11Sometimes it's multiple times a day.
00:13You have to, right? Yes.
00:16Behind these popular American brands is an Italian company, Ferrero.
00:21When I tell people I'm from Ferrero, the first thing that they always say 100% of the time is,
00:25oh, Ferrero, they make the little golden balls. Yes, we do.
00:28We also make Nutella and Tic Tac and Crunch and Baby Ruth and Halo Top ice cream and Blue Bunny
00:33ice cream.
00:34Ferrero has been on a shopping spree, snapping up American favorites and pouring money into new factories,
00:41all to grab a bigger bite of the $55 billion confectionery market in the U.S. that's very different from
00:48Europe.
00:49U.S. tends to prefer milk a little bit more than dark chocolate.
00:52Americans love peanut in a way that Europe in particular doesn't really.
00:56Trends like that are forcing Ferrero to take risks.
00:59The company launched an entirely new flavor of Nutella just for North America for the first time in more than
01:0760 years.
01:08It has also invested in a U.S.-based candy lab, betting big on innovation.
01:13I want to say that is salted caramel and that's marshmallow.
01:18We're actually starting with the individuals that have worked at those Michelin star restaurants
01:23to develop our ideas and to eventually bring them onto our factory lines.
01:28So we went to the heartland of American manufacturing to find out what foreign brands like Ferrero are doing to
01:35get an edge
01:35and why the U.S. is the biggest candy market in the world.
01:42Ferrero has quietly been building a chocolate and snacks empire in the U.S.
01:47But currently, it's the third largest confectionery business in the world behind Mars and Mondelez International.
01:54So how can it catch up with the competition?
01:57I think Ferrero takes a very different approach, which is buy well-established love brands and then turn them back
02:03around.
02:04In fact, this factory in Franklin Park, Illinois, belonged to Nestle.
02:09But in 2018, Ferrero bought its U.S. confectionery business for $2.8 billion.
02:16OK, so we've got a lot of stuff to put on before we can head in there.
02:20They're earplugs because it's loud.
02:22Goggles, I assume, for splatter.
02:25Hard hat and steel-toed boots in my size.
02:34OK, so after like 10 minutes of putting on things, I'm all suited up.
02:39Head to toe and ready to go in.
02:42And even though everything we were wearing was brand new, we had to walk through sanitizing stations several times.
02:50And it's not as easy as it looks.
02:55Yes! I made it!
02:59You didn't hold the handrail.
03:02It's OK. It's all right. It's OK.
03:05I failed.
03:06Today, the folks who run the show here are Italians.
03:09Like Robert Poe, who was born and raised in Alba, where Ferrero is based.
03:15Like, does the whole town just work at Ferrero?
03:17Yeah, practically.
03:18There's about 35,000 people in Alba.
03:23And probably about 5,000 work for the company, so you can imagine.
03:26But in here, Ferrero is still producing American classics.
03:31Like Baby Ruth, made here since the 1960s.
03:35Well, the best advantage for us to have a plant in the U.S. is to be here.
03:41And the size of the consumers here is a very attractive point.
03:47So I believe in the U.S., we will expand more than anywhere else in the world.
03:52That's become Ferrero's playbook in America.
03:55Don't erase what people love.
03:57Instead, help it grow.
04:00So we're now going to head into Fannie Mae, which is a premium American chocolate brand that's 106 years old.
04:07And Ferrero bought it in 2017 and was their first American acquisition.
04:12For generations, Midwestern families have come here for holiday gifts and boxes of chocolate.
04:19We're really American pralines built around the American palate.
04:23And you look at our Pixi, it's still the same recipe that we made in 1946 we make today.
04:29So, so far we've seen a lot of the chocolates that you can find at a grocery store.
04:33But this is a more premium selection that I can put together myself.
04:37I love dark chocolate. Can you help me pick a few?
04:40The brand's value went beyond the numbers.
04:43It was more a symbol of Ferrero's growing commitment to this country.
04:47When Ferrero purchased us, I think we had way more products.
04:52I think we got really focused on the right products.
04:56You know, we innovated against the right things.
04:59They also offered us a chance to get even beyond Chicago.
05:02Since then, Ferrero has added many household names, like Famous Amos, Little Brownie Bakers, and Keebler.
05:11And last year, the group snagged W.K. Kellogg's for $3.1 billion, bringing in cereals like Fruit Loops and
05:19Frosted Flakes.
05:20They're sweet. They're crunchy. They're great.
05:25We have spent over $5 billion in the last five years on investments within the U.S.
05:29So we are investing heavily, heavily in U.S. manufacturing.
05:32With more than 50 brands, including luxury chocolates, candy, mints, cookies, and breakfast cereals, the third generation business is still
05:42growing.
05:43It's nearly doubled its revenue since 2018.
05:47Today, the company's president, Giovanni Ferrero, is the second richest man in Italy.
05:53And those closest to him told us that it's become a personal mission to crack the U.S. market.
05:59Mr. Ferrero comes to the United States frequently.
06:02He will literally bring hundreds of innovations to the U.S. every year.
06:06Try this. Try this. What do you think? Gather input here. Gather input from consumers.
06:10But for Ferrero, manufacturing in America has been tricky.
06:14At the national level, again, there's a lot of push and excitement when we say we're going to invest in
06:19the U.S.
06:19So I think that part has gotten a little bit easier.
06:22The parts that have gotten tougher, I would say, it's more expensive to bring equipment in, for example.
06:27It's a little bit of a challenging regulatory and tariff environment.
06:30Let me put it this way. So some of the equipment was very obsolete.
06:34We brought a lot of equipment from Italy, from Germany.
06:37We have spent a lot of money to improve also the structure of the place.
06:42Buying beloved brands and upgrading their factories is just one growth strategy.
06:49Ferrero is also trying to decode American taste buds.
06:52By investing in a 45,000-square-foot innovation lab in downtown Chicago.
06:58Effie Nestred led us through this restricted area.
07:01Is it open to the public?
07:03It absolutely is not.
07:04So this is top secret. I love it.
07:06It's extremely top secret.
07:08I was always one of the kids that would play with my food.
07:11And eventually, I just kind of started to understand that you could do that for a living, that someone would
07:18actually pay you money.
07:19Here, she oversees a team of eight, including pastry chefs.
07:24I've been working with chocolate my whole career, and it just never ceases to not interest me, to not capture
07:29my imagination.
07:31At any given time, they're working on more than 100 products, tinkering with textures, flavors, and ingredients.
07:39I would say something that is really critical in a role like this is to just make sure that you
07:44don't close off any ideas,
07:46that you always make sure that you'll at least taste everything, generally at least twice.
07:52They even put our taste buds to work.
07:54We were handed three unlabeled samples of butterfinger coating and challenged to guess each flavor.
08:01If you try it, close your eyes and just try it, and it takes you back to a memory, a
08:07childhood memory.
08:08French toast.
08:09Perfect.
08:10Check.
08:10That one was easy.
08:13I want to say that is salted caramel, and that's marshmallow.
08:18I can be a tester.
08:19Or a tester, whatever.
08:22Through experiments like these, they've identified trends, some more obvious than others.
08:28American consumers love sweet things.
08:30A lot of times we will get comments of, I love it, but there's something off.
08:34And sometimes if you adjust the sweetness, it's exactly what they wanted.
08:38One, two, three, and then gently.
08:44Yes.
08:45Perfect.
08:45Oh, my God.
08:46You can work with me.
08:48Americans are also big on nostalgia, something Ferrero is now tapping into.
08:53In chocolate especially, what you were exposed to when you were young tends to carry forward to when you're mature
09:02as far as those products come.
09:04So again, you might eat French toast every weekend with your family at home, and then you go into your
09:10local grocery store and you find a Butterfinger French toast.
09:14Still, one of their biggest best sellers in the U.S. isn't American, but a Ferrero original, Nutella.
09:20In fact, it was their very first product.
09:25It all started in 1946 in a small town in Italy called Alba.
09:30Back then, the country was reeling from the devastation of World War II.
09:35Cocoa was scarce, and chocolate was expensive to make.
09:39So two brothers, Pietro and Giovanni Ferrero, turned to an ingredient that grew in abundance, hazelnuts.
09:46They mixed them with sugar and the little coca they could find to create a solid sliceable loaf called John
09:53Duyo.
09:54They wrapped it in foil and sold it around town, where people would slice it onto bread.
09:59That post-war recipe kept evolving.
10:02Until in 1964, Ferrero launched the first jar of Nutella.
10:10These days, it makes 365,000 tons a year, equal to the weight of the Empire State Building.
10:18But now, it's trying to localize that taste for U.S. consumers with its latest creation, Nutella Peanut.
10:27About 90% of U.S. households have peanut butter in their pantries.
10:31So Ferrero decided to make this its first new flavor since 1964.
10:36It took the company about five years to get the recipe just right.
10:41And it invested $75 million to build the new Nutella peanut line.
10:46And right now, we're running, as I mentioned before, 300 jars a minute.
10:50So you can see how fast that goes.
10:53Does it ever jam up?
10:54It do.
10:55And then how long does this take you to fix it?
10:59Usually, I would say a minute.
11:01So I'm going to be pensive a little bit.
11:03But usually, it's really fast.
11:04Since January, they've already produced more than 7.5 million jars of Nutella peanut.
11:10To avoid any supply chain disruptions, Ferrero buys the peanuts from the U.S., mostly from Georgia.
11:17They're also used in other products like Baby Ruth and Butterfinger.
11:22Really crunchy and crispy at this stage.
11:24Yeah.
11:25Amazing.
11:25Can I have more?
11:26Absolutely.
11:26Awesome.
11:27Thanks.
11:28In fact, this factory processes roughly 24 tons every day.
11:34That's about the weight of six African elephants.
11:39Ferrero also uses about a quarter of the world's hazelnuts in some of its signature products.
11:45Most of that supply used to come from Turkey, the world's largest producer.
11:50But in 2019, reports surfaced that some of those farms used child labor.
11:57Ferrero told us since then it's improved traceability throughout its supply chain, while also diversifying its sourcing.
12:04I would say a lot of our nuts are grown in the U.S., especially in Oregon, where we send
12:09most of our nuts into our Nutella facilities and our Rocher facilities.
12:11Since 2020, Ferrero says it has tripled its use of American ingredients, including raisins from California.
12:19And the bulk of its eggs, milk and sugar supplies also come from American farms.
12:24Sourcing locally not only helps Ferrero avoid supply chain disruptions, it's also betting that the Made in America label will
12:33appeal to shoppers.
12:35But not every ingredient can be found here.
12:38Clearly the U.S. can't grow chocolate.
12:40We don't have, you need to be in a rainforest climate, so our chocolate still comes from outside.
12:44Ferrero's cocoa beans mainly come from West Africa and end up in Bloomington, and we decided to head there.
12:51So we're an hour into this drive and just seeing a lot of wind turbines and silos and farmland so
12:58far.
13:03Bloomington has historically been a college town.
13:06But since 2018, manufacturing jobs have increased 150% with investments from electric vehicle companies and, of course, Ferrero, which
13:15bought drops to the area.
13:17Ferrero's chocolate factory here is enormous.
13:20The middle six silos right here are for cocoa liquor. Each one holds about 45,000 kgs of cocoa liquor.
13:29On the very end, the four silos, two of them are for dark chocolate.
13:34At any given time, this place stores upwards of 720,000 kilograms of chocolate.
13:41That's as much as eight fully loaded Boeing 737 passenger jets.
13:46We were not able to see how that chocolate is made. That is obviously a top secret, but all we
13:52saw were these massive tanks and it smells like chocolate in here.
13:55This chocolate is also used for Kinder, which has around 30 products worldwide, such as eggs and Bueno bars.
14:02So when you think about from a global powerhouse perspective, Kinder should be eventually in the U.S. the number
14:09one chocolate brand.
14:10So Ferrero decided to start producing Bueno bars locally by building its first U.S. factory from the ground up.
14:17To make that growth both economically viable and to have the right type of local market insights, we have to
14:22build facilities in the U.S.
14:25First, the wafers are baked until they're crispy. Then the signature hazelnut cream is piped inside.
14:31We got to try it as soon as it came off the line.
14:35Without the chocolate yet, the hazelnut is really cutting through.
14:38Oh yeah.
14:39The bars are then coated with a thin layer of chocolate.
14:43Behind me are the rejects and I would happily eat even things.
14:47While the basic recipe stays the same, European candy makers often tweak ingredients in the U.S.
14:54Take milk chocolate. In Europe, it needs at least 25% cocoa solids. In the U.S., just 10%
15:02chocolate liquor.
15:03That's a mixture of cocoa solids and cocoa butter.
15:07Many brands in the U.S., including Ferrero, also use compound chocolate in some of their everyday candy.
15:13It's cheaper because it's made with vegetable fats rather than cocoa butter.
15:18If they're added, then the product no longer meets the standard of identity for chocolate.
15:24Sometimes you'll see these labeled as chocolate flavored.
15:28And you have to be a bit careful because there are some very high quality coatings that are manufactured.
15:34So just because it isn't real chocolate doesn't necessarily mean that it's an inferior product.
15:41Europe has also long banned several preservatives and artificial colors that were still allowed in American candy.
15:50President Trump and I are going to stop the mass poisoning of American children.
15:55Now, as Washington pushes companies to clean up ingredient lists, Ferrero says, as a European company, it's already ahead of
16:03the curve.
16:04We obviously will follow any regulation that's mandated by the government.
16:08But I would say relative to many of our competition, the impact of the Make America Healthy Again regulatory pushes
16:14is less severe on the Ferrero portfolio.
16:17Once the bars are ready, they are wrapped, packed and boxed up, mainly by machines.
16:23But chocolate factories haven't always looked like this.
16:27Historically, confectionery, chocolate and confectionery manufacturing has involved a lot of handwork.
16:34So there were large numbers of people involved.
16:37And nowadays, a lot of that's been replaced with automation, robotics, especially in packaging.
16:44We will also still need the individuals to be more skilled in operating the machines.
16:48And that's why they haven't stopped hiring, growing from 300 employees a decade ago to more than 5,000, a
16:57trend that's increasingly rare in the U.S.
17:01While President Trump has promised more manufacturing jobs in the United States, they're actually declining and they're shifting from high
17:11labor intensive jobs to more mechanized ones like the ones we see here.
17:16But by continuing to hire locally, Ferrero is turning Made in America from a label into a business strategy.
17:24So is Ferrero's bet on North America paying off?
17:28Well, this region now makes up about 15% of the company's portfolio, compared to just 4% about a
17:35decade ago.
17:37Since 2017, U.S. revenue has grown from about $600 million to roughly $3 billion.
17:45Faster than its main competitors.
17:48We are today at Ferrero where Coke and Pepsi were in the 1920s, which is starting to introduce to everybody
17:54in the economy to become a ubiquitous, omnipresent powerhouse.
17:59Winning over America is one thing.
18:01Staying ahead is another.
18:03And the next big breakthrough may come from a growing wave of craft chocolate makers.
18:08Those transforming cacao from bean to bar.
18:13Early in my career, there may be what we call six primary bean processors that take, you know, raw cocoa
18:20beans and process them into chocolate.
18:23And now there in North America, there are something like 350.
18:27The advantage of these small manufacturers is that they can be very innovative.
18:33And I think even the large companies are looking to these smaller companies for some of those innovative ideas.
18:41But for lifelong employees like Robert, Ferrero's success is about more than sales.
18:47It's personal.
18:49All my relatives, my wife, my son, everybody, when they go into a store, they fix the display.
18:54They put the jars in the right way.
18:55And the kinder chocolates are all aligned.
18:58They remove the items that were put there by mistake.
19:01Because this is us.
19:13Any excuse to eat chocolate before noon?
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