When the integration between Nestlé and Ferrara is completed, the Nestlé logo will be taken off from all of its original sugar and chocolate confectionery brands, and all the US candy factories previously owned by Nestlé will be rebranded as Ferrara, according to Patricia Bowles, communications manager at Ferrara.
Will Ferrero bring Nestlé candy brands to India?
Ferrero reportedly plans to bring some of its recently acquired candy brands, especially those in the sugar confectionery space, to India as it aims to achieve $1bn in sales from the country in 10 years, according to livemmint.com. The company wants to make India a product development and export hub.
The acquisition of Nestlé US candy business added at least nine sugar confectionery brands to Ferrero, including SweeTarts, LaffyTaffy, Nerds, FunDip, PixyStix, Gobstopper, BottleCaps, Spree and Runts.
ConfectioneryNews is waiting for a comment from Ferrero’s headquarter on which brands will be used to target the Indian market.
Bowles noted Ferrero’s reformulation plan starts with Butterfinger and Crunch because these are iconic brands. However, “they have not been selling very well for many years… [Nestlé’s] chocolate business has been declining, and for some brands, even by double digits,” she said.
“Nestlé USA’s focus is on nutrition and health food. They are working on pet food and waters, and they have a new vision that they did not believe candy could follow,” added Bowles, who had worked at Nestlé for 27 years before joining Ferrara.
She told ConfectioneryNews at the recent Sweets and Snacks Expo in Chicago that Ferrero will remove molasses and TBHQ (a preservative that helps keep peanut products fresh) from Butterfinger, and increase cocoa percentage from 20% to 25%.
“[Ferrero] is also going to add metalized film to the packaging to naturally bring about a fresher chocolate product over time… they are taking the pack count down to 18 bars from the original 24 bars [in retail], so they could turn the velocity faster which helps deliver a fresher product to the consumer,” said Bowles.
The Crunch brand will go through a similar reformulation process like Butterfinger, added Bowles.
When Ferrero finishes swapping the ingredients, each Butterfinger and Crunch bar will be under 200 calories, said Bowles. All the new products are expected to hit the US market in Q1 2019.
Cocoa supply chain
The question is, when Butterfinger and Crunch switch their cocoa supply chain from Nestlé’s Cocoa Plan to Ferrero’s, will their sustainability be affected?
Bowles said, “the supply chain will change over time. We’re only six weeks in [since the Ferrero’s acquisition of Nestlé], that’s why we’re still using cocoa beans from Nestlé under a transfer service agreement. This is a way for us to transition these brands out of Nestlé and into Ferrara.”
She also noted Ferrero, as their new parent company, will play a bigger role in making Nestlé’s chocolate products since Ferrara doesn’t play in the chocolate category.
“When you look at the cocoa beans Ferrero is sourcing, their standard is above anything that we’ve been doing at Nestlé,” she added. This is despite the fact that both companies use third-party organizations including Fairtrade and UTZ to monitor their sustainable cocoa sourcing progresses.
According to Ferrero’s corporate social responsibility report, half of its cocoa beans were certified as sustainable in fiscal year 2015/16. The Italian chocolate maker also set 100% sustainable cocoa target by 2020. While Nestlé has not set a goal, its sustainability program covered around 35% of its total cocoa supply in 2015.
Ferrero 2.0: the sole candy maker among top three companies
Ferrero is currently the third largest confectioner in the US following Mars and Hershey, according to Euromonitor.
The company could further strengthen its position as a confectionery leader within the country as Mars and Hershey are actively investing in emerging snack brands.
“We still have plenty to do in our confectionery business… and we have nothing on the plan for snacks at the moment,” said Paul Chibe, the president of Ferrero USA.
“Ferrero USA solely focuses on candy,” said Bowles. “We’re going to receive millions of dollars [from Ferrero] to improve our product level and advertising to really bring the consumer back to enjoy their permissible indulgence. This is Ferrero 2.0, a new day for the candy market.
“A rising tide raises all the boats. So you are going to see all companies setting a new standard for quality in this industry,” she added.