Background on Ferrero Mexico and its Relevance
Ferrero, an Italian confectionery company, has been a significant player in the global market for over 70 years. Established in 1966, Ferrero Mexico has been a crucial part of the company’s international expansion. Known for popular brands like Nutella, Kinder Chocolate, and Ferrero Rocher, the company has built a strong reputation in Mexico.
Paolo Cornero, President and CEO of Ferrero Mexico
Paolo Cornero, the President and CEO of Ferrero Mexico and Central America, has been instrumental in driving the company’s growth in the region. With his strategic vision and leadership, Ferrero Mexico has consistently delivered double-digit growth in value and near double-digit growth in volume.
Strategies for Growth Amidst Weak Consumer Spending
Despite the challenging market conditions, Ferrero Mexico is optimistic about its growth prospects. The company aims to grow by 3% in volume and 7% in value by focusing on three key strategies:
- Strengthening Core Brands and Products: Ferrero Mexico plans to reinforce its most popular and iconic brands, ensuring their continued success in the market.
- Improving Distribution and Execution: The company is working on enhancing its distribution network, operational efficiency, and execution capabilities to maximize market reach.
- Innovation through New Product Launches: Ferrero Mexico is investing in research and development to introduce new products that cater to evolving consumer preferences.
Cornero stated, “Although our growth rate will be lower than anticipated, we still expect to grow by 2% to 3% in volume and 6% to 7% in value. We may be moving at a slightly slower pace, but we will continue to grow.”
Market Share and Historical Context
Cornero highlighted that Ferrero Mexico has been gaining market share according to Nielsen data, even as the overall market faces difficulties. He acknowledged that negative private consumption has been a recurring challenge over the past 31 years of commercial openness, but emphasized that Ferrero Mexico has consistently improved its performance.
“There is no specific reason for the current negative private consumption, as it’s a combination of factors like uncertainty, remittances, investments, and labor force dynamics,” Cornero explained. “We need to adapt to viewing these challenges from a long-term perspective.”
Private consumption has declined by 0.9% between January and April of this year, according to data from Mexico’s National Institute of Statistics and Geography (Inegi).
Trade Tariffs and Export Strategy
Cornero dismissed concerns about the impact of tariffs imposed by the Trump administration on Ferrero Mexico’s operations. The company’s exported products from Mexico are protected under the Trading Agreement between Mexico, the United States, and Canada (T-MEC).
Ferrero Mexico allocates 40% of its production to export markets, with 30% destined for the United States, 10% for Canada, Central America, and South America, and the remaining 60% for the domestic market. Key exports to the US include Nutella and Kinder Chocolate.
“By manufacturing in Mexico, our products are exempt from tariffs under the T-MEC,” Cornero explained. “However, there is uncertainty regarding a potential 30% tariff increase starting August 1st. We trust that these tariffs should not apply to products manufactured under the free trade agreement.”
Ferrero Mexico remains committed to its expansion plans and investments in the country, with an ambitious goal of increasing production by 150% at its San José Iturbide plant by 2028. The estimated investment is $350 million, with products like Kinder Sorpresa, Kinder Delice, and Nutella being manufactured in Mexico.
Joy of Moving: A Public Policy in Mexico
Ferrero Mexico and the Guanajuato state government have extended their partnership in the “Joy of Moving” program, which will be implemented in basic education schools across the state from 2025 to 2030.
Developed in Italy, the Joy of Moving methodology encourages active lifestyles among children through play and movement, fostering essential skills such as physical conditioning, motor coordination, cognitive function, and creativity.
Out of the 34 countries where Joy of Moving operates, Mexico and Italy are the only ones where the methodology has been integrated as a public policy.
Key Questions and Answers
- What is Ferrero Mexico’s growth strategy amidst weak consumer spending? Ferrero Mexico plans to grow by 3% in volume and 7% in value through strengthening core brands, improving distribution, and launching new products.
- How do trade tariffs affect Ferrero Mexico’s operations? Tariffs imposed by the Trump administration do not directly impact Ferrero Mexico’s operations, as their exported products are protected under the T-MEC.
- What is the Joy of Moving program, and why is it significant for Ferrero Mexico? Joy of Moving is a program developed in Italy that promotes active lifestyles among children through play and movement. Ferrero Mexico has partnered with the Guanajuato state government to implement this program as a public policy in Mexico’s basic education schools.
