Michele Ferrero: The reclusive real-life Willy Wonka

A canny entrepreneur and confectioner, a spoonful of Michele Ferrero's brand of benevolent capitalism could be just what we need.


Michele Ferrero remained a chocolatier all his life

"If the world were seeking a real-life Willie Wonka", says The Independent, "it would have struggled to get closer than Michele Ferrero", the Italian confectioner who seduced millions with Nutella, Ferrero Rocher, Kinder Eggs and Tic Tacs, who died recentlyaged 89.

Rather like Roald Dahl's candyman, Ferrero was a inventor of treats who remained "an enigmatic recluse" right up to his death on Valentine's Day (a fitting date, given Ferrero Rocher's status as the world's best-selling boxed chocolates).

Born in 1925 in Alba, "where the business still has its headquarters and the smell of Nutella from the factory perfumes the air", Ferrero inherited a thriving local business when his father, Pietro, died in 1949. At its heart was the famous chocolate and hazelnut spread, which, "though considered delectable by generations of children and adults, began as a shrewd business move", says The New York Times.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

At a time when cocoa was still rationed, Pietro came up with the idea of mixing in hazelnuts, which grew abundantly locally. He called the resulting paste Pasta Gianduja, after a carnival character famous in the region. But while Pietro found the winning recipe, it was his son's branding savvy that turned it into the world-conquering Nutella.

Within six years, Ferrero took the firm international, first with Mon Cheri, a cherry liqueur chocolate launched in Germany in 1956. Kinder chocolates arrived in 1968, the futuristic-looking Tic Tacs a year later, and Ferrero Rocher in 1982. The latter, notes The Independent, became a cult hit even among those who sniggered at its "questionable claims to be a preferred offering at diplomatic gatherings".

Today, the firm is the world's fourth-largest confectioner, valued at $30bn. But Ferrero himself remained a chocolatier all his life, forever tinkering with recipes in his personal laboratory, says the FT.

The legend goes that "it took him five years to discover how to bend the wafers that go into his Ferrero Rocher chocolates", which were inspired by the rock formations at Lourdes, where Ferrero a Catholic who kept statues of the Virgin Mary in all his factories and offices made annual pilgrimages.

Ferrero's aversion to publicity and risk kept the company firmly within the family, says the FT (see below). In the late 1990s, he handed over the reins to his two sons, Pietro and Giovanni, who acted as joint chief executives, before Pietro's untimely death from a heart attack in 2011.

The company has adopted "a more open stance in recent years" under the direction of Giovanni, says The Independent. However, one rule laid down by Ferrero seems to abide: "only on two occasions should the papers mention one's name birth and death". Ferrero would probably have been happy with the tributes.

Benevolent capitalism that never saw a strike

But the plan thought to be advanced by Ferrero's sons was swiftly overruled by the patriarch. A great pity for Cadbury's aficionados: it seems unlikely that Michele Ferrero would have lacked the respect to mess with the quality of the product.

Had the deal gone ahead, it would have astonished Milan's tight-knit financial community, where "Fortress Ferrero" is known for being in the words of a partner at a local leading law firm "unbankable", says Rachel Sanderson in the FT. "Bankers and lawyers talk of making repeated forays to Alba, only to be turned away on any proposition." With organic growth its mantra, "the only acquisition the group has ever made was a Turkish hazelnut supplier, bought last year".

The death of the billionaire patriarch has "reignited speculation of a possible change of strategy", but those familiar with the group don't see it any time soon. As Giovanni Ferrero remarked in 2013, when Nestl was rumoured to have made an approach: "we were born a family company and intend to stay that way".

The firm may be secretive, "but it has little to hide", noted John Hooper in The Guardian in 2011. Once named as the world's "most reputable corporation", it has "an excellent record of social and environmental responsibility" and "industrial relations are such that it has never had a strike".

Fererro's approach is "believed to be heavily influenced by his Catholicism", says Cahal Milmo in The Independent. Although a perfectionist, he valued the loyalty of his workforce and paid wages above the national average, as well as generous perks. We could do with more of his "brand of benevolent capitalism".