NSRGY Nestle SA (PK)

By Manuela Mesco 

MILAN--Italian candy giant Ferrero International SA named its first nonfamily chief executive in two decades, as an ambitious effort to boost sales and expand its global footprint starts to make strides.

The privately held maker of Tic Tacs, Kinder eggs and Nutella--the hazelnut-based, chocolate-flavored paste--said Ferrero veteran Lapo Civiletti will take over as chief executive Sept. 1, replacing family scion Giovanni Ferrero. Mr. Ferrero will take on the position of executive chairman, where he will chart longer-term strategy, the company said.

Ferrero has long been overshadowed by its bigger candy and confectionery competitors, including Mars Inc. and Mondelez International Inc. But under Mr. Ferrero, the grandson of the company's founder, it has boosted sales and global market share in recent years--narrowing the gap with those better-known rivals.

Currently, Ferrero ranks as the world's No. 4 chocolate maker, behind Mars, Mondelez and Nestlé SA, and just ahead of Hershey Co., according to Euromonitor. But Ferrero has made significant gains, despite a big slowdown in chocolate sales that has buffeted other global players. Last year, Mondelez launched an unsuccessful bid to buy Hershey, in a deal that likely would have topped $25 billion, amid consolidation pressures across the industry.

Five years ago, Ferrero commanded 8% of the global chocolate market. It boosted that to 9.5% last year, just shy of Nestlé's 10%. Both Mondelez and Nestlé lost share in the same period, while Mars didn't grow as fast as Ferrero.

Earlier this week, Ferrero reported an 8% hike in sales last year, to 10.3 billion euros, or about $11 billion. That was thanks to growth for its core products, including Nutella and Rocher pralines, particularly in Europe. Four years ago, the company promised to hit 16 billion euros in annual sales by 2024. It has invested heavily in new machinery and plant expansion.

It has also been expanding through acquisitions in big, developed markets like the U.S. and Britain. Earlier this month, it agreed to buy Fannie May Confections Brands, a Chicago-based candy maker founded in 1920. Two years ago, it bought British brand Thorntons, which dates to 1911.

Behind the big push is Mr. Ferrero, the 52-year-old grandson of Pietro Ferrero, who founded the company in 1946. Michele Ferrero, Pietro's son, remained a looming presence at the business until he died in 2015. Giovanni took the CEO reins in 2011 after his brother died.

Since then, Mr. Ferrero has been credited with boosting the metabolism of the company by, for instance, cutting in half the time it takes to roll out new products. He has overhauled the company's organization, creating regional divisions aimed at catering to local tastes, instead of product-based business units. The moves were seen as a radical departure for a company that has been run largely the same way for 70 years.

Write to Manuela Mesco at manuela.mesco@wsj.com

(END) Dow Jones Newswires

March 30, 2017 09:50 ET (13:50 GMT)

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