(Bloomberg) -- Ferrero SpA wants to woo shoppers in the world’s top chocolate consumer to grow its Kinder brand.
The maker of Nutella has already expanded Kinder sales in the US to more than $500 million in the past five years, Catherine Bertrac, a senior vice president in charge of the brand in North America, said in an interview. It now wants to turn it into a $1 billion business.
The Italian candy maker is capitalizing on changing tastes in the US, which consumes more than twice as much chocolate as second-ranked Germany, according to consumer researcher Euromonitor International. Chocolate remains a relatively cheap treat, with demand holding up even as inflation hits American pockets.
“The new generation of consumer has different expectations,” Bertrac said. “They’re expecting a different experience, different quality, so bringing Kinder — which is a different kind of chocolate: creamy milky center, so very smooth, very tender, melting in the mouth — is a different experience than Hershey.”
Ferrero is already selling its Kinder Joy, Kinder Bueno and Kinder Seasonal lines in the US, and it plans to release Kinder Chocolate in August, according to Bertrac. That will help boost a brand that already racks up $7 billion in sales around the world every year.
To support the company’s US growth, Ferrero is expanding its manufacturing facility in Bloomington, Illinois, and it’s also opening a new innovation center in Chicago.
Commodity Costs
It’s not all good news for Ferrero. Commodity costs are rising and the threat of an El Nino weather pattern, which could disrupt sugar and cocoa supplies, could make things worse, squeezing margins for chocolate makers.
Still, the company decided to expand its US business a while back, and rising inflation won’t change that, Bertrac said. While Ferrero has raised prices in line with competitors, it’s not passing it all on to consumers. As a result, it’s managed to keep growing.
“We are compensating some cost increase, not all,” she said. “We are still growing in volumes.”