Nestle is selling its candy division to Ferrero. This should matter to you if you like let alone love chocolate. I want to lay out some of the reason why it matters.
1. Both are huge companies. When the sale is finalized, do we have any reason to believe it won't be, Ferrero will become the 3rd largest candy company in the world. This substantial market share will impact chocolate, sugar, vanilla, and several other ingredients in terms of price and quality. That's basics economics.
2. Both Nestle and Ferrero pledged in the past to embrace more fair trade practices in terms of sourcing their ingredients. That is a good thing but if we compare them to other massive food companies, they are in the middle tier in terms of good fair trade practices. Unless Ferrero makes a more concerted effort, I think they'll stay in that middle tier. Given the increase in their market share, this could either push the lower tier companies to improve or similar depress the higher tier businesses who still have to compete for consumers.
3. Both Nestle and Ferrero have had reports of child labor and even slavery on cocoa farms where they source the most important ingredient for chocolate; cocoa beans. While both companies again pledged to do better, and indeed just last summer Nestle can be credited with improving, they have a long way to go. This is a historical fight, one that has plagued candy and chocolate makers from the 19th century. Companies have been making promises to stop buying from farms that use slaves or children for over a century. If Ferrero is serious this could have a huge impact but it doesn't address the full causes of slavery or child labor.
4. Ferrero will need to compete with other huge food businesses in terms of supporting cocoa farmer not just by buying their beans but by encouraging certain types of agricultural practices beyond labor and improving beans themselves. As companies such as Cargill and Barry Callebaut look at and attempt to increase sustainable farming practices, Ferrero might choose to do the same. If they do, this could improve the chances that chocolate will survive as a mainstream product into the next century.
5. A lot of this depends on you and me, the consumers.
Look back that chart of ethical chocolate makers and seller. How many of the companies in the high tier of ethical practices are big players in the candy world? I checked the Top 100 in the candy industry to look for those top 5 ethical companies. They don't show up at all on that list. Sure they show up on "best of" lists for vegan chocolate, ethical practices, and are very favorable reviewed by bloggers but their market shares are small.The impact they make is minor in terms of global issues we've laid out above. Why? Because consumers balk at regularly paying more than $5 per bar, that's the low end of prices for ethically and sustainably produced chocolate. The average price for 3.5 ounces of chocolate in the USA is currently $3.49 while 3.5 ounces of chocolate candy is back at $2.24 cents.
What do you think about the Nestle sell to Ferrero?
1. Both are huge companies. When the sale is finalized, do we have any reason to believe it won't be, Ferrero will become the 3rd largest candy company in the world. This substantial market share will impact chocolate, sugar, vanilla, and several other ingredients in terms of price and quality. That's basics economics.
2. Both Nestle and Ferrero pledged in the past to embrace more fair trade practices in terms of sourcing their ingredients. That is a good thing but if we compare them to other massive food companies, they are in the middle tier in terms of good fair trade practices. Unless Ferrero makes a more concerted effort, I think they'll stay in that middle tier. Given the increase in their market share, this could either push the lower tier companies to improve or similar depress the higher tier businesses who still have to compete for consumers.
3. Both Nestle and Ferrero have had reports of child labor and even slavery on cocoa farms where they source the most important ingredient for chocolate; cocoa beans. While both companies again pledged to do better, and indeed just last summer Nestle can be credited with improving, they have a long way to go. This is a historical fight, one that has plagued candy and chocolate makers from the 19th century. Companies have been making promises to stop buying from farms that use slaves or children for over a century. If Ferrero is serious this could have a huge impact but it doesn't address the full causes of slavery or child labor.
4. Ferrero will need to compete with other huge food businesses in terms of supporting cocoa farmer not just by buying their beans but by encouraging certain types of agricultural practices beyond labor and improving beans themselves. As companies such as Cargill and Barry Callebaut look at and attempt to increase sustainable farming practices, Ferrero might choose to do the same. If they do, this could improve the chances that chocolate will survive as a mainstream product into the next century.
5. A lot of this depends on you and me, the consumers.
Look back that chart of ethical chocolate makers and seller. How many of the companies in the high tier of ethical practices are big players in the candy world? I checked the Top 100 in the candy industry to look for those top 5 ethical companies. They don't show up at all on that list. Sure they show up on "best of" lists for vegan chocolate, ethical practices, and are very favorable reviewed by bloggers but their market shares are small.The impact they make is minor in terms of global issues we've laid out above. Why? Because consumers balk at regularly paying more than $5 per bar, that's the low end of prices for ethically and sustainably produced chocolate. The average price for 3.5 ounces of chocolate in the USA is currently $3.49 while 3.5 ounces of chocolate candy is back at $2.24 cents.
What do you think about the Nestle sell to Ferrero?
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