Italian Confectioner Ferrero Strengthens Business via Mexican Confectionary Market

Italian Confectioner Ferrero Strengthens Business via Mexican Confectionary Market

Italian confectionery group Ferrero, the maker of chocolate delights such as Kinder Bueno, Nutella and Ferrero Rocher sold around the world, plans to invest $190 million to open a new production plant in San Josè Iturbide in the Mexican state of Guanajuato.

The new plant, located at the Parque Opcòn industrial park, about 260km north of Mexico City, will feature four production lines. These four lines will manufacture the new Kinder and Nutella products for the Mexico as well as for U.S. and Canadian markets. 

With production expected to begin in May 2013, the creation of the new plant couldn’t be more timely according to industry analyst’s growth forecasts. With CAGRs (Compound Annual Growth Rates) of 2.8 percent and 1.7 percent for the U.S. and Canada, respectively, IBISWorld food industry analyst Mary Nanfelt believes manufacturing in Mexico will work to the advantage of Ferrero, which is planning on exporting approximately 40 percent of its production to North America. "Ferrero is primarily going to manufacture their Kinder and Nutella products, which will definitely benefit the company because U.S. consumers are developing a more complex palette and they are becoming more interested in foreign products," Nanfelt told just-food, a source for food industry news and information.

The biggest share of Ferrero's business, however, will be conducted in Mexico, a market that is showing potential for growth. Jonathan Thomas, principal market analyst at Leatherhead Research, says to this regard, ‘I think Mexico is a market that shows potential for growth given it’s high percentage of young people, and of course young consumers are a key target market for confectionery.’[…] ‘People are looking towards European brands, Swiss chocolate and products like that. And that trend may well improve as the economic situation improves and disposable income levels start rising. There is no reason why consumers might not turn back to more expensive forms of chocolate and Ferrero would be in an ideal position to take advantage of that.’

For the five-year period 2010-2015, the Mexican confectionary market is expected to achieve a value of $3.2 billion. Ferrero, which began Mexican operations in 1992, is looking to capitalize on the Mexican confection industry’s heightened expansion.