Italy's richest family builds US$3b side bet to candy giant

[ALBA] Michele Ferrero helped introduce Nutella and Kinder chocolate to the world, turning his family's Italian confectionary business into a global giant with annual sales of about US$10 billion. Now his son, Giovanni, is charting his own path.

Net assets of Giovanni's investment firm, CTH, surged 40 per cent last year to 2.8 billion euros (US$4.53 billion), filings show. The increase was boosted by its US$300 million purchase of Danish cookie baker Kelsen Group, an acquisition designed to help preserve Italy's biggest fortune by investing beyond the confectionary industry.

Giovanni has "established his presence in the wider sweet packaged-food market" with CTH, said Guido Giannotta, a director of the Brussels-based firm, who helps manage the Ferrero family's fortune. Such a move will "represent an important de-risking solution, both in terms of product categories and geographical reach", he added.

Like the Ferreros, many of the world's richest individuals are diversifying their fortunes as the seek to grow wealth across generations. Zara founder Amancio Ortega - Spain's richest person - invested the proceeds from his clothing business Inditex SA into real estate worldwide, while Microsoft co-founder Bill Gates' holdings range from railroads to agricultural businessess to construction firms.

PASTRY SHOP

The Ferreros' business began as a family pastry shop in northern Italy that used hazelnuts as a way to stretch limited cocoa supplies. After World War II, it grew into a confectionary firm, opening production facilities and offices abroad.

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It launched the Nutella and Kinder Chocolate and Tic Tac mints brands in the 1960s, and then expanded with products including Ferrero Rocher.

CTH was created in 2016 and owns Belgian cookie maker Delacre and US candy company Ferrara, in addition to Kelsen Group. Ferrero Group - the family's confectionary business - has also invested beyond candy, completing a US$1.3 billion deal last year for Kellogg's cookies and fruit snack brands.

Giovanni, 55, is executive chairman of Ferrero Group and owns a controlling stake in the Alba, Italy-based company, which is now valued at US$23 billion, according to the Bloomberg Billionaires Index. It makes up the bulk of the Ferrero family's US$32.9 billion fortune.

Investing in cookies "makes sense as chocolate and biscuits fight for the same space in our stomachs," said Duncan Fox, a consumer products analyst at Bloomberg Intelligence. "If you can get the right innovation, you get far greater distribution if you have exposure to both."

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