Briefing - Nutella Sweden Experiential Learning Program, University of Gothenburg

1. Briefing - Nutella Sweden Experiential Learning Program, University of Gothenburg

2. Contents PART 1: Introduction to Ferrero & Nutella PART 2: Brand personality, perception and positioning PART 3: Status Nutella Sweden PART 4: Main challenges PART 5: Objectives and tasks

3. Ferrero – The success story of an Italian family The entire Ferrero Group ended the 2008-2009 financial year with a consolidated turnover of 6,345 million euros, an increase of 2.1% (+131 million euros) compared with the previous financial year 2007-2008. The Group worldwide – headed by its Chief Executive Officers, Pietro and Giovanni Ferrero – includes 38 trading companies, 18 factories and around 21,500 employees. The Ferrero Group, one of the largest confectionary producers in the world with a clear leading position in Europe and well-known products like Ferrero Rocher, Kinder Surprise-egg and Nutella. The driving force behind the development of the Group is Michele Ferrero. With his energy and passion for creating new products using innovative ideas, he has revolutionized the eating habits of millions of consumers. It all began 65 years ago in the little town of Alba in Piedmont (Italy). The roots of this success can be traced back to the 1940s. It was at that time that Piera and Pietro, Michele’s parents, succeeded in turning a pastry shop into a factory. These first, decisive steps forward were made thanks to the products “invented” by Pietro Ferrero and his young son Michele. Another factor in their success was the efficient sales network set up by Giovanni, Pietro’s brother. He died before his time, in 1949. The history of Ferrero is now in its third generation. Pietro and Giovanni Ferrero, Michele and Maria Franca’s sons, head the Group as its Managing Directors. The company continues to grow under their guidance. So today, as in the past, it is a company based on a solid family structure. In short, behind the brand, the balance sheets and the growth of a multinational company, lie the past, the present and the future of an ingenious and tenacious Piedmontese family. Ferrero Scandinavia AB, strategically located in the Öresund region in Malmö, is the Nordic company of the Ferrero Group.

4. nutella– an original idea.... Nutella Introduction: The first version of what would become the revolutionary invention of the century and what is now one of the most famous food specialties in the world – Nutella – was founded in a backroom of the pastry shop founded in Alba in 1944 by Pietro Ferrero. In 1964 supercrema gianduja was renamed "Nutella" (its origin being the word "nut"), and began to be marketed outside Italy! Since then, Nutella continues to inspire and satisfy the palate of the entire world: from the United States to Europe, Australia to Canada, its unique taste and its distinctive jar appeal to consumers of all generations. Thanks to its inimitable recipe and its genuine and carefully selected ingredients, Nutella, spread on bread, has become an essential element to the breakfast ritual and serves as a great way to begin the day. Nutella is Number 1 Ferrero brand in volume and value. The spread is an international success and has a central place on many breakfast tables all over the world. Nearly three generations of Europeans have grown up eating Nutella spread. Today, Nutella is the number one spread in Europe. Nutella has reached an icon status on many markets worldwide and the product has the second biggest fan page at Facebook. 400 million jars are sold per year in almost 200 countries.

5. Nutella – Sales development in Sweden • Nutella has been on the Swedish market for more than 15 years • Strong development has been seen during last 3 years • The trend on the market indicates futher potential for future growth Volume in Q.li (100kilo) Sweden Source: Sell in Data

6. Nutella is the market leader... • Limited competition within chocolate spreads • Nutella is the driver of the category • Main competition is coming from Private label sku’s with a lower price point • Ranking: 1 • Producer: Ferrero • Product: Nutella 350gr • Value Trend: +13,6% • Value Share: 53,5% • Ranking: 2 • Producer: Ferrero • Product: Nutella 700gr • Value Trend: +17,3% • Value Share: 12,6% • Ranking: 3 • Producer: Hard discount • Product: Mister choc choco due, 750gr • Value Trend: +21,0% • Value Share: 9,4% • Ranking: 5 • Producer: Hard discount • Product: Primadonna nut nougatnöt750 gr • Value Trend: -6,4% • Value Share: 4,0% • Ranking: 6 • Producer: Other manufact. • Product: Max & Moritz nötnougatkräm 350g • Value Trend: -8,3% • Value Share: 1,8% • Ranking: 4 • Producer: Printzells fabrik AB • Product: Printzells nötmassa,220gr • Value Trend: -6,0% • Value Share: 4,6% Source: Nielsen week 5210 – Value MAT DVH excl. HD

7. ... but Nutella is more than only a Chocolate spread • High consumtion of Sweet Spreads in Sweden • Jam has the biggest SoM but is also the only segment decreasing • Chocolate spreads approximately 3% SoM, but is also the one with best trend • Unaided brand Awareness for Nutella within Sweet spreads is low Sweet Spreads in Sweden Unaided Brand awareness Within Sweet Spreads Euromonitor, 2008 GFK, 2010

8. The Swedish consumers know Nutella • Nutella is a well known brand • 91% Brand awareness • Still room to improve purchase penetration Brand awareness Purchase penetration Source: GfK brand tracking

9. Consumption pattern starts to change in Sweden • Increased consumption of Nutella on bread in Sweden - Positive results from last years activities! • 55% of our consumers eat Nutella on bread (vs. 43% LY) • Major increase, but still not in line with other countries (89% in DK) Source: GfK brand tracking

10. The present perception of the product is not the ideal: Nutella is perceived as being a sweet and almost not as foodNutella is mainly consumed at special occasionsNutella is linked to emotions as joy and happiness. Besides, its “sinful” image needs to be controlled (occasional consumption) Perception of Nutella in the Swedish market “Like a mouthful of heaven” “ But I shouldn’t…. Or maybe just one more… Oh, all this guilty feelings….”

11. Current brand situation - Summary • Still growth opportunities on the Swedish market: • Chocolate Spreads category has a good growth on the Swedish market • Nutella is market leader within Chocolate spreads category, but this category is perceived as “pleasure” and mainly consumed for special occasions like holidays & weekends = limited consumption • Consumption of Sweet Spreads in Sweden is high • The Swedish consumers don’t mention Nutella when considering Sweet Spreads • Nutella needs to take shares from other Sweets Spreads and not only Chocolate Spreads • Increased level of consumption of Nutella on bread as a result of last years focused activities • Consumer promotions linked to bread and breakfast • Increased visiblity in bread section (secondary placements of displays) • Nutella moved frome bakery shelf to same shelf as other Sweet Spreads

12. Current brand situation - Summary • We have a satisfactory level of brand awareness (91% aided) • Our key challenge is the consumption and purchase penetration (cp: 24%/pp: 27%) which are rater low, as nutella is perceived to be more of a sweet than food • Only 55% of our consumers eat nutella on bread • To further increase penetration of Nutella the link between Nutella and bread needs to become stronger. We need to increase the positioning of Nutella as a Sweet Spread and not only a Chocolate spread

13. Nutella – brand personality and positioning Nutella is: • A deliciously unique spread made from the combination of roasted hazelnuts, skim milk and a hint of cocoa. Nutella has no artificial colours or preservatives. • Can be a part of a balanced breakfast • Target group: • Parent with children 5-13 years • Unique Selling Points: • The creaminess • The high quality ingredients • The hazelnut content (13%) • Brand personality: • If Nutella was a person he/she would be positive, emotional, active, natural, fun, social • Nutella is joy of life in a jar! • Core Values: • Quality, family, pleasure and naturalness

14. Nutella postitioning, The brand pyramid Brand Essence Joy of live in a jar • Values: • •Quality • Family • Pleasure • Naturalness Brand Character • Personality: • • Positive • emotional • active • natural, • fun • social Brand Benefit Brand Supports (Attributes) • Original and unique taste • High content of hazelnuts • High quality ingredients (cacao, hazelnuts, milk) Only with Nutella you can spread Joy of life on bread Consumer Insight Bread combined with sweet spreads is a good solution for ”ficka” or breakfast but sometimes only marmelade is a bit boring. Only with Nutella you can spread ”joy of life” on bread. Competitive Frame All sweet spreads Target Parents with children between 5 and 13 years

15. What is the core insight driving the brand’s positioning and strategic direction Insights driving this brief: • The Swedish consumers consider Nutella as a Sweet and not as food. • Bread in combination with sweet spreads is a habit and good solution for ”ficka” or breakfast but sometimes only marmalade is a bit boring. Why should the target consumer believe that the brand can deliver on this benefit? • Original and unique taste • High content of hazelnuts • High quality ingredients (cacao, hazelnuts, milk) Net net, what impressions about the brand do we want consumers to have after seeing this advertising? • Nutella should be consumed on bread • Nutella can be a part of a variant alimentary situations as breakfast and ”ficka” • Local Swedish campaign

16. The two main challenges • 1. Swedish breakfast is salty – not sweet • 2. Marmelade on bread is a habit but Nutella is widely eaten with a spoon (approx. 40%) TRADITION SWEET SALTY

17. What are the objectives with the thesis 2A. What are the marketing objectives that this advertising must help achieve? • Volume growth rate of 75% for the next 3 years within Sweden (SAF1 10/11 – PMT3) • Increase KPI’s (%) within 3 years: Year 10/11 – 13/14 • Purchase penetration 27 35 • Consumpion penetration 24 35 • Increased consumption of Nutella on bread 55 65 • Unaided awareness Sweet Spreads 35 40 2B. What is the purpose of this thesis? ”Improve” the acceptance of Nutella as a food product and not a Sweet by establishing a alimentary consumption situations (breakfast, ”ficka”) Source: GFK, 2010

18. Tasks and Mandatories • Tasks: • Situation analysis : market, competitors, customers, growth potential for Nutella in Sweden • SWOT analysis. • 3-year brand strategy • Suitable marketing mix and activities • Provide creative executions and a detailed media budget for Year 1 and strategic recommendations only for Years 2 and 3 Mandatories: The creative solutions need be in line with the Swedish cultural and behaviors of Swedish consumers. The feeling of the activities/communication need to have a local touch to be accepted • and considered as trustworthy • Budget recommendations: • the budget is 500,000 Euro for Year 1 and 400,000 Euro for Years 2 & 3 • submit an additional recommendation for what you consider to be the "ideal" budget.