Consumptionella

Originally, Italians used “pasta gianduja” in sandwiches for lunch.  In Italian, “pasta” means paste and “gianduja” is in reference to an animated character on their advertisements.  Ferrero found that children would discard the slices of bread and solely consume the pasta gianduja.  He brainstormed ways to combat the  issue and adjusted the texture so that mothers could easily spread the hazelnut paste onto a slice of bread.  Eventually, Ferrero named the revised product “supercrema gianduja” due to its spreadability.  In 1964, “Nutella” became the new name, using “nut” from “hazelnut” and “ella”  in order to make the product sound Italian and catchy at the same time (History of Nutella).  Nutella’s popularity grew and eventually, the United States began importing the hazelnut spread from Italy.  Beginning in 1983, Ferrero began distributing Nutella to northeastern United States and soon after, to other parts of the world.  This showed how quickly the product became globalized.  It has been marketed as a method to implement whole grains into children’s diets, causing mothers to buy the product for a quick breakfast for the kids.

A 13 ounce jar of Nutella at Walmart costs $3.48, averaging at $0.27 per ounce (Nutella: Hazelnut). According to Forbes, Ferrero earned $10.5 billion dollars in revenue in 2012.  $6 billion of that went to the family (Michele).  Since Ferrero is a private company, little information could be found on how much the company’s workers get paid.  From the information given, it can be inferred that the owners receive the majority of the revenue while the company’s employees do not get paid nearly as much.

Commodity fetishism refers to the magical qualities attached to a product for an added value more than its material worth.  According to Marx, “the mysterious character of the commodity. . . reflects the social characteristics of men’s own labour as objective characteristics of the products of labour themselves, as the socio-natural properties of these thing.” (Marx).  He compares commodity fetishism to religion and states that labour is immediately associated with the commodity that is produced.  The product gains value of utility once it is exchanged.  Nutella’s slogan is “spread the happy.”  The American commercial for Nutella features a busy mother of three with a dog barking in the background talking to the viewer about how she relies on Nutella to feed her children a breakfast of their preference.  Mothers and their children make up the majority of the target consumer audience.

The commercial uses words like “morning”, “delicious”, “perfect”, “quick”, “easy”, and “simple” to convey the message of Nutella as a breakfast spread for that mothers can serve to their picky children.  Their other commercials feature urbanized individuals sporting pearly white teeth with smiles and laughs.  The consumers tend to be on-the-go, which implies that the hazelnut spread is for even the busiest of people.  In one scene, a woman in an office with white-collar attire is seen spreading Nutella onto a slice of green apple.  This shows that the spread can be eaten with healthy fruits as a quick snack at work.  This also reveals that Caucasian, middle class, women in their 30s and 40s buy the product. The final image reveals a pancake with Nutella spread in the shape of a smile.  The company’s use of smiles assists in marketing the magical qualities of Nutella as a source of happiness while eating a balanced diet.  Furthermore, going off of the play on words of “spread”, the jar of Nutella is passed on from person to person.  The product is viewed as designed to be shared since someone is always seen serving someone else a slice of bread or fruit with Nutella.

The success of Nutella is partly due to Ferrero and customer’s use of social media to spread the word about the product.  A similar strategy occurs with healthcare.  According to Gupta, Tyagi, and Sharma, social media has been used to promote education of public health which enables health professionals to extend their impact directly to the public especially during emergencies or large scale catastrophes.  Mayo Clinic is a non-profit website which consists of facts along with opinions and first-hand experiences.  Mayo Clinic’s Facebook page contains personal posts from patients as well as employees.  The medical research group believes when patients share their experiences, their peers would see it and the chances of them spreading the message would increase.  The article concluded that “user generated content and multi directional communication flow makes for best choice for faster spread of public health messages and improves functional health literacy of general population” (Gupta).  This shows that the use of social media when applied to Ferrero’s product would increase the odds of Nutella’s slogan “spread the happy”.  

The website for Nutella has customer generated stories which utilizes the hashtag #NUTELLASTORIES.  Customers have a chance to share recipes, photos of their nutella jars, and their love for the hazelnut spread to world.  Ferrero hosts a Nutella Day on May 25th.  This past year was Nutella’s 50th birthday.  According to the Nutella Stories website, Europeans, North Americans, Russians, and Middle Easterners were the ones to show appreciation for Nutella’s 50th birthday.  Urban dwellers have access to technology, where images could be posted and shared on the Internet.  This reveals that those of the global north or urbanized regions are the target consumers of the product.

Global Flowellas

Nutella is sold in 75 countries around the world and is consistently growing in sales. The Italian company introduced the tasty product to the American market in 1983. The factory in Brantford, Canada produces the jars of Nutella for Canada and the United States which is then sent to Somerset, New Jersey as the exclusive distributing location (History of Nutella). The product is mainly popular in North America (excluding Mexico), Europe and Oceania. Nutella’s international website lists twenty nine countries. It contains pages for countries like Canada, United States, Australia, and most of the countries in the European Union. East and Southeast Asian countries do not have a website for Nutella. This shows the lack of a demand in those regions as Ferrero has not invested in advertising and online marketing for those parts of Asia. Since Europe has a high demand for Nutella, the other forty six countries which sells the product would most likely be European nations, though a list of the other countries does not exist. Since Brazil and Argentina have Nutella factories within their borders and as OECD revealed that Nutella is produced near their markets, one may deduce that those two countries distributes the chocolate spread to unlisted Latin American countries.

Ferrero is solely in charge of trade and distribution of hazelnuts as of July 2014. The company strives to enhance the quality of their product and maintain their reputable flavor by intensifying their presence in the market of hazelnuts. According to Ferrero’s website, though the purchase is pending approval, the company “has acquired 100% of the family-owned Oltan Group. . . [which] is the worldwide leading operator in the procurement, processing and marketing of hazelnuts, with an annual turnover above $500 million” (Ferrero Group). This displays their dedication to preserving the decadent quality of their products. The purchase of Oltan Group by Ferrero also signifies the beginning of a sustainable approach to the hazelnut industry in Turkey as Ferrero would implement sustainable agricultural practices in line with the Ferrero Farming Values (FFV) which is focused on “enhancing farming skills of all farmers and improving their possibility of revenue increase” (Ferrero Group). Those who follow neoliberalism would commend Ferrero’s decision to make use of comparative advantage, the economic theory that states that countries should focus on what they do best in order to achieve maximum efficiency in the world market.

In recent years, weather contributed to the increase of the price of Nutella. Because Turkey produces the majority of the world’s hazelnuts, any disturbances in the climate would affect the hazelnut industry. In 2014, the unreliable weather of Turkey has directly influenced the price of hazelnuts, causing “what could be a hazelnut crop that’s more than 30 percent below original expectations which resulted in an increase in price “by more than 60 percent so far this year and more than doubled since last fall” (Ferdman). Murat Keskin, the head of chamber of commerce in Giresun, Turkey states that “we are living through the worst hazelnut harvest in history” since Turkey normally cultivates about 590,000 metric tons of hazelnut a year, but the country anticipates a harvest of 370,000 metric tons this year (Nuts). Ferrero is able to combat the issue immediately due to the acquisition of Oltan Group, which protects the company from the hazelnut supply issues. Other factors that contribute toward the price of Nutella includes palm oil, which has similarly increased in price due weather related issues and an increase in demand, and cocoa, which has seen a 40 percent increase in price (Ferdman).

A political agreement which affects the trade of Nutella is France’s “Socialist plan to quadruple the tax on palm oil . . . from 19.6 percent to 20 percent”; The sales tax targets consumer goods as opposed to certain corporations and since France consumes the most Nutella in the world, the tax has been labeled as the “Nutella tax” (Zaretsky). Another political agreement which excludes Indonesia from the Nutella trade is the creation of the Roundtable on Sustainable Palm Oil. As previously mentioned, Ferrero only imports palm oil from Malaysia since their palm oil is RSPO-certified. This shows that Ferrero is willing to go the extra mile to ensure its quality product by spending more on Certified Sustainable Palm Oil from Malaysia as opposed to non-certified palm oil from Indonesia.

With the tons of hazelnuts cultivated in Turkey, the hazelnut shells are reused for biomass fuel. This is reminiscent of the “chock-chocky” furniture created by migrant workers of Bangladesh. According to Gregson, migrant workers in Bangladesh are skilled craftsmen or are in the process of learning the trade. They take board and wood from totaled ships and create them into recycled furniture (Gregson). This gives the Bangladeshi people a source of cheap, moveable furniture which gives it a sense of cultural value apart from its monetary value. Ferrero’s use of hazelnuts from Turkey contributes to the recycling of hazelnut shells for biomass fuel. According to Bakisgan, it was reported that “the analysis of trace elements in ashes produced from some biofuels obtained from various areas of Turkey such as hazelnut shell” (Bakisgan). This shows that the consumption of Nutella around the world produces hazelnut shells which indirectly contributes towards recycled energy in Turkey just as Bangladeshis reuse broken wood from ships for furniture.

Productionella

During the Triangular Trade, African slaves were transported to the Americas.  The slave labor produced raw goods which were then sold to Europe  In Europe, the raw goods were turned into manufactured goods such as guns, alcohol, clothing, and toys.  These were sold back to Africa and the Americas for a great amount of profit for Europe and a small amount of profit for the Americas.  As a new triangular trade, companies import commodities and resources from former colonies, produce finished goods and manufactured products due to cheap labor, and export them out to consumers all over the world for massive profit.  Nutella consists primarily of sugar, palm oil, skim milk, and hazelnut.  These ingredients are extracted from a number of countries, primarily imported from the global south.  The company boasts its’ use of  “over 50 hazelnuts per 13 oz. jar” and each jar “contains no artificial colors. . . [or] preservatives.”

Ferrero International SA, the company behind Nutella is headquartered in Luxembourg.  Today, the department in charge of producing Nutella consists of ten factories.  Half of the factories are in Europe.  Russia, Turkey, Australia, Canada, and Brazil each have one factory.  Most of the hazelnuts are imported from Turkey, even though Italy produces hazelnut as well.  Malaysia, Papua New Guinea, and Brazil are responsible for palm oil.  Cocoa comes from Ivory Coast, Ghana, Nigeria, and Ecuador.  Europe and the United States send over their vanilla flavoring and Europe supplies most of the sugar.  Once these key ingredients blend together, the product is sent to over 100 countries.

A case study by Backer and Miroudot found that “food products are globally produced in value chains where both developing and developed countries are involved. . . As exemplified with the Nutella supply chain, being close to final consumers and to specific inputs supplies matters for the agri-food industry and the same activities can be located in developed and emerging markets” (Baker and Miroudot, 17).  Ferrero produces Nutella close to where it is sold.  This image reveals the main countries and locations in which Nutella retrieves the ingredients to make the spread.  Europe, North America, South America, and Australia has its own factory.  Brantford, Canada, Pocos de Caldas, Brazil, Los Cardales, Argentina, Villers-Ecalles, France, Stadtallendorf, Germany, Belsk, Poland, Vladimir, Russia, and Lithgow, Australia contain a Nutella producing factory.  There are no factories in Asia because Asian consumers tend to have less of a demand for the product.  The Ferrero Group headquarters is located in Alba, Italy.  This map is credible as it uses information directly from the Ferrero website.

According to the Nutella producer’s American website, Ferrero is a member of the Roundtable on Sustainable Palm Oil (RSPO) and exclusively imported palm oil extracted from controlled plantations in Malaysia (Nutella Frequently Asked Questions).  RSPO’s mission as stated on their website includes:

“to advance the production, procurement, finance and use of sustainable palm oil products; to develop, implement, verify, assure and periodically review credible global standards for the entire supply chain of sustainable palm oil; to monitor and evaluate the economic, environmental and social impacts of the uptake of sustainable palm oil in the market; [and] to engage and commit all stakeholders throughout the supply chain, including governments and consumers” (Vision).  

Their website further states that palm oil from the core of the plant is used in order to maintain the perfect amount of viscosity while lowering the amount of saturated fat in the end product (Nutella Frequently Asked Questions).  Ferrero holds strict regulation on how the palm oil used in Nutella is processed, which expresses their concern for the environment and the health of their consumers.

Additionally, the company agreed to the Ferrero Palm Oil Corporate Charter, which explicitly declares their commitment to benefit the environment and the surrounding communities which produce palm oil.  Ferrero claims to work with the global supplies of palm oil and “are on track to achieving 100% traceable segregated, RSPO-certified palm oil by the end of 2014” which is one full year ahead of the original plan (News - Palm Oil).  Nations like Malaysia experience deforestation, therefore the Ferrero Palm Oil Charter decided to work with  The Forest Trust (TFT) in order to ensure that the suppliers comply with the progress of conserving the environment.  Ferrero states that they are:

“committed to making sure that [their] palm oil suppliers are providing fully traceable oil, while including smallholders, not clearing High Carbon Stock forests, not using fire to clear land, not planting on peat soils, protecting orang-utans and other endangered species by maintaining High Conservation Value areas, reporting on the greenhouse gas emissions of their production, respecting human rights, including the right to Free, Prior, and Informed Consent of indigenous and local communities, recognizing respect and strengthening the rights of workers, not using Paraquat, and actively fighting corruption.”

This illustrates the level of supervision Ferrero wishes to uphold.  The company claims to report transparently and publically on the issue every six months.  Ferrero obtains 150,000 tonnes of palm oil a year from Malaysia, showing their reliance and dependence on quality, raw materials.

However, workers for the palm oil industry have been subjected to abuse.  The workers who are chosen to work on the palm oil plantations are not from the local communities.  Instead, they are from distant communities and tend to owe money to labor brokers who often lie to the laborers.  The laborers are told that they would be working under safe working conditions, but would be forced to pay for transportation, lodging, food, and safety equipment at an increased price.  The housing lacked electricity and water and “when workers attempted to flee, they were beaten with sticks and machete handles” (Hill).  Though child labor is uncommon in palm oil plantations, the production quota is unachieveable, so workers bring their children to work for fear of being scolded which indirectly contributes to the child labor issue.  The Round Table on Sustainable Palm Oil attempts to regulate the work conditions for the laborers, but is unsatisfactory in their efforts.  Since “twelve of the sixteen seats on the executive board are held by growers, processors, manufacturers, retailers or investors”, the laborers essentially lack a voice at the table (Hill).  

The Association for Women’s Rights in Development published an article stating how the World Bank is structured to put women at a disadvantage.  The article reveals that:

“Women’s unpaid labour increases with the removal of subsidies on social services.  When subsidized daycare is cut, for example, women provide free childcare for their families and neighbors.  When medical services are cut, women care for those who would otherwise have been hospitalized.  Inherent in structural adjustment programs and the dominant economic agenda is an assumption of the unlimited availability of women’s time and unpaid labour (World Bank)..

This shows that women are viewed as method of free labour due to the cutting of social services, which, in turn, helps the market at the expense of women.  However, Ferrero is not in line with these values.  

Ferrero published a “code of ethics” which also detail the conditions of their workers.  The company strives to be known for having a positive setting in the work environment, allowing their employees to grow and develop skills for their job.  They implemented numerous services in support of their employees and their families.  In Italy and Germany, Ferrero uses services such as “Social Assistance” to support families when they need it the most with “medical visits [and] financial support.”  Employees receive pensions, holiday breaks, and Christmas parties for the employees’ children.  In France and Italy, certain programs assist in balancing the workers’ social and work life.  Those with children have access to “company day care, mini clubs, support services. . . [and] groups for listening to associates” in order to promote “part time” work during special leave.  Ferrero states that they “support the protection of human dignity, . . .the abolition of the exploitation of child labour and of forced and coercive labor within [their] sphere of influence and along the entire production chain. . . [and] work to avoid any form of discrimination.”  These statements are ideal of any company, especially with the globalized market which exist today.

Neoliberalism is an economic theory which focuses on free trade, deregulating the economy, privatizing the public sector and cutting spending to the public sector such as education and healthcare.  The International Monetary Fund and the World Bank have implemented conditionalities which borrowing countries must meet.  Export Processing Zones (EPZ) were created to promote exports but are not subject to the countries’ laws and taxes.  In 1971, The Free Trade Zone Act affected Malaysia.  It attempted to create jobs and to invite foreign corporations into the country.  In order to motivate investors, export processing zones were created near capitals, large highways or sea ports.  Normal trade regulations did not apply to these zones, allowing firms to be exempt from taxes on exports (Sivalingam, 4-5).  Since Malaysia’s labor force spoke English, cheap, and generally educated, investors were attracted to the country’s EPZs.  According to Sivalingam,  “INTEL and National Semiconductor were among the first to relocate to Malaysia (Sivalingam, 5).  This illustrates that American electronic companies took advantage of Malaysia’s labor, causing a divide between rich countries of the global north and poor countries of the south.  Furthermore, the country would follow neoliberal beliefs, which favored the investors who received tax cuts while indirectly promoting poor working conditions as workers were not allowed to unionize or go on strike.

Malaysian manufacturers of palm oil do not receive governmental assistance since the cost to cultivate palm oil is cheaper than other countries.  However, Malaysia’s government created the Palm Oil Credit Payment Arrangement (POCPA) which is responsible for securing trade of palm oil with countries like India, China, and Pakistan, which allows completely refined palm oil to be free of export tax (Othman, Mohd, and Mohammad, 178).  Under the GATT Uruguay Round agreement, “all import quotas and variable levies are to be replaced by fixed tariffs, which will be reduced by 36 percent over a period of six years from 1995 to 2001” (Othman, Mohd, and Mohammad, 179-180).  This shows that the World Trade Organization’s policy of trade liberalization has worked for Malaysia and the tariffs are insignificant compared to the amount of profit the country gains.  At the end of the agreement, Malaysia’s palm oil would become more and more competitive in the world market.

Historella

World War II caused a shortage of cocoa in Europe.  Pietro Ferrero invented Nutella in the 1940s to spread onto slices of bread to eat for breakfast.  He decided to use hazelnuts as opposed to cocoa, which allowed for an increase in profit.  Readily available in Europe, hazelnut became the primary ingredient in the spread.  His genius invention would later become a popular commodity and an alternative to peanut butter in the global north (History of Nutella).

Hazelnuts have been found in northern parts of Europe as early as 5600 BC.  According to Kubiak-Martens, the civilizations at Tybrind Vig in Denmark utilized hazelnuts in their diets.  Both waterlogged and charred hazelnut shells were found in the Tybrind Vig assemblage.  Early settlements near Denmark reveal that hazelnuts were roasted in order to access the high fat and protein content.  If the hazelnuts showed evidence of charring, the “nuts inside were also charred and worthless as a food source”, which leads scientists, historians, and archaeologists to believe that hazelnuts could have been used as a source of fuel due to its flammability (Kubiak-Martens).

In Europe, World War II rationing triggered a shortage of cocoa.  Ferrero chose to use hazelnuts in order to limit the use of chocolate.  Italians in the Piedmont region of northwest Italy cultivated hazelnuts, which facilitated the production of Nutella (History of Nutella).  Second only to Turkey, Italy has consistently produced hazelnuts, cultivating between 120,000 to 85,000 metric tons per year.  On the flip side, Turkey produced 660,000 metric tons of the commodity (FAOSTAT).  This caused Ferrero to import more hazelnut from Turkey, because it was cheaper to get it from there.  

A similar situation occurred in the eighteenth century between Britain and India.  According to Marks, British textile manufacturers preferred to keep wages low because otherwise, they would not be able to compete with other manufacturers.  He pointed out that India had a competitive advantage against the United Kingdom in producing textiles, where the colony prospered in the world market (Marks).  This illustrated that since India could produce more textiles at a cheaper rate, companies preferred to purchase from India instead of from their own country, Britain.  In the case of Nutella, while Italy produced tons of hazelnut for Nutella, Turkey produced 6.5 times as much hazelnut, causing the latter country to be integrated into the world market of Nutella production.