EconomyFinancialGrupo Ferrero faces the 'bitter challenge' of inflation

Grupo Ferrero faces the 'bitter challenge' of inflation

Paolo Cornero, CEO of Grupo Ferrero México, is excited to know that his portfolio of brands is present in the holidays, as this will give the push for the Italian group to close the year with a 24% growth in sales against 2020. However, the businessman is concerned about the inflationary trend in the country.

According to the Bank of Mexico (Banxico), inflation will close 2021 with 7.63%, while for 2022 a rate of 4.36% is expected and for 2023 one of 3.72%. In other words, with everything and monetary policy to contain inflation, it will not be enough to reach a rate of 3% as expected.

“It is not something Mexican, but a problem of world supply. There is little supply and high demand, so when there is no material there is obviously an increase in prices. This could last between 18 and 24 months, after this December ”, says Cornero.

The main challenges for 2022

According to data from IHS Markit, retail sales of sweets and chocolates are 20% above 2020, and retailers expect to continue this dynamism at the end of this year, as celebrations such as the Day of the Dead, Halloween and the holidays generated a peak in demand for this type of product. Ferrero México is no stranger to this positive inertia.

“Despite the fact that at the beginning of the pandemic our brands had a depreciation, due to being premium , we achieved a new sales record. Consumers started buying other products. With their children at home, some parents stopped spending on school supplies, for example, but they consented to something else and our products were the option, especially the Kínder brand ”, Cornero explained in an interview, after the inauguration of the Jaguar Sanctuary project.

But disruptions to the global supply chain, coupled with a 3-4% increase in sugar prices and high energy prices, have made candy prices more expensive by 2.5% compared to the previous year. , as calculated by IHS Markit.

Although this adjustment in prices was lower than expected, which was around 5%, the analysis firm envisions that buying sweets in the first quarter of 2022 could be more expensive than in 2021.

“We know that the consumer’s pocket will be under pressure and not only our product, which is also not essential, however, we take care of quality and packaging, that is the differentiator,” said Cornero.

The manager, who is aware of the challenges that the sector will face during the start of 2022, envisions that the company will be cautious in the projects and strategies that it will promote during the first half of the year. “We must be careful. Focus actions on the projects that are most important and that we know can generate more results in the medium or short term and that guarantee people’s work ”, he said.

Grupo Ferrero scheduled launches of new flavors and portfolio products for the second half of 2022. “We understand that these are curves and periods,” he concluded.

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