Nutella is manufactured by Ferrero, an Italian manufacturer of branded chocolates (Ferrero Rocher, Kinder Joy) and other confectionery items (Tic Tac mints).
Italy used to import raw cocoa from South America, but during WWII, the supply of cocoa was severely impacted.
So, the Italian chocolatiers started mixing the little cocoa they could access with hazelnuts creating a sweet paste.
Ferrero mastered this skill, and later, this paste came to be known as Nutella, which today is the best-selling product for Ferrero.
Ferrero produces 400,000 tons of Nutella each year, and this requires vast quantities of hazelnut (hazelnuts make up 13% of the Nutella recipe).
Now, there aren’t too many countries that produce significant quantities of hazelnuts—Turkey is the top producer and contributes to 70% of the global production.
To produce 400,000 tons of Nutella, Ferrero was hugely reliant on Turkey for the hazelnut supply.
But Turkey was caught in the middle of a controversy in 2019-20 surrounding child labour, hazardous conditions on the hazelnuts farms, and low wages.
To continue sourcing from Turkey despite these issues is a huge reputation risk for an organisation that sells Nutella to 160 countries.
In the last couple of years, several influencers have suggested they have stopped buying Nutella because of sourcing from Turkey.
While Italy is the 2nd biggest hazelnut producer, its production is insufficient to meet Ferrero’s demand.
Also, Italy’s regulation stops Ferrero from buying extraordinary quantities as that would mean a lack of supply for smaller players.
Ferrero also launched a program called Progetto Nocciola Italia (translates to Italian Hazelnut Project) in 2018.
This project provides guidelines for quality and sustainable hazelnut cultivation that will likely increase hazelnut production in Italy by 30%.
But the project hasn’t landed well with the farmers who believe these guidelines are centred around monoculture farming, i.e., growing a single crop at a time.
And monoculture farming is harmful to the soil’s health and can eventually make the soil infertile.
All this means that the supply of Nutella may be under threat in the upcoming days.
