A Sweet Dilemma: Sourcing Palm Oil with Ferrero SpA and Nestlé

by: Andrew Hoffman

Publication Date: March 31, 2022
Length: 18 pages
Product ID#: 7-951-326

Core Disciplines: Social Impact, Strategy & Management, Sustainability

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Teaching Note

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This case focuses on Ferrero SpA’s sustainable palm oil sourcing strategy in light of its acquisition of Nestlé’s U.S. confectionery brands, which in many ways does not comply with Ferrero’s sustainable sourcing commitments. The case reviews Ferrero’s rich family history, provides an overview of the confectionery industry, explains the environmental and social problems associated with palm oil production, discusses the Roundtable on Sustainable Palm Oil (RSPO) certification and whether it is truly sustainable, provides a competitor analysis of palm oil sourcing strategies, and reviews Ferrero’s sourcing strategy.

Adding complexity to the case, while the RSPO is a common standard among competitors for sustainable palm oil sourcing, there is discussion over whether it is truly sustainable, and if palm oil use in general can ever be sustainable. Overall, this case grapples with how the Ferrero Group should deal with their sourcing strategy in the midst of this dilemma between their acquired and native brands.

Teaching Objectives

After reading and discussing the material, students should:

  • Describe Ferrero’s rationale for acquiring Nestlé’s American confectionery brands, as well as the complexities related to supply chains and sourcing.
  • Assess the environmental and economic impacts of sourcing sustainable palm oil.
  • Compare the sustainable palm oil initiatives among Ferrero’s competitors and explain how they may influence Ferrero’s acquisition and integration of Nestlé’s brands.
  • Identify pros and cons related to the RSPO certification.
  • Evaluate the stakeholder most responsible for addressing Nestlé’s suspension from the RSPO, as well as its lack of commitment to source sustainable palm oil.