Nutella Supply Chain Illustrates Global Agri-Food Industry Networks

To get a glimpse of the global value chains feeding the agri-food industry, consider the supply network behind the humble Nutella jar.

A new Organization for Economic Cooperation and Development paper seeking to shed light on global supply chains across countries and industries notes that a relative few companies control the global food supply.

The OECD uses Nutella, the popular hazelnut and cocoa spread brand sold in more than 100 countries, to illustrate the long agri-food value chains that contribute to the products on grocery shelves.

Ferrero International SA, based in Luxembourg, produces about 350,000 tons of Nutella each year at 10 factories: five in the European Union and one each in Russia, Turkey, North America, South America and Australia.

While some inputs are sourced locally, Nutella also consists of:

–Hazelnuts from Turkey

–Palm oil from Malaysia, Papua New Guinea and Brazil

–Cocoa from Ivory Coast, Ghana, Nigeria and Ecuador

–Sugar from Europe

–Vanillin from the United States and Europe

Production is located near markets where Nutella is in high demand – Europe, North and South America, and Oceania – the OECD notes.

“In agri-food business value chains, there are more developing and emerging economies involved, as can be seen in countries in Latin America and Africa in the case of Nutella,” the OECD paper says.

Nutella’s supply chain, it says, shows that being close to final consumers and to suppliers matters for the agri-food industry, and that the same activities can be located in developed and emerging markets.

“The agri-food industry is increasingly structured around global value chains led by food processors and retailers,” the paper says. “Supermarkets, for example, work both with importers and exporters and want to control how products are grown and harvested.”

The food and beverage industry has the 14th longest supply chain of the 36 that the authors explored, according to the policy paper. The top five are TV and communication equipment; motor vehicles; basic metals; textiles, leather and footwear; and electrical machinery.