Confectionary giant set to further boost its position in Russia
Arturo Maria Cardelus, the CEO of Ferrero Russia, recently shared with TRCW his views on a range of issues that included the company’s operations and ambitious plans for boosting its presence in the country and also the international corporations’ role in improving people’s living standards and deepening mutual understanding between countries by honoring all their social and corporate responsibilities in their areas of operations.
As a representative of Italian business in Russia, how would you describe Russia’s current investment climate, from the point of view of ‘ease’ of doing business by foreign investors?
I strongly believe that today’s Russia is one of the most attractive countries in the world for foreign investments. The political and economic stability of the last decade, the government’s consistent actions aimed at creating an attractive investment climate for foreign investors have over the last years helped to significantly boost the country’s investment attractiveness. Today, in Russia many foreign companies are successfully doing businesses in different sectors of the economy. We are deeply motivated by the fact that the Russian government views the attraction of investments as a significant factor in its efforts to modernize the economy. In this context, our goals and interests fully coincide and this is the most positive ground for effective cooperation.
It is a known fact that Ferrero has been working in this country now for 15 years. Briefly put, how would you assess the company’s operations on this market over these years?
The history of Ferrero’s business development in Russia is a history of a successful integration. We passed through all the stages of business development, starting from opening a small representation office in Moscow to the creation of a diversified business structure and production facility. Thanks to the favorable economic situation and our consistent dynamic business development actions, the company’s sales volume in Russia is now the group’s fourth largest after Italy, Germany and France, in term of sales turnover. And, we have all the reasons to believe that Russia will remain one of the most prospective markets for the company’s further growth. The results of independent marketing researches have shown that most Russians know and highly appreciate our products. Specifically, the Raffaello sweet candies got the People’s Trust Prize and were named the trademark No.1 in the packed sweet candies category, according to the results of the opinion survey conducted in October 2009.
Like all over the globe, Ferrero has also become a household brand name in Russia. How can you explain such popularity of the company’s products in Russia over such a short time?
The secret or recipe for this success is quite simple. First of all, this includes the company’s products themselves and also our well-thought-out marketing strategy. This is because while entering the Russian market, we decided to bring our leading brands that had already achieved huge successes and global recognition on the international markets. Indeed, Ferrero’s products are very popular because of their top-quality properties as each of the company’s products, is in its own way, really unique and innovative.
Today, your company is finishing the construction of a factory in the Vladimir Region. Does this means that Russia is no longer seen only as a sales market, but also as a place for producing the company’s core products?
Localization of our commercial activities in countries of our business operations is one of the key principles of Ferrero’s business development on international markets. Such approach is the strongest proof of the company’s total commitment to long-term presence in such regions and its readiness to make serious investments into new jobs creation, infrastructure development and transfer of its accumulated experience and knowledge.
In continuation of the previous question, and taking into account Ferrero’s 15 years presence in Russia, how much has the company invested into the local economy?
The total volume of the company’s direct investments in the construction of its factory in the Vladimir Region was over 200mln euros and this only covered the execution of the first phase of this project. However, the company’s aggregated investments into the Russian economy are certainly much higher. Besides, our company has consistently and responsibly executed all its business activities in Russia as a responsible taxpayer, good-faith employer as well as a very reliable and lucrative business partner to its Russian counterparts.
What plans and/or projects are currently being executed or considered by your company so as to broaden its presence and achieve new heights on the Russian confectionery market?
We are targeting further growth of our business by constantly improving the quality of our products’ presence in shops and efficiency at store level. We always have a lot of opportunities to strength the market positions of our key brands , these, first of all, include the Raffaello sweet candies, the Kinder products line, the Nutella hazelnut past and plans to launch new products in new market segments. We have very many ideas.
There have been cases of attempted forgery of Ferrero brands in Russia. In this context, how would you describe Russia’s intellectual property protection practice, and what measures are being taken by Ferrero to protect its brands in the country?
Unfortunately, popularity has another side, as fraudulent competitors usually counterfeit famous and popular brands. The Russian legislation on intellectual property rights offers companies with tools, in full compliance with international standards, for protecting their exclusive rights, including trademark names. I must note that we are very active in the protection of our intellectual property rights because all our products are results of years of researches and serious investments. Besides, consumers trust us, and therefore, we see it as our key duty before them to protect our products from counterfeits or their imitations.
Today, in crisis time, a company’s relations with employees and society, where it operates its business, has assumed a new importance. In this context, how does Ferrero view its corporate social responsibility in Russia?
The Ferrero group is committed to the principle of running socially responsible business all over the world. It tries to create an environment based on the principles of confidence, honesty and respect. The group’s advanced technologies and longstanding international experience in all fields of business enable it to hire the best employees and provide them with generous opportunities for both professional and personal growth and development. Besides, we have a perfect track record of executing social projects both in developed European countries and the least developed regions of the world. For example, we have implemented several national large-scale programs in support of children sport and healthy lifestyle development in different countries within the global Ferrero program “Kinder + sport”. Thus, some of our latest most significant projects included the establishment of social enterprises in Cameroon, South Africa and India. Similarly, in Russia, we on a regular basis also provide charity support to institutions in the social spheres — such as orphanages and hospitals — in the Vladimir and Moscow Regions. Besides, we also call on and encourage our partners to abide by the principle of running socially responsible businesses and participate in social and charity projects in their localities. For instance, a year ago, our company in cooperation with the Vladimir Regional Administration initiated the launch of Kinder+Sport, a program for supporting children sports in the region.
As you already know, this interview is being conducted as a part of our special report on Russian-Italian Business Relations. In this context, what role, in your opinion, can international businesses, such as yours, play in promoting mutual understanding between countries?
The history of the world is full of laudable examples of outstanding merchants that had been successful pioneer discoverers and ‘ambassadors’ — such as the likes of Afanasy Nikitin and Marco Polo — who helped to promote trade and spread of knowledge. Indeed, Russia and Italy are linked by centuries-long history of successful cooperation and interactions in all spheres of life. It is, therefore, not surprising that it is one of Russia’s leading trade partners among other Western countries today. Besides, our countries’ leaders have implemented consistent policies for creating a convenient and favorable environment for doing businesses in our economies. The importance of maintaining and developing mutually beneficial cooperation has been repeatedly pointed out by our countries’ leaders in their public speeches and addresses. This is why we have all the reasons to believe that our today’s robust bilateral relations will continue to grow even more positively and dynamically in the future.
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