Nutrexpa S.A.

Type: Private Company
Address: Lepanto 410, Barcelona, E-08025, Spain
Telephone: (34 93) 290 02 90
Fax: (34 93) 290 03 42
Web: http://www.nutrexpa.es
Employees: 1,330
Sales: EUR 350 million ($500 million) (2007)
Incorporated: 1940
NAIC: 311320 Chocolate and Confectionery Manufacturing from Cacao Beans; 551112 Offices of Other Holding Companies
SIC: 2066 Chocolate & Cocoa Products; 6719 Holding Companies Nec

Nutrexpa S.A. is a leading Spanish food company focused primarily on chocolate- and cocoa-based drinks, snacks, and confections. The company's flagship brand is Cola Cao, which has been one of Spain's favorite cocoa drinks since the 1950s and is one of the top five most recognized brands in Spain. Cola Cao is also the company's most global brand, backed by manufacturing and marketing subsidiaries in Chile and China, a distribution subsidiary in Portugal, and the company's own export and international marketing operations.

Another top Nutrexpa brand is its Granja San Francisco Honey brand, produced by bees near the San Francisco monastery. Other brands in the company's portfolio include the popular Nocilla chocolate spread; La Piara, a leading producer of patés and other meat products; Okey dairy drinks and products; Phoskitos children's snacks; La Cafetera confectionery; and Mesura corn starch and food additives. Nutrexpa remains a private company controlled by the highly secretive Ferrero family. Javier Ventura Ferrero controls most of the company's shares. In 2007, Nutrexpa sales were estimated at more than EUR 350 million ($500 million).

Post-Civil War Food Company

Nutrexpa had its start in the aftermath of the Spanish civil war when José Ignacio Ferrero Cabanach and José Maria Ventura Mallofré founded a small food production company in the district of Gracia in Barcelona. The company's initial product line was comprised of basic processed cooking ingredients, including fish bouillon and yeast. It also developed its own brand, Gloria, which was used for marketing crème caramels and cocoa cream. Another early product, introduced in 1934, was Granja San Francisco Honey; this product became the company's first true success and would remain one of its flagship brands into the next century.

By 1946, Nutrexpa's interests had turned to chocolate, specifically to the production of chocolate drink mixes. In that year, the company launched the product that would put it on Spain's food map: Cola Cao. The powdered cocoa product, thinner than traditional Spanish chocolate drinks but still thicker than such chocolate mixes as Nestlé and Bosco, quickly became a Spanish favorite.

It was only in the mid-1950s, however, that Cola Cao emerged as a truly national favorite. This development was partly the result of a radio advertising campaign launched in 1955. The campaign featured a song composed for the brand. Titled "Canción del Negrito," the song lyrics included the lines: "Yo soy aquel Negrito del Africa tropical/que cultivando cantaba la canción del Cola Cao." The song became a hit, vaulting Cola Cao to national recognition. The surge in demand for the product led the company to build a new factory in the Calle Lepanto district in Barcelona in 1957. Nutrexpa continued to back its new flagship product with strong advertising over the years; in fact, the company became one of the first in Spain to begin advertising on the television in 1962.

First Acquisition in 1964

With two strong brands among its product line, Nutrexpa sought further expansion in the 1960s. The company took out a major competitor in 1964 when it acquired Phoscao, a manufacturer of soluble cocoa powder and other chocolate-based products. In 1970, Nutrexpa extended its range of operations into the snack cakes and cookies sector with the purchase of Galletas Paja, a company based in the Girona-region town of Riudarenes. The move into snack cakes, combined with the company's control of the Phoscao brand, provided the basis for the launch of the company's popular snack cake line, Phoskitos. The company also launched its first exports during the decade.

Nutrexpa built a new production facility in 1979, in Parets del Vallès in Barcelona. This plant featured a new warehousing facility, which took over as the group's central distribution operation for the Spanish market. The new plant and warehouse also enabled Nutrexpa to begin seriously targeting the foreign market for the first time. In that year, the company also inaugurated a new International division, which began developing a marketing and distribution strategy for the global market. In the early 1980s, the company enjoyed particular success in the Latin American market, and in 1981 Nutrexpa founded a dedicated subsidiary for the region, adding production and distribution facilities in Chile and later opening a factory in Ecuador as well. The Cola Cao brand became the group's international spearhead, accompanied by the Granja San Francisco Honey line. Portugal represented another important market for the company. Accordingly, in 1984, the company put into place a dedicated marketing and distribution subsidiary for that market.

Nutrexpa gained a new product line in 1985 when it acquired Dulces Unzue, a purchase that allowed the company to enter the confectionery sector for the first time. The Dulces Unzue acquisition also extended the company's production network, with a plant in Pamplona. By the end of the decade, Nutrexpa had added another product line to its growing holdings when it acquired Productos Selectos de Cerdo and its La Piara brand of patés, cold cuts and other meat- and fish-based spreads, hams, and delicatessen products in 1988. That company, founded in 1923, had initially targeted the youth market with iron-rich nutritional products, such as its Tapa Negra paté launched in 1974. Over the following decade, however, the company had expanded its range to include the full range of consumer segments. Under Nutrexpa, the company's product line was placed under the La Piara brand. In 1990, Nutrexpa expanded its meats production again with the acquisition of another Spanish company, Jamones Aneto. In another product extension, the company added infant formulas, under the Laboratorios Ordesa brand.

Joint Venture in China in 1991

The company's international operations received a new boost in the late 1980s when Nutrexpa became one of the first Spanish food companies to enter the slowly opening People's Republic of China. The company first began shipping its products to China in 1989. By 1991, Nutrexpa had reached a joint-venture agreement with state-owned Limind to build a factory in Tianjin. The new company became known as Tianjin Nutrexpa Food Company and set initial production targets at 2,000 tons per year. For the launch, the company adapted the name of its flagship Cola Cao brand for the local market, changing its name to Galoe Cao (or Gao Le Gao), which translated to "Grow Strong and Tall" in Chinese, a slogan shared by the Chinese Olympic team.

The joint venture proved a strong success for the company, and by the end of the 1990s it had achieved penetration on a national level. In 1999, Nutrexpa inaugurated a second and larger production facility in Tianjin in order to supply the Chinese market. The company by then had also expanded its product range there to include soluble powders, pastries, and cocoa creams. The company adapted its recipe for local tastes, adding new flavors in the new century including banana, vanilla, and strawberry in 2001, orange in 2004, and peach in 2005.

Not all of the group's expansion efforts met with equal success during the 1990s, however. The company attempted to launch its Cola Cao brand in Japan but was forced to withdraw from that market after only a few years. More promising for the company was its plans to enter the Eastern European market, particularly Russia, where it began marketing Cola Cao starting in 1992. The company launched a production subsidiary in Poland during this time. By the end of the decade, Nutrexpa had succeeded in building the brand into the top-selling instant-cocoa drink in Russia. In order to supply the growing demand for its products in that market, the company reached a production agreement with Moscow-based Inforum Prom to begin manufacturing Cola Cao in Russia. The agreement called for the construction of a new factory in Kasimov, in the Ryazan region.

Family Owned Leader in the New Century

In 1990, the company hired its first outside manager, Gianfranco Santoni, who came to the company from a position at Arthur Andersen. While the Ferrero family maintained ultimate control of the group's ownership, according to industry analysts the decision to hire professional management played an important role in Nutrexpa's ability not only to survive the difficult economic climate at the beginning of the 1990s but also to grow into a major food company distributing its products on a global basis.

Still, the family ownership did thwart some of Santoni's aspirations. In 1995, Nutrexpa was on the verge of acquiring rival food products group, Bimbo, then part of the Anheuser-Busch group. The acquisition would have doubled Nutrexpa in size, with sales of more than ESP 100 billion, and would have added a new line of pastas and bakery products. However, after the government refused to provide tax incentives to back the purchase, the Ferrero family quashed the acquisition.

The late 1990s brought a restructuring to Nutrexpa. A holding company structure was adopted with the primary subsidiary, Nutrexpa, overseeing the core Cola Cao and Granja San Francisco Honey operations. Also under the umbrella company was Laboratorios Ordesa, the infant formula operations, the La Piara meats company, and new acquisition Productos Ortiz breads, which was soon sold to rival Bimbo in 2001. Laboratorios Ordesa was eventually spun off as an independent company although the Ferrero family retained a majority stake in the sale.

Next Nutrexpa moved to boost its main cocoa operations, buying the Nocilla brand of cocoa-based products from Unilever plc's Spanish division in 2001. That acquisition was bolstered by another Unilever product family, the Mesura brand of sweeteners and corn starch and other food additives and ingredients. As part of this acquisition, the company took over a factory in Montmelo, in Barcelona. That facility continued to produce Maizena-branded corn starch and Starlux-brand bouillon cubes for Unilever. In the meantime, the addition of Nocilla gave Nutrexpa control of Spain's leading brand of chocolate spread, which boasted a share of nearly 70 percent of the Spanish market.

Nutrexpa continued to invest in its other operations as well. In 2003, the company inaugurated a new factory for its La Piara brand family. The company boasted that the Manlleu, Barcelona-based plant was the most modern paté production unit in Europe. At the same time, Nutrexpa's interests had increasingly turned toward extending its operations into the fast-growing healthful foods sector. As part of that effort, the company launched new fiber-enriched and fruit and cereal formulas of its Cola Cao brand. Nutrexpa also formed a partnership with another Spanish company, Natraceuticals, in order to develop new nutritional and functional foods compounds.

Nutrexpa remained committed to its family-owned status in the new century. At the beginning of 2007, however, the Ferrero family moved to restructure the company's ownership arrangement. As part of that effort, Javier Ventura Ferrero raised his share of the company to 50 percent, in an exchange with his brother, José Maria Ferrero, who then took full control of Laboratorios Ordesa. The other half of Nutrexpa remained controlled by Ferrero's cousins, led by Ignacio Ferrero Chloe. With internationally recognized brands including Cola Cao and Granja San Francisco Honey, Nutrexpa had become one of Spain's leading food groups, with sales estimated to be in excess of EUR 350 million ($500 million) for 2007.

Principal Subsidiaries

Cola Cao Food (Tiajin) Co. Ltd. (China); Nutrexpa Chile S.A.; Nutrexpa Portugal.

Principal Competitors

Nestlé Espana S.A.; Natra S.A.; Cadbury Espana S.L.; Cantalou S.A.; Zahor S.A.; Lacasa S.A.; Nederland S.A.; Chocovic S.A.

Further Reading

Higgins, Kevin T., "Nutrexpa Turns Heads in Honey Package," Food Engineering, October 2004, p. 18.

"Javier Ventura Aumenta Su Poder en Nutrexpa y Controla ya un 50%," Lalo Agustina, January 25, 2007.

Labiano, Javier, "La Alimentacion Se Concentra," Epoca, August 30, 2002, p. 82.

Martinez, Felix, "La Multinacional Española Oculta Se Llama Cola Cao," El Mundo, July 7, 1997.

"Nutrexpa/Natraceuticals Functional Prod Deal," Nutraceuticals International, April 2004.

"Nutrexpa (Spain) to Produce Cola Cao Drink Range in Russia," Inzhenernaia Gazeta, May 29, 2001, p. 3.

"Nutrexpa to Acquire Nocilla and Mesura," Expansion (Spain), April 17, 2002.

"Unilever to Invest Two Million at Basque Factory," Estrategia Empresarial, June 30, 2004.

— M. L. Cohen