What Nutella teaches us about global supply chain risks
BNN Bloomberg
Beloved hazelnut spread Nutella is a classic example of the benefits and costs of globalization.
Beloved hazelnut spread Nutella is a classic example of the benefits and costs of globalization.
Some 400,000 tons of it are produced every year by a supply chain touching almost every continent. Key ingredients such as cocoa, hazelnuts and palm oil are sourced from Africa, the Middle East and Asia, as producer countries boast about bringing their people out of poverty.
That network has come with consequences, though. Accusations that child labor was being used on hazelnut farms in Turkey pushed Nutella’s parent Ferrero to ramp up traceability of its supplies in 2019. The breakneck expansion of palm-oil production in Indonesia and Malaysia has come at the expense of vast swathes of rainforest, which Ferrero tries to counteract with sustainable sourcing and satellite monitoring of forest areas. Now environmentalists and some farmers are grumbling about the impact of the firm re-shoring some production back to Italy.
This is a breakfast staple that, even as it scrambles to keep ever-stricter tabs on supplies, seems to catch a lot of political flak.
Nutella is only one of many reminders that multinational supply chains are at the heart of global struggles like the fight against climate change and the drive to stamp out human-rights abuses. And yet this responsibility still seems to be catching firms by surprise.
The need for companies to look beyond their immediate doorstep and scrutinize every aspect of their production has been a feature of the COP26 summit, where palm-oil producers were among 100 countries pledging to halt and reverse deforestation by 2030. The issue has also been front and center during COVID-19, as lockdowns put essential workers in harm’s way for poor pay. Judging by the struggles to keep supermarket shelves stocked in the current recovery, supply-chain vulnerabilities are still being felt.
