How does the rising cost of hazelnuts impact NUTELLA®?

Hazelnuts are used in high-end chocolate items such as pralines and truffles.  In addition, hazelnuts are used in Nutella spread.  Turkey supplies more than 70% of the world’s hazelnuts. In 2014, there was a widespread frost in Turkey that damaged hazelnut flowers and cut production of hazelnuts by 28%.  The price of hazelnuts more than doubled ahead of the peak demand season at Christmas and the Lunar New Year and the price continues to be high into 2015.

NUTELLA® is made by Ferrero Canada Inc., which is headquartered in Toronto, Ontario, Canada. Ferrero Canada Inc., is a subsidiary of Ferrero International.  The main production plan for Nutella for North America is in Brantford, Ontario.

Questions

1. What variance(s) will the increased cost of hazelnuts impact at the Nutella plant in Ontario?
2. How can Nutella respond to the increase in the cost of hazelnuts?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

• Student handout (pdf) (word) (contains entire blog posting + discussion questions)
• PowerPoint file (brief article overview + discussion questions)

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