New Britain Palm Oil has signed a $100m deal to supply Ferrero, the Italian confectionery maker, with sustainable palm oil as food producers come under pressure to source commodities ethically and to stop using hydrogenated fats.
Ferrero, whose brands include Ferrero Rocher, Nutella and Tic-Tac, stopped using hydrogenated fats two years ago to assuage consumers’ health concerns and now uses palm oil instead.
Greenpeace last year criticised Ferrero for not buying sustainable palm oil for use in Nutella, claiming the privately aowned Italian company was contributing to deforestation.
Alessandro Cagli, corporate social responsibility director for the Ferrero Group, said “increased scrutiny from non-governmental organisations” had spurred it to buy sustainable oil.
Consumers prefer companies to use sustainable raw materials if they do not affect products’ taste or raise prices, Mr Cagli said, adding Ferrero uses palm oil to create a “creaminess” in its confectionery brands.
Cadbury New Zealand this summer was hit by an environmental backlash after it replaced cocoa butter in its Dairy Milk chocolate with palm oil. The company has since stopped using palm oil.
Ferrero said agreement with New Britain, which will supply oil from a factory being built in Papua New Guinea, will provide about a quarter of its palm oil needs. It expects the company to eventually supply all its requirements.
Alan Chaytor, executive director of New Britain, said it expected to sell oil to more food producers when it completes construction of a factory in the UK early next year.
Ferrero declined to specify exactly how much palm oil it buys annually but said volumes were lower than its sugar, cocoa, hazelnut and milk purchases.
New Britain’s shares have risen 56 per cent over the past year to trade at 385p.
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