(Corrects currency of Van Melle NV acquisition on the second screen.)
Feb. 1 (Bloomberg) -- In 1946, brothers Ambrogio and Egidio Perfetti took over their father’s small candy workshop in Lainate, Italy. One of the their earliest products was the country’s first brand of chewing gum, Brooklyn, which featured the iconic New York City bridge on the wrapper.
During the next six decades, the brothers transformed the business into Perfetti Van Melle SpA, the world’s sixth-largest confectionery and maker of Mentos mints and Airheads taffy. The closely held Milan-based company reported 2.37 billion euros ($3.15 billion) in revenue in 2011, up 12 percent from a year earlier amid increased demand from emerging markets such as India, where sales rose 169 percent from 2007 through 2012, according to a research report by Euromonitor International.
The surge in value has added more than $1 billion to each of the fortunes of Ambrogio’s two billionaire sons, Augusto, 61, and Giorgio, 65, according to the Bloomberg Billionaires Index.
“They’re really playful in their product mix,” said Marcia Mogelonsky, Director of Insight at market researcher Mintel Food and Drink, in a phone interview Jan. 22. “The company is privately held, so we don’t know a lot about them. But what we do see is clever innovation that’s strategically organized.”
The brothers control the candy maker through C+F Confectionery & Foods Holding BV, a Netherlands-based holding company. Each has a net worth of at least $3 billion, according to the Bloomberg ranking
Sales of Perfetti chewing gum make up 41 percent of its revenue, while candies -- including Airheads and Chupa Chups lollipops -- account for 59 percent, according to Anna Re, a Perfetti Van Melle spokeswoman in Milan. More than 22 percent of its total sales come from Italy, according to Euromonitor.
In January 2001, the company acquired 63 percent of Van Melle NV, the Breda, Netherlands-based maker of Mentos, for $649 million. The operation already owned a 37 percent stake in Van Melle, which it bought in 1991.
The company publishes little financial information. At a press conference at the time of the Van Melle acquisition in 2001, Augusto Perfetti said his company was more profitable than Van Melle. In 1999, the last year financial information was available on Van Melle, the company earned 28.8 million euros on sales of 447.6 million, giving it a 6.5 percent net margin, according to its annual earnings report.
Re said the company declined to comment on the Perfetti family’s net worth.
Italy’s largest candy fortune belongs to Michele Ferrero, the 87-year-old billionaire who controls Ferrero SpA, the maker of Nutella, Tic Tac and Ferrero Rocher chocolates.
Ferrero International SA, the family’s Luxembourg-based holding company, reported fiscal year 2011 revenue of 7.2 billion euros. Ferrero has a net worth of $24.7 billion, making him the 22nd-richest person in the world, according to the index.
Perfetti Van Melle is valued at $6 billion, according to data compiled by Bloomberg, applying its 2011 financial results to the average enterprise value-to-earnings before interest, tax, depreciation and amortization and price-to-earnings multiples of four publicly traded peers: Hershey, Pennsylvania-based Hershey Co., Kilchberg, Switzerlands’s Lindt & Spruengli AG, Seoul’s Lotte Confectionery Co. and Mondelez International Inc. of Deerfield, Illinois. Enterprise value is defined as market capitalization plus total debt minus cash.
The brothers, who moved to Switzerland in the early 1980s, shun publicity. No Perfetti family members serve on Perfetti Van Melle’s board, and the company is run by outside managers.
Their uncle, Egidio, was kidnapped by a gang in 1975, and was released several days later. In 1979, a second kidnapping attempt targeting Egidio was foiled. The family decamped to Switzerland shortly afterwards.
In 1980, Perfetti started joint distribution with Van Melle in Eastern and southern Europe, and two years later, opened its first foreign factory, in Greece. In 1986, they acquired Davide Caremoli SpA, a Milan-based company that makes Golia licorice.
Control of the company passed to Augusto and Giorgio in 1989 after their father’s death. Their uncle, Egidio, died two years later without any heirs.
Under the second generation’s ownership, the company expanded its product line and geographical presence beyond Europe, into markets such as Asia and South America. They added production sites in India, China, Vietnam and Brazil. In 2006, Perfetti Van Melle bought Chupa Chups SA, the Spanish lollipop maker whose logo was designed by Salvador Dali, for an undisclosed price.
The brightly-colored pops were a natural fit for a company that, according to Mintel’s Mogelonsky, is characterized by clever packaging and branding. One example: Mentos gum.
“They took what started as a mint and transitioned it into gum,” she said. “It leverages a popular brand name, and it also leverages the desire of the consumer to chew gum.”
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