How Nutella Explains the World

Not only is Nutella sold all over the world—250,000 tons of the scrumptious chocolate goo is sold across 75 countries every year—its ingredients are sourced from just about everywhere. It’s hazelnut-flavored globalization in a jar, inspiring the Organisation for Economic Co-operation and Development to use the popular spread as a case study for “global value chains.”

The report reveals just how tightly integrated and small the world has become. Though Ferrero, the company that brought Nutella to market in 1964, is headquartered in Italy, an OECD-produced map illustrates what is a truly international concoction, with factories in Europe, Russia, North America, and South America. While certain stuff is sourced locally, like milk and packaging materials, the main ingredients come all over the place. Turkey provides the hazelnuts for its trademark flavor while the cocoa is harvested from Nigeria. Sugar is shipped from Brazil. The more subtle inputs, like palm oil and vanilla, are supplied by Malaysia and France.

Every spoonful of Nutella is the result of a vast global enterprise. These are the so-called global value chains that the OECD report suggests “world trade and production are increasingly structured around.” The iPhone is designed in California, its chips are fabbed in Taiwan, among other places, and the pieces are put together in China. This is one reason why the concept of slogans like “Made in the USA” are not only increasingly irrelevant but also nonsensical.

This is the nature of our globalized world, where the assembly line no longer takes place in the confines of a factory itself, but in the world at large, one in which borders continue to become less defined, and the only kind of world where something like Nutella can not only exist, but also be accessed by just about anyone craving some nutty, chocolatey goodness. And why World Nutella Day, celebrated on February 5th each year, is actually a thing. If I wanted to, I could walk thirty feet to my corner bodega and buy some right now. The stuff we get in the US is made in Brantford, Canada and for some reason contains soy products.

Any economic textbook will tell you that free trade is unanimously represented as a good thing, in that it theoretically results in a net positive for society with regards to production efficiency. A report by the World Bank Group found that 721 million fewer people lived in extreme poverty in 2010—defined as under $1.25 a day—compared to 1981.

But the reality is also a bit more complicated, mainly because, even as national borders become economically less defined, they still very much exist socially and politically.

In the US, the allure of cheap iPhones means sacrificing some manufacturing prowess while undercutting domestic labor.

For developing nations, too much specialization can be detrimental. “Banana republic” isn’t just a store that sells overpriced Gap apparel, it’s also a term for politically unstable countries whose economies are dependent on the export of a single limited-resource product, like bananas, explained expertly by the Economist:

It refers to the fruit companies from the United States that came to exert extraordinary influence over the politics of Honduras and its neighbours. By the end of the 19th century, Americans had grown sick of trying to grow fruit in their own chilly country. It was sweeter and cheaper by far to import it instead from the warmer climes of Central America, where bananas and other fruit grow quickly. Giants such as the United Fruit Company—an ancestor of Chiquita—moved in and built roads, ports and railways in return for land. In 1911 the Cuyamel Fruit Company, another American firm (which was later bought by United), supplied the weapons for a coup against the government of Honduras, and prospered under the newly installed president. In 1954 America's Central Intelligence Agency (CIA) backed a coup against the government of Guatemala, which had threatened the interests of United. (Historians still debate whether the CIA's motive was to protect United or, as many now believe, to nip Communism in the bud.) Hence the real meaning of a “banana republic”: a country in which foreign enterprises push the government around.

It should be obvious why banana republics aren’t generally desirable when taking into account the best interests of the country itself, especially for the impoverished working class, a seemingly unavoidable outcome when a country’s economy is hijacked by foreign corporate interests who manipulate the resulting plutocracy. A toxic economy is hard to shake off. By some accounts, the structural problems in Honduras largely remain unchanged a century later.

Even China, the biggest benefactor of the freer trade responsible for most of the decline in global poverty in the last three decades, must deal with the consequences of a more laissez faire attitude, where, in certain parts of the country, simply breathing can kill. In November, an 8-year old girl was diagnosed with lung cancer, the sad outcome of out-of-control air pollution that is now visible from space. Coal emissions were responsible for a quarter million premature deaths in 2011, according to a Greenpeace study.

None of which is to say that a more integrated economy isn’t a good thing; it is. But there are always countless variables to consider and finding the right balance is neither easy nor straightforward—though it appears inevitable. Last week, the World Trade Organization agreed to what UK Prime Minister David Cameron called a “historic” deal that will provide a “lifeline” for the world’s poorest people.

“For the first time in our history, the WTO has truly delivered,” said WTO chief Roberto Azevedo of the WTO’s first comprehensive agreement since it was founded in 1995, a deal that could add $1 trillion in trade and 20 million new jobs to the global economy. Apparently, making everything more like Nutella is very beneficial. And in the future, nearly everything we consume will likely follow the same formula.

As it turns out, there aren’t any Ferrero factories in Asia yet, though not due to lack of resources, according to authors of the report Koen Backer and Sébastien Miroudot. Global corporation-concocted foodstuffs like Nutella are still an acquired taste, one that the Chinese and their regional neighbors have yet to take to. Of course, it’s nothing a well-executed marketing campaign can’t address. If the popularity of McDonald’s, Coca Cola, and even Spam is any indication, it’s only a matter of time before everyone joins our Nutella world.

@sfnuop