The chocolate spread relies on palm oil for its smooth texture and considerably long shelf life and a report by the European Food Safety Authority (EFSA) declared it to be more carcinogenic than any other oil, following similar claims by the WHO.
Several retailers in Italy, including the country’s biggest supermarket chain, Coop, have boycotted the spread as a precaution.
However, Ferrero has now launched televised campaign insisting they use palm oil in a way that is not dangerous and the spread would not be the same without refined palm oil.
They also insist that it is not a question of cost but quality.
“Making Nutella without palm oil would produce an inferior substitute for the real product, it would be a step backward,” Ferrero's purchasing manager Vincenzo Tapella told Reuters.
Substitute oils, derived for example from sunflowers or rapeseed, could be used but would increase the cost of making the product by as much as $22m (£18m), a calculation by Reuters found. Ferrero has not confirmed the figures.
The cancer fears centre on a compounds known as glycidyl fatty acid esters (GE), which are produced in palm oil when it is heated above 200 degrees celsius, as it is in the processing of for many foods.
Dr Helle Knutsen, chair of Contam, the EFSA panel that investigated palm oil, said in May: “There is sufficient evidence that glycidol is genotoxic and carcinogenic, therefore the Contam panel did not set a safe level for GE.”
However, Ferrero has told Reuters that it uses an industrial process that combines a temperature of just below 200C and extremely low pressure to minimize contaminants this had allowed it to bring GE levels so low that scientific instruments find it hard to trace the chemical.