Fazer Group has downsized plans for a new confectionery factory, citing changes in the “operating environment”, “consumer behaviour” and potential domestic sugar taxes.
The project in Lahti, southern Finland, was originally planned to take on the chocolate-producing capacity of the Finnish food manufacturer’s plant in nearby Vantaa, just outside Helsinki, as well as sugar confectionary from a facility in Lappeenranta, on the Russian border.
However, due to the inflationary environment and a downturn in consumer spending, Fazer has decided to move only its chocolate operations to the new site.
Sugar confectionery production will remain in Lappeenranta. Fazer said “development of the operations” at the site, which employs approximately 400 people, will continue.
The Lahti factory investment was part of Fazer’s strategy to “strengthen its position as the number one FMCG brand in Finland and to accelerate growth in the other Nordic countries”.
Last month, Fazer confirmed it was exiting the dairy category, ending production of milk products at its Koria plant. The Koria facility in south-eastern Finland will focus on the manufacture of oat drinks and oat-based products going forward.
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Christoph Vitzthum, president and CEO of Fazer, said: “In addition to the general uncertainty and the challenging market outlook, the unpredictability of the political environment in Finland is a concern, mainly due to the ongoing discussion regarding health taxes.
“Fazer is committed to developing the domestic food sector, to create employment opportunities and to make long-term investments in Finland. This, however, requires that the regulatory environment is predictable and treats all actors equally and fairly.”
The company said it decided to continue with the chocolate move because the Vantaa factory was “approaching the end of its technical life cycle”. It added it sees “significant growth potential” in its current chocolate portfolio and will focus on R&D in the new plant. It has recently invested in developing oat-milk-based chocolate and said it is “researching the possibilities” of cell-cultured cocoa.
In 2020, it moved production of xylitol products, including chewing gum, from a plant in Karkkila to the site in Lappeenranta.
Fazer employs 2,449 people in its confectionery arm and has made products in Finland since the 1890s. It exports to over 40 markets.
In 2022, Fazer Confectionery’s net sales were EUR461.4m.