Hershey is to close a factory in Canada manufacturing products under its Brookside brand.
The US giant said the plant in Abbotsford in British Columbia would shut by the end of October. Some 180 jobs will be affected.
The “majority” of production will move to a second facility in Canada, located in St Hyacinthe in Quebec, Hershey said. The remaining production will be transferred to a site in the US in Robinson, Illinois.
Hershey attained the two Canadian facilities when it acquired Abbotsford-based Brookside Foods in 2011.
“This decision was part of a comprehensive review of our manufacturing operations to find the most efficient and effective ways to manufacture Brookside products while continuing to meet consumer needs now and into the future,” Hershey said.
When Hershey reported its financial results for 2015 in January, the company indicated plans to expand the Brookside portfolio and push on with plans to carve out a foothold for the brand in China.
“Some of the things you’ll see in the marketplace in 2016 to address broader snacking, income bifurcation, and lower trips include a broad-based launch of substantial snacking items, including Brookside Bars, Snack Mix, and Snack Bites canisters,” president and CEO John Bilbrey said. He added Hershey would invest in increasing “Brookside distribution and trial” in China.
However, in April, when Hershey reported its numbers for the first quarter of 2016, the company faced questions on the performance of the Brookside brand in the US. Credit Suisse analyst Robert Moskow said the data had “not looked very good” for the brand.
Bilbrey replied: “As we look at the Brookside brand, we’ve been really pleased with the growth of the brand. It’s done terrific in terms of establishing itself as the number two or three dark chocolate brand in the category. It’s got great repeat purchase of somewhere in the range of like 50%, which is really, really high. It’s ahead of our acquisition strategy. Now, we have lost some distribution in the club channel. We also believe that as we have expanded it, we need to continue to work on the brand positioning some. And you’ll see that we’ve got a whole new advertising effort there.
“We also probably would tell you that we have expanded some of the offerings maybe a little bit ahead of ourselves. And we need to make sure that we just continue to work on the base brand proposition. So as we do that, we continue to have a lot of confidence in the brand.”