Mondelez International is putting cash behind chocolate manufacturing in a major European market.
The US snacks giant is to install a new production line at its plant in Bournville in the UK to make Cadbury Dairy Milk products.
Mondelez said the GBP11m (US$15m) project would see the company make the “majority” of its Cadbury Dairy Milk chocolate at the Bournville factory.
The total production volume in Europe is not being increased, with Mondelez moving output from plants elsewhere in the region to Bournville. Some of the Cadbury Dairy Milk products will continue to be made at other plants in Europe “for technical and capacity reasons”, Mondelez said.
“There have been and always will be a minority of Cadbury Dairy Milk products that are made elsewhere for technical or capacity reasons. For example, Cadbury Dairy Milk Big Taste which needs specialist equipment to make. However, the majority of Cadbury Dairy Milk bars sold in the UK have always been made in Bournville, and we remain committed to this,” a spokesperson said.
Asked if Brexit was factor in the move to switch Cadbury Dairy Milk volumes from factories on the continent to the UK, the spokesperson added: “The investment wasn’t driven by Brexit, the driver was increasing supply-chain efficiency in order to continue to improve Bournville’s productivity and competitiveness.”
The company is also planning to invest another GBP4m at the site to increase its chocolate-making capacity “to meet current demand and anticipate future needs”.
Bournville is a district in the UK city of Birmingham, where Cadbury was founded in 1824. The Bournville factory was opened in 1879.
In 2010, the then Kraft Foods acquired Cadbury plc. A year later, Kraft announced a plan to split into two, with Mondelez housing its snacks brands, including its Cadbury assets.
"This investment will continue the modernising of our production processes at Bournville and ensure we are meeting the need for a highly-efficient and robust supply infrastructure for our iconic Cadbury Dairy Milk tablets," Louise Stignant, the managing director of Mondelez's operations in the UK, said.
In 2016, Bournville was named among a global network of R&D hubs Mondelez set up to participate in the company's innovation initiatives. Two years earlier, Mondelez announced a programme of upgrades at the factory that led to a reduction in jobs.
Last week, when Mondelez published its financial results for 2020, the company reported "strong growth" in its chocolate sales in Europe in the fourth quarter of the year. Globally, Mondelez "held or gained share in ... 80% of our chocolate revenue base" last year, CFO Luca Zaramella said. He described Mondelez's UK chocolate business as "a notable share gainer" during 2020.
Mondelez said it expects to hit its target for annual sales growth in 2021 for the third straight year, with the Milka maker predicting continued growth in biscuits and chocolate would offset a gum market still hit by Covid-19-related pressures on mobility.