Wessanen closes cereal unit

Related tags Breakfast Wheat Cereal

Wessanen, the Dutch wellness foods group, is to close one of its
British breakfast cereal production units as part of its cost
cutting programme, Operation Phoenix.

The company said that the Dailycer breakfast cereals manufacturing facility in Telford would be merged into other production facilities in the UK, France and the Netherlands, with the loss of 140 jobs.

The plant will cease operations in the second half of 2004.

Operation Phoenix was launched in August 2003 by Wessanen's new chief executive Ad Veenhof in order to reduce costs and refocus the one-time dairy group on its core wellness foods business - be it diet foods, organic products or supplements.

Consolidation of Dailycer's manufacturing activities onto the three sites will improve competitiveness and increase the group's profitability, the company said. The bulk of the volumes manufactured in Telford will move to Dailycer's remaining UK-based facility in Deeside, with some transferred to the factories in Tilburg (the Netherlands) and Faverolles (France). Office functions will be moved to Deeside.

This is the latest in a series of changes at the company's cereal activities, which have been among the weakest of its divisions for some time. A restructuring programme at Dailycer has already led to an improvement in sales - although turnover fell slightly to €111.6 million in the first half of 2003, this was attributed solely to exchange rates - but consolidation of production facilities was always an inevitability.

In October, Wessanen announced that the Dutch production activities of Dailycer in Tilburg were to be integrated into the activities of Delicia, Wessanen's chocolate manufacturing business also based in Tilburg.

At the same time, the production of wheat flakes at the Deeside factory was transferred to the Telford and Faverolles sites - and presumably could now be transferred back again following the decision to close the Telford site, although at the time Wessanen said that Deeside would concentrate on higher-margin cereal bars, making it likely that Faverolles will get the wheat flake business.

Other Wessanen​ units which have not performed well, such as the Tree of Life supplements retail business, have also been restructured under Operation Phoenix, but disposals are now thought to be less likely than before, with Veenhof's aim to improve efficiencies at the businesses rather than abandon them completely.

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