The supplier, which operates brands in the UK including Harvest Cheweee snack bars and Honey Monster cereals, today (11 December) announced it is to centralise snack bar production at its facility in Newport, Wales, and outsource cereal production.
The move follows a consultation process started at the beginning of October, when Raisio said changing consumer behaviour had led to the decline of the entire UK cereal market and increased competition.
“Sales volume for Raisio’s cereals has decreased and profitability of the business has turned negative,” said the company at the time. “With the reduced sales volume, fixed costs of the Southall site further restrict profitability improvements despite the efficiency improvements already carried out.”
Improve cost efficiency
Raisio today said the new operational structure would “improve cost efficiency and competitiveness in the UK cereal and snack business” and enable it to “build a more consumer-oriented product range”. In an interim financial report issued last month, Raisio said it had seen “particularly good sales growth in healthy, natural snack bars and nibbles” in the UK.
The production restructure would improve efficiency at the Newport site and allow it produce a wider range of goods that meet consumer needs, it said, adding that outsourcing cereal production would enable it to build a “diverse product range focusing on healthier cereal products” while ensuring cost efficiency.
“Remodelling of the business is necessary to ensure future success of the UK cereal & snack business,” said Tomi Järvenpää, vice president of Raisio’s snack & cereal unit. “The new operating model improves Raisio’s competitiveness in both local and international markets."
Loss of 99 jobs
Part of the Southall production will transfer to Raisio’s Newport site early next year, and part will be outsourced. Production will cease altogether at the Southall site by the end of March, will the loss of 99 jobs. Raisio is looking at options for the future of the Southall property.
In the last quarter of 2015, Raisio has recorded write-downs of around €4.5m ($4.9m) and arrangement expenses of €7m ($7.7m) related to the closure of the Southall site.