Mondelez Plans To Invest $110 Million In Russian Snack Factory
By Isaac Fletcher, contributing writer, Food Online
Aiming to improve its supply chain, cut costs, and seize opportunities in emerging markets, the snack maker plans to build a new factory in politically-turbulent Russia
Mondelez International, the snack manufacturing giant that makes products such as Chips Ahoy!, Trident, and Oreo, is planning to spend $110 million on a new factory in Russia. This is just one of many global investments Mondelez has made in developing markets in throughout 2013 and early 2014.
In Mexico, the company invested $350 million to build a biscuit manufacturing plant. $300 million was invested in Brazil to expand production capacity. A Nigerian chocolate plant received a $30 million boost for facility upgrades. $190 million was invested in India to build the country’s largest chocolate manufacturing plant. And in China, Mondelez invested $85 million to expand its Biscuit plant. In September 2013, Mondelez stated that it hoped to achieve 25 percent growth in capacity over the next three years by optimizing its production network and improving or shutting down subscale facilities.
The Russian plant, which will be Mondelez’s most advanced facility in Russia, will be built in the Novosibirsk region, adding enough capacity to produce 50,000 tons of snacks annually. The plant will also create about 180 jobs. Snack lines manufactured at the new plant will include Jubilee, TUC and Barni biscuits, Aspen Gold, Milka, and Vozdushny chocolate.
Recent political tensions have created some resistance for U.S. companies that are operating in the region, but Mondelez plans to go through with the project nevertheless. The move is a part of the company’s effort to improve its supply chain and cut costs, which have become major goals for the company in recent months and a driving factor behind the closure of the company’s Philadelphia plant in the early part of February.
Mondelez is trying to cut $1.5 billion in net productivity costs and increase its cash flow by $1 billion over the next three years, according to spokesman Michael Mitchell. Mitchell goes on to say that Mondelez is adopting “a number of initiatives around the world to capitalize on growing demand in emerging markets, while also aggressively reducing costs and improving productivity.”