By Sam Lewis
Company is having a “crisis of trust” after horse meat scandal
Nestle will be shutting down its frozen, ready-to-eat meals operations in its Beauvais, France facility. This announcement was made by the company on Oct 25 and comes as a consequence of the horse meat scandal that swept through Europe earlier this year.
A Nestle spokesperson announced that ready-to-eat meals’ sales were down 25 percent from a year ago, after falling 40 percent during the peak of the scandal. This has caused what Nestle is calling a “crisis of trust.” With sales that low, the plant manufacturing the frozen meals under the Maggi brand has been deemed “uneconomical” to remain open. “There is not enough activity to continue,” says the Nestle representative. “The supermarkets were not concerned about our products following the horse meat scandal, but there was a crisis of trust from consumers, and that had an impact on the sale of our products.”
The shutdown will affect only the company’s frozen ready-to-eat meals under the Maggi brand, not any other Maggi products. The shutdown, which will be completed by mid-2014, will affect 165 employees of the plant. Nestle plans to offer those affected with two options. First, they will be offered jobs in the same facility in the ice cream production portion of the business. Other employees will be receiving a severance package from the company. France is home to Nestle’s second-biggest market, only trailing the U.S. Currently, Nestle France employees 16,000 people at 30 plants.
From here forward, Nestle, the fifth most loved company worldwide, plans to concentrate efforts on ice cream production at the Beauvais, France plant. This means it may be furthering its investment in the frozen confectionary, which may make the brand more competitive. Nestle already has invested 20 million Euros in the facility over the last three years, primarily on new, high-tech production lines.