Friday 17 March 2017 10:01 AM
Mondelez confirms Dunedin exit, will consider using third party for Kiwi candy
By Paul McBeth
March 17 (BusinessDesk) - Mondelez International, the US food group on a global push to cut costs, will close the doors on the Cadbury factory in Dunedin early next year.
The multinational has been in talks with the union and staff for the past four weeks to try to find a way to keep the factory open but has settled on its original plan to wind down the facility by early next year, it said in a statement. However, it is open to Kiwi staples such as Pineapple Lumps and Jaffas being made by a third party in New Zealand, and a working group including E tū union representative Neville Donaldson, Dunedin city Mayor, Dave Cull, Otago/Southland Employers Association chief Virginia Nicholls, MPs and Mondelez management will seek out a potential candidate.
"Following four weeks of detailed consultation with the union and employees to assess alternatives, we could not find a viable option that met global benchmarks and ensured the ongoing sustainable operation of the factory," Amanda Banfield, Mondelez area vice-president for Australia, New Zealand and Japan, said in a statement."Mondelez International remains committed to New Zealand and will continue to employ over 130 people nationwide to support the hundreds of small, medium and large retailers and business partners we have right across the country."
The decision spells the end for some 350 jobs at the factory, which was a major employer in the South Island city, and Mondelez said it will support relocating as many as possible for roles in Australia and the region.The company plans to keep the Cadbury World tourism venture, which employs 36 people, and is considering redeveloping the site.
Kraft bought the factory in 2010 as part of an 11.9 billion pound takeover of the global Cadbury group, of which the New Zealand assets were worth some $200 million. Kraft later spun out its global snacks business and renamed it Mondelez. In the first year of owning it, Mondelez injected about $80 million of new capital into the New Zealand entity.
Since buying the Cadbury business, Mondelez's New Zealand operations have become closer to the global group, with 30 percent of its sales in 2015 going to related parties, up from just 21 percent in 2011.
However, it hasn't been unprofitable for the group. Financial statements filed to the Companies Office show Mondelez New Zealand Investments shipped back $105 million of dividends between 2011 and 2015 on profits of just $39.8 million, and a related party loan of $120 million has accrued more than $40 million of interest payments through that period.
The New Zealand holding company has also paid its parent royalties totalling $47.4 million and service fees and marketing rebates totalling $37.2 million.