Mars subsidiary Wrigley has announced plans to cut 207 jobs at its Biesheim site in France in the wake of falling impulse sales in Europe.
It intends to modernize existing production facilities at Biesheim, which supplies many countries in Europe, by constructing a European Gum Base and Soft Gum Center of Excellence at the site.
Economy dents impulse sales
The company said in a statement: “Since 2007, chewing gum has been one of the consumer goods which are most subject to impulse purchases. Because gum is directly linked to consumers’ purchasing power, it has been particularly hard-hit by the economic downturn in Europe.”
It said that production volumes had fallen 33% at the Biesheim factory with all product formats affected, including stick, tab and pellet gums. This came as conversion costs per unit rose at the site by 36%.
“Strong measures were taken over the past years to turn around the performance of the plant and also grow the chewing gum category. Unfortunately, in spite of such efforts, Wrigley France SNC is still facing structural issues that have to be addressed now,” said the firm.
€50m modernization project
The company presented two projects to the Works Council last week that it said would secure the future of the plant - a European Gum Base and Soft Gum Center of Excellence.
“The projects would lead to significant long-term industrial investments, including €50m ($65m) in modernizing gum base production.”
The firm plans to concentrate on two pack formats at Biesheim: sticks and and tabs. Pellet pack production will move to another plant. 207 of 639 employees at the plant are expected to lose their jobs
Wrigley began operating in France with the Biesheim production site in 1967. The factory produces for the French market (13%) and European markets (87%). .
Mondelez also feeling the pinch
Wrigley main gum rival Mondelez International, with its Trident and Stride brands, has also experienced falling gum sales in recent years.
The company, which holds a 30% share of the global gum market, behind Wrigley on 32%, saw its candy & gum segment decline around 3% in 2012 as other categories grew. Mondelez CEO Irene Rosenfeld has said that it will take around two years for the category to return to growth.