Spanish confectioner in sticky situation

Related tags Chupa chups Lollipop

Spanish confectionery group Chupa Chups has announced a 17 per cent
drop in sales for 2002 - a decline which has forced it to close
most of its foreign production units.

Spanish confectionery group Chupa Chups has reported a 17 per cent drop in sales for the 2002/2003 financial year to €501 million, a performance which has forced the lollipop producer to effectively close four production facilities.

This year, the Spanish company ceased production at its Brazilian plant, sold its Chinese facility to its local partner, reduced staffing levels in Mexico to a bare minimum and closed its French facility in Bayonne - a move which was announced just last week.

The Bayonne plant has been closed because the mature European confectionery market does not justify numerous production facilities there, the company said, adding that its sales in Europe fell 13 per cent by volume in 2002.

Chupa Chups now has just one foreign confectionery production unit - in St Petersburg, Russia. A pastry production facility - Pastelería Ballabriga - which the company operates in Russia is likely to be closed or sold soon, however.

The company will now focus on its Spanish production facilities in Barcelona and Asturias. Increasing productivity at these two facilities should enable the group to substantially reduce its cost base.

Productivity will be increased not only by transferring production from the sites which have been shut down but also by introducing a range of new products, not least in the sugar-free segment of the market, the only one to show any significant growth in recent years.

Chupa Chups has not been active in this market until now, but a recent trial of its Chupa Chups Cremosa sugar free brand has proved successful, and a nationwide rollout for the brand is expected this year.

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