- Givaudan, a Swiss flavor company, told Food Dive in an email it is shutting down two facilities in New Jersey and cutting 85 jobs. According to the New Jersey Department of Labor's website, the company is laying off as many as 104 employees from its Middlesex, New Jersey and Cranbury, New Jersey sites.
- As part of its 2020 operations strategy, Givaudan said it reviewed its existing seasoning blending and meat processing manufacturing activities in New Jersey and decided to consolidate production into newer plants with more advanced technology in Illinois and Kentucky.
- "We regret the impact that this difficult decision will have on our employees and their families and we will strive to alleviate the impact of this transition," the company said in a statement emailed to Food Dive.
Givaudan said in a statement to Food Dive it was "not an easy decision" to close these facilities, but that its long-term strategy determined that consolidation was needed.
Many food and beverage companies have consolidated in recent years to help boost revenue and improve margins. Big companies such as Kellogg, TreeHouse, Dean Foods, Coca-Cola, General Mills and PepsiCo are among the businesses to cut jobs and close plants or offices.
But as Givaudan plans cuts in the U.S., it has expanded its international facilities. The company announced the launch of a digital factory for innovation in Paris in January and opened a flavors manufacturing facility in Pune, India a month later. It looks like the company may be consolidating its U.S factories while expanding its presence around the world — potentially for cheaper labor.
Other ingredients giants have made similar moves. Global taste and nutrition company Kerry Group cut about 900 jobs in June from a facility that closed in the U.K. As Kerry shuttered that factory, it announced a $22 million facility in India. Ingredion also announced a $125 million cost savings plan last year that included transitioning its corn milling plant in California into a shipping distribution station.
But Givaudan is not only cutting costs, it is also increasing prices. Last week, the company confirmed its guidance after sales jumped 6.4% in the first nine months of 2019 compared to the same period a year ago, helped by price increases. In its flavor division, sales jumped 4.6%. The company said in a release it will continue to implement price increases. More CPG companies have been raising prices to bolster their bottom lines and ingredients companies also could be following that trend.
Givaudan’s 2020 goal is to create more value through profitable growth, which these plant closures could help them achieve. The closures could also free up cash for the company. That could be useful since part of the company’s 2020 strategy is to create value through targeted acquisitions. Since 2014, Givaudan has completed 13 acquisitions, including buying Conagra's Spicetec flavors and seasonings business for $340 million in 2016. That deal came with the facility in Illinois and the New Jersey facility in Cranbury, which they are now shutting down.
The plant closures are hitting Givaudan’s seasoning blending and meat processing manufacturing, which could be a result of changes in consumer demand. Givaudan has been looking to innovate more to meet changing consumer needs in the industry. In October, the company announced a new flavoring approach to transform the taste of plant-based meat alternatives. As consumer demands shift and Givaudan strives to drive down costs, more plant closures could be a part of its future.