- Russell Stover Chocolates will be laying off about 400 workers as it shutters a factory in Montrose, Colorado next year and closes distribution and fulfillment centers in Cookeville, Tennessee and Butler, Missouri. Low-traffic Russell Stover stores will also close during the next year. The company will add about 300 workers as it expands facilities in Corsicana, Texas; Abilene, Kansas and Iola, Kansas.
- “Having been in business since 1923, we know the importance of keeping pace with the changing tastes and preferences of the people who buy our chocolates,” Russell Stover CEO Andy Deister said in the release. “Just as consumers change their preferred flavor or package, they’re changing the way they shop for our products, and we’re making sure we have the infrastructure to deliver on their expectations.”
- Last week, the Kansas City chocolate company's corporate parent Lindt & Sprungli AG announced a separate round of about 300 layoffs, according to Kansas City's KSHB. These layoffs involve sales and executive jobs throughout merchandising teams that include Russell Stover. A Lindt representative told the local TV station this only would involve a "low, single-digit number" of employees in the Kansas City area.
With so many personnel announcements in such a short period of time, it's difficult to do the math on how these moves affect Russell Stover and its employees.
Simple subtraction shows that the company is losing a net of more than 100 jobs, but considering the locations of plant closures and expansions, plus the hazy announcement from the parent company of 300 layoffs — which only seems to have been reported by Kansas City media — it's unclear how deep these cuts are. Neither Russell Stover nor its Swiss parent company Lindt & Sprungli make many company announcements that aren't marketing-related or dealing with the full company's financials, so there are many gray areas.
However, it's clear that business is sweet for Russell Stover and Lindt & Sprungli, which bought the Kansas City-based chocolate company in 2014 for $1.6 billion. The Swiss confectioner also owns chocolate brands Ghiradelli and Lindor, and is the United States' third largest chocolate maker. Lindt & Sprungli released its 2019 global sales report on Tuesday, reporting organic sales growth in North America of 5.4%. All three of the chocolate maker's brands, the company said, contributed to the increase. Russell Stover's press release says fiscal year 2019 was "strong."
It has taken time for Russell Stover to get settled in as part of the Swiss chocolatier's portfolio. When the company was purchased, many consumers thought of it as a boxed chocolate brand. After sales volumes of the brand fell 20% in six months in 2016, Lindt & Sprungli started repositioning Russell Stover as a brand that makes "everyday" chocolate in pouches and bags. Russell Stover also launched a stevia-sweetened sugar-free line of chocolates in 2017.
Sales have picked up for Russell Stover, and Lindt & Sprungli has the financial opportunity to make big changes now. According to Lindt & Sprungli's 2019 sales report, these changes will cost 60 million Swiss francs ($62.2 million), but the cost will be offset by a one-time Swiss tax benefit. The company states this will support future growth in the U.S.
And it's all about modernizing. The Colorado plant that is closing next spring was Russell Stover's fourth factory and built in 1973. The Kansas and Texas factories that will be expanded are state-of-the-art factories totaling more than 1.2 million square feet, according to a case study from the engineering and construction firm that worked on them. They all have specialized equipment and were designed for eventual expansion and easy transport of candy both in the United States and abroad.
It's also important to be prepared for what's next, David Abbott, Lindt & Sprungli USA's senior director of supply chain planning, told Supply Chain Best Practices.
“We need to stay ahead of it because of the scale,” Abbott told the website. “For example, when we run out of capacity to make our Lindor truffles, buying a new machine has a long lead time from designing, to buying, installing and producing Lindor truffles from it.”
Several other food companies are investing in improving manufacturing and logistics as a way to improve sales and delivery. Kellogg and Nestlé have both made the shift to warehouse distribution in the name of cost savings. For Kellogg, that resulted in more than 4,499 jobs lost, while Nestlé's layoffs will add up to around 4,000.
It remains to be seen how these changes will impact Russell Stover, which began as a family-owned and local company. However, considering the tax-related windfall Russell Stover's parent company is receiving from the Swiss government, now may be a good time to make those shifts.