Givaudan plans to streamline its savoury flavour manufacturing production in Europe, with a new plant in Hungary designed to take over most of its current production from the UK and Switzerland, according to FoodNavigator.Com.
The proposed investment plan would also increase capacity by 50%, which the firm says will help support future growth, particularly in developing markets where it hopes to increase its presence.
Givaudan’s new European savoury manufacturing plant, located in Mako in Hungary, comes at a cost of CHF 170 million (NZD$288 million) and is expected to be fully operational by 2013.
According to the report, the proposed investment, which is still subject to consultation with employee representatives, will take over all savoury flavour production from Givaudan’s Bromborough plant in the UK, as well as part of its production from Kemptthal in Switzerland.
Only the dry powder-blending manufacturing will move from Kemptthal to Mako, while process flavours, spray-dry manufacturing and commercial/marketing and product development/creation will remain in Kemptthal.
The new site will have 50% extra capacity over and above the existing capacity at Bromborough and Kemptthal.
The site will produce culinary flavour blends, snack seasonings and spray-dry flavours, and will also boost the company’s capability to produce Kosher, Halal and allergen-free products.
Nnormal business operations at Kemptthal and Bromborough will continue until 2012.
The ultimate goal, said a spokesperson, is to obtain an improved supply chain, which would help the firm “anticipate market demands with regard to quality, while staying cost competitive and profitable”.
In a statement to investors, Givaudan said the proposed plant is part of an updated five-year strategy for growth. The facility will be located close to the “fast-growing markets of Eastern Europe”, which the firm has identified as a growth opportunity.
Developing markets currently account for 41% of Givaudan’s sales, and the company expects this to increase to 50% by 2015.
Givaudan expects that the savoury manufacturing strategy together with other efficiency programmes will result in a restructuring cost of approximately CHF 75 million including an estimated cash component of CHF 55 million.
The expected payback for the savoury manufacturing investment is seven years and for the efficiency projects around three years, said the firm.
Overall, Givaudan expects its growth strategy to deliver free cash flow to between 14-16% of sales by 2015.
“The overall objective is to grow organically between 4.5% and 5.5% per annum, based on an assumed market growth of 2% to 3%, and to continue on our path of market share gain over the next five years,” CEO Gilles Andrier was quoted saying.