Cocoa processing overcapacity prompts ADM closure plan

By Jess Halliday

- Last updated on GMT

Related tags Chocolate

Archer Daniel Midland is proposing to close its cocoa processing plant in Hull, UK, this summer because there is overcapacity in the market place and demand for semi-finished cocoa is shifting to Central and Eastern Europe.

The US company conducts first-stage processing of cocoa beans at the plant in Hull, which currently employs 86 people. It also has a chocolate manufacturing plant in Liverpool.

But it now sees the Hull plant as surplus to requirements, because there is simply too much semi-processed chocolate on the market.

What is more, where once manufacture of chocolate products was once a thriving industry in the UK, brand owners are tending to move manufacturing to places where labour is cheaper.

The company said that even consolidation in demand – that is, mergers and acquisitions between major confectionery firms – has not improved the outlook.

In a statement it said: “In order to continue to meet our customers' demands, we need to align our production capacity with our European and global customer base, providing better efficiency for our customers. It is for this reason that we have a proposed business plan to close our operations in Hull."

Organic efforts

The Hull plant has been the hub of efforts to offer more differentiated cocoa offerings, in keeping with consumer tastes and demand. In May 2008 it announced the launch of a new range of organic chocolate ingredients in liquid form and in solid forms, (such as chips, buttons and fragments).

This involved bringing in some changes in production patters in the Hull plant, as well as in Liverpool. For instance, the system has to be flushed with 4 metric tonnes of organic beans when switching from non-organic, with cocoa from those 4 tonnes labelled non-organic. It also had to complete mass balance system for full traceability of organic products.

ADM has now started a 30-day consultation process on the possible closure, which could take place as of 1 July, involving unions. It has said it will not take a final decision until after that process has ended.

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