Mondelēz to spend $123M on Virginia location expansion

Dive Brief:

• Mondelēz International will invest $122.5 million over three years to boost capacity at its Richmond, Virginia, location, the commonwealth’s governor said in a statement. 

• The investment will include a 68,000-square-foot expansion of the company’s Richmond Biscuit Bakery, which will support its manufacturing operations and enable the installation of a high-speed Oreo production line, according to the press release. The bakery is the company’s East Coast manufacturing hub for Mondelēz’s U.S. operations and employs more than 500 people.

• The company also will be opening a new sales fulfillment center close to the Richmond bakery. The fulfillment center, which will support Mondelēz sales and distribution in the U.S., is scheduled to open in 2022. It will create approximately 80 new jobs.

Dive Insight:

Earlier this year, Mondelēz announced plans to close bakery plants in Atlanta and Fair Lawn, New Jersey, moves that would impact roughly 1,000 workers. At the time, Mondelēz said the two locations were no longer geographically strategic and the plants were facing operational challenges, including aging infrastructure.

Instead, the maker of Ritz, Triscuit and Tate’s Bake Shop cookies decided to focus production at facilities in Richmond, Virginia; Chicago; and Portland, Oregon. 

The announcement by Mondelēz follows through on that commitment and increases the company’s output of snacks while offsetting some of the production lost from the shuttering of the earlier facilities. The construction of the bakery will play a major role in increasing production for Oreo, the world’s top selling cookie brand, according to the statement. Mondelēz estimates that it produces 40 billion Oreo cookies globally each year.

Food companies have been scrambling to increase output across a host of areas in order to meet heightened demand. Data compiled by Food Dive show half of the states in the U.S. have seen at least one new food industry facility this year. 

PepsiCo’s Frito-Lay, Dole, Diageo, JBS USA, Tyson Foods, Nestlé and General Mills are just a few of the companies that have announced new or completed manufacturing projects in 2021. Last week, J.M. Smucker said it would invest $1.1 billion to build a new manufacturing facility and distribution center in Alabama to produce its Smucker’s Uncrustables sandwiches. 

Mondelēz has been among the most ideally positioned of CPGs, with its focus on crackers, bars and cookies perfectly matching shoppers’ desire to both snack and indulge — trends that have only accelerated during the ongoing COVID-19 pandemic. Still, the growing demand for boosting production has coincided with a tight labor market that has left businesses scrambling to find enough employees, and in the process giving workers the upper hand when it comes to labor negotiations.

Workers at Mondelēz factories in five states, including Richmond, went on strike earlier this year for more than a month before negotiating a new contract that ended the stalemate in September. Now those who were walking the picket lines only a few weeks ago can soon expect to see higher output and more coworkers once the expansion has been completed.