Cadbury factory closure confirmed

Mondelez has confirmed that it will be ending its Dunedin factory operations in early 2018.

Cadbury's Dunedin factory will close early next year, owner Mondelez has confirmed.

The company told staff on February 16 about the potential closure.

Amanda Banfield, area vice-president of Mondelez for Australia, New Zealand and Japan, said no alternative to closure could be found.

"Following four weeks of detailed consultation with the union and employees to assess
alternatives, we could not find a viable option that met global benchmarks and ensured the ongoing sustainable operation of the factory.

"Our focus is now on helping our team and minimising the impact of this decision on
them and the broader Dunedin community."

The decision spells the end for some 350 jobs at the factory, which was a major employer in the South Island city, and Mondelez said it will support relocating as many as possible for roles in Australia and the region. The company plans to keep the Cadbury World tourism venture, which employs 36 people, and is considering redeveloping the site.

The company will meet all redundancy requirements in the employment agreements and
offer a support package to staff. Staff may be able to find jobs in Australia.

Mondelez is looking for third-party manufacturers to make the company's Kiwi brands Pineapple Lumps, Jaffas, Chocolate Fish and Buzz Bar.

A working group including E tū union representative Neville Donaldson, Dunedin city Mayor, Dave Cull, Otago/Southland Employers Association chief Virginia Nicholls, MPs and Mondelez management will seek out a potential candidate.

Kraft bought the factory in 2010 as part of an 11.9 billion pound takeover of the global Cadbury group, of which the New Zealand assets were worth some $200 million. Kraft later spun out its global snacks business and renamed it Mondelez. In the first year of owning it, Mondelez injected about $80m of new capital into the New Zealand entity.

Since buying the Cadbury business, Mondelez's New Zealand operations have become closer to the global group, with 30 per cent of its sales in 2015 going to related parties, up from just 21 per cent in 2011.

However, it hasn't been unprofitable for the group. Financial statements filed to the Companies Office show Mondelez New Zealand Investments shipped back $105m of dividends between 2011 and 2015 on profits of just $39.8m, and a related party loan of $120m has accrued more than $40m of interest payments through that period.

The New Zealand holding company has also paid its parent royalties totalling $47.4m and service fees and marketing rebates totalling $37.2m.