‘Significant’ decline in snack cake demand prompts Canada Bread closure

By Kacey Culliney

- Last updated on GMT

Related tags Cost New brunswick Baking Canada bread company

The facility set for closure produces snack cakes under the Chevalier, Cadbury and Obsession brands
The facility set for closure produces snack cakes under the Chevalier, Cadbury and Obsession brands
A significant decline in snack cakes over recent years has prompted Canada Bread Company to shut down a Quebec facility, its CEO says.

The bakery firm will close its snack cakes bakery in Shawinigan on May 3, affecting 74 employees.

The Shawinigan bakery produces a variety of snack cakes under the Chevalier, Cadbury and Obsession brands.

“We have experienced a significant decline in consumer demand for snack cakes in recent years,”​ said the president and CEO of Canada Bread Richard Lan.

The company said the closure will improve efficiencies by supporting a refocus on higher margin products and reducing overheads.

Broader shut-downs

The announcement comes just weeks after it shut down​ two fresh bakeries in Edmonton, Alberta and Grand Falls, New Brunswick and nearly one year after the closure of two Greater Toronto bakeries in May 2012.

Canada Bread plans to consolidate most of its fresh production to its larger Ontario site, opened in September 2011 by parent company Maple Leaf Foods. Maple owns 90% of Canada Bread. 

“We must adapt to food inflation and rising costs by further lowering our cost structure and improving operating efficiencies,”​ Lan said at the time of the earlier closures.

On the company’s latest announcement, the CEO said: “We are conducting a strategic review to identify category expansion opportunities. Based on the outcome of this work, there could be potential in the future to utilize this plant to support other manufacturing requirements.

“However, based on declining capacity utilization we have no alternative but to close the facility. We deeply regret the impact this decision has on our people and are committed to supporting their transition to new employment.”

In total the closure is set to cost Canada Bread around $3.1m before tax - $1.6m in cash expenses. Costs will be incurred in 2013, it said, and include severance, decommissioning and asset write-downs.

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