American snack giant Mondelez International is cutting at least two months from its supply-chain lead time for a key ingredient used in Cadbury chocolate.
The company opened a $22 million facility in Shah Alam, Malaysia, on Friday to produce chocolate crumb, an ingredient that contributes to the taste and texture of Cadbury’s chocolate products, locally rather than importing it from Australia and South Africa.
“Producing it directly in Shah Alam removes at least two months from our supply-chain lead time,” Nitin Binnani, vice president of customer service and logistics for AMEA at Mondelez International, told CNBC. The new facility will reduce import and transportation costs as it looks to support volume growth across Southeast Asia in the coming years, he said.
A bigger role for Southeast Asia
Shah Alam is Mondelez’s sole Cadbury manufacturing hub for Southeast Asia, producing more than 130 varieties of chocolate and around 100 million bars annually, Binnani said.
Cocoa prices have eased after a record-breaking rally over the past two years, which was fueled by adverse weather and poor harvests that drove up costs for chocolate makers, CNBC previously reported.
Southeast Asia already plays a broader role in Mondelez’s global manufacturing network, with individual sites serving both domestic and international markets, and the company sees further room for growth in snacking across the region, Binnani said.
“Our Cikarang plant in Indonesia, for example, supplies products to nearly 40 countries including Australia and Japan, while Thailand operates as an export-oriented hub for gum and candy,” Binnani said.
Mondelez is also currently exporting crumb to Pakistan to help address supply disruptions caused by interrupted shipping channels, he said.
Based in Chicago, Illinois, Mondelez owns snack brands including Oreo, Ritz, Cadbury and Sour Patch Kids.
Mondelez is not the only U.S. company expanding chocolate-related production in Malaysia. U.S. agribusiness giant Cargill expanded its specialty fats production facility in Port Klang earlier this year, including capacity for ingredients used in chocolate manufacturing.
Formerly known as Kraft Foods, the company was renamed Mondelez International in 2012 after spinning off its North American grocery business.
