Declining snack cake sales are leading to the elimination of the Chevalier, Obsession and Cadbury snack cake brands and the closure of a Canada Bread plant in Quebec.
Seventy four employees – 11 salaried and 63 paid hourly – will lose their jobs when the bakery in Shawinigan, Quebec closes its doors on May 3, while the three snack cake brands will be discontinued at the end of May.
“Essentially it’s a closure that’s market-driven, unfortunately,” said Dave Bauer, a spokesperson for Canada Bread, which is 90 per cent owned by Maple Leaf Foods.
“The snack cakes business has experienced a significant decline in sales volumes and profitability in recent years.” For example, between 2010 and 2012, snack cake sales saw “a decline of north of 40 per cent,” with production falling accordingly.
The bakery has become “highly underutilized” and unprofitable, Bauer said. “As a result, we had no choice but to immediately close the facility.”
Most of the company’s snack sales were in Quebec where there has been a trend toward healthier food options, he said.
Canada Bread is not the only company to have been hit by declining snack cake sales in Quebec. Last year, Montreal-based cheese and dairy giant Saputo – which makes the famous Jos. Louis and May West snack cakes under its Vachon bakery division – took a $125-million fourth-quarter writedown related to “stagnating growth in market-wide snack cake sales.”
Closing the plant will cost Canada Bread about $3.1 million before tax for severance, decommissioning and asset write-downs. The plant was built in 1986 and acquired in 2007 by Canada Bread when the company bought Pâtisserie Chevalier from the brothers Louis and Claude Chevalier.
There may still be hope for the plant and its soon to be unemployed workers, however. Canada Bread is conducting a strategic review to identify ways the plant could be used for making other foods. The plant once had up to 160 workers.
“It’s still in the early stages,” Bauer said of the review. “We look to be making a decision around 2014 whether the plant is reopened.”
Meanwhile, Canada Bread committed to supporting the workers’ transition to new employment, Canada Bread president and CEO Richard Lan said in a statement.
Canada Breads was licensing from Cadbury such snack cake brands as Cadbury Caramilk, Crème Egg, Crunchie, Mr. Big and Triple Chocolate Snack Cakes.
The Chevalier, Obsession and Cadbury snack cakes were made by the Dempster’s bakery division of Canada Bread.