Helsinki / FI. (fg) Fazer Group’s project to build a state-of-the-art confectionery factory in Finland has proceeded and is currently in the basic engineering phase. When the investment into the new factory was announced, the company communicated that in the first phase chocolate production, currently located in Vantaa, and then in a second phase, sugar confectionery production, currently located in Lappeenranta, would transfer to the new factory in Lahti. Significant changes in the operating environment, such as the rapid change in interest rates, changes in consumer behaviour and demand as well as the uncertainty around on-going discussions regarding health taxes in Finland, have affected the company’s views. Consequently, the scope of Fazer’s confectionery factory planning will change, and the company has decided to investigate only the transferral of the production of chocolate products to the new factory. The current factory has been operational since the 1960’s and is approaching the end of its life cycle. The new factory would enable the development and production of the chocolate products of the future. The production of sugar confectionery will therefore continue in Lappeenranta.
Fazer’s strategic ambition is to strengthen its position as the number one FMCG brand in Finland and to accelerate growth in the other Nordic countries. As part of executing its strategy, Fazer announced in spring 2022 its plans to invest in a new state-of-the-art confectionery factory in Lahti, Finland. The planned factory would, if realised, meet future consumer expectations and environmental requirements, enable the production of completely new kinds of products, and improve working conditions and the competitiveness of domestic production. According to the original plan, the aim was to transfer to the new factory gradually during the years 2025-2027 the chocolate production, currently located in Vantaa, and the sugar confectionery production, currently located in Lappeenranta.
Changes in the operating environment and low predictability
The operating environment of the company has changed significantly since the announcement of the investment project. Interest rates, which have escalated at a historical pace, high inflation and the changes in demand affect Fazer’s investment plans. In addition, the on-going discussion regarding health taxes challenges the ability of actors such as Fazer to make investments. Consequently, Fazer has decided to focus on the planning of the factory for producing chocolate products. The current chocolate factory is approaching the end of its technical life cycle. At the same time, Fazer sees significant growth potential in its current chocolate portfolio as well as in new products, enabled by the capabilities and capacity of the new factory. The schedule of the project as well as other details will be disclosed in greater detail in connection with the announcement of the investment decision. Consequently, Fazer will continue the production of sugar confectionery as well as the development of the operations in Lappeenranta.
«In addition to the general uncertainty and the challenging market outlook, the unpredictability of the political environment in Finland is a concern, mainly due to the on-going discussion regarding health taxes. Fazer is committed to developing the domestic food sector, to create employment opportunities and to make long-term investments in Finland. This, however, requires that the regulatory environment is predictable and treats all actors equally and fairly,» says Christoph Vitzthum, President and CEO of Finland’s Fazer Group.
In 2021, Fazer initiated a project to modernise its confectionery production, and in May 2022, Fazer and the city of Lahti signed a cooperation agreement regarding the reservation of a land plot in the industrial area of Pippo-Kujala for the planned confectionery factory. In February 2023, Fazer and the city of Lahti signed a letter of intent regarding the property transaction of the site defined in the cooperation agreement. The letter of intent precedes the actual property transaction and the investment decision.
«Despite the change in scope of the planned investment, it is still the biggest in the history of Fazer. The city of Lahti offers an excellent environment for the planned factory and for the future development of Fazer, and our cooperation with the city will continue,» comments Christoph Vitzthum.
Fazer’s confectionery production in Finland
Fazer has produced confectionery products in Finland since the 1890’s. Today, the Fazer Confectionery Business Area employs 2,449 people. Except for a few specialty products, all products are manufactured in Finland and exported to over 40 countries globally. In 2022, Fazer Confectionery’s net sales reached 461.4 million euros.
The chocolate factory in Vantaa
- The chocolate factory in Vantaa has been operational since the 1960’s
- Employs approximately 500 people
- Fazer’s biggest chocolate product is Karl Fazer milk chocolate, Fazer Blue. Other well-known and popular international brands include, among others, Dumle and Geisha
- Fazer has invested in the development of the chocolate products of the future by, for example, investing in the production of oat-based Fazer Oat Choco and in researching the possibilities of cell-cultured cocoa
- The factory in Lappeenranta has been operational since 1922 and was acquired by Fazer in 1993
- Employs approximately 400 people
- Well-known mixed sugar confectionery bags such as Remix and Ässä Mix, as well as classics such as Vihreät Kuulat Green jellies marmalade, Fazerin Parhain and Pantteri are produced in Lappeenranta. Popular international brands include, among others, Tutti Frutti, Marianne and Tyrkisk Peber
- Fazer has recently invested in the renewal of the central packaging unit of the factory