Fazer was to build a new factory in Lahti to produce both turkey peppers and chocolate bars. Now the company is planning a factory that could also produce snack products.
– In the post-pandemic period, the trend has reversed, and people are now eating much more bulk foods than during the pandemic. It is a much smaller category for us than mixed bags,” he says.
But consumer choices on the candy shelf are only one piece of the puzzle. Fazer planned to build a new factory in Lahti in phases, first moving the production of chocolate products from Vantaa and later the production of sugar confectionery from Lappeenranta.
Sharp rise in capital costs
When the company announced its plan in spring 2022, it was not known how expensive the solution would be. Now interest rates are very high.
– In the original plan, we would have built the entire property, then filled it first with chocolate production and a few years later with sugar confectionery production. At current capital costs, it’s not free anymore, says Vitzthum.
Regarding the Vantaan factory, the situation is different, according to him, because the unit is at the end of its technical life. Fazer also believes that the demand for chocolate will grow. According to Vitzthum, the market is expanding in snack products.
– These can be, for example, hybrids of chocolate and cookies, combining sweet and salty. Or we make smaller pieces of some product in general, so that portion sizes can be reduced, which is a responsible act for health as well.
Xylitol from Lahti does not work in milk chocolate
The health tax, which was raised in the public debate, is the third essential reason for the change in plans. It is difficult for a confectionery manufacturer that it cannot be sure what kind of taxation will be applied to its products in the next few years.
– It significantly weakens the predictability of market development, says CEO Christoph Vitzthum.
Fazer produces xylitol from oat husks in Lahti, but there is no xylitol chocolate factory.
– Xylitol has a cooling effect, so it is suitable for mint chocolate, for example, but in a product like Fazer Sininen, it does not work as a sweetener, Vitzthum explains.
Fazer will make an investment decision on building a chocolate factory in Lahti, probably during 2023.