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American snack giant Mondelez International will reduce supply chain lead times for key ingredients used in Cadbury chocolate by at least two months.
The company on Friday opened a $22 million facility in Shah Alam, Malaysia, to locally produce chocolate crumb, an ingredient that contributes to the taste and texture of Cadbury’s chocolate products, rather than importing it from Australia or South Africa.
“Direct production in Shah Alam will reduce supply chain lead times by at least two months,” Nitin Binani, vice president of SEA integrated supply chain at Mondelez International, told CNBC. He said the new facility will reduce import and transportation costs to support increased sales volumes across Southeast Asia in the coming years.
A bigger role for Southeast Asia
Binnani said Shah Alam is Mondelez’s only Cadbury manufacturing site in Southeast Asia, producing more than 130 types of chocolate and about 100 million bars a year.
CNBC previously reported that cocoa prices have fallen after record highs over the past two years as bad weather and poor harvests raised costs for chocolate makers.
cacao price
Binani said Southeast Asia already plays an extensive role in Mondelez’s global manufacturing network, with individual locations serving both domestic and international markets, and the company sees room for further growth in the snacks sector across the region.
“For example, the Cikarang factory in Indonesia supplies products to about 40 countries, including Australia and Japan, and Thailand operates as a central export hub for gum and candy,” Binnani said.
He said Mondelez is also currently exporting bread flour to Pakistan to deal with supply disruptions due to disruptions in transportation routes.
Mondelez, based in Chicago, Illinois, owns snack brands including Oreo, Ritz, Cadbury and Sour Patch Kids.
Mondelez is not the only American company expanding chocolate-related production in Malaysia. US agribusiness giant Cargill expanded its specialty oil production facility in Port Klang earlier this year, adding capacity for raw materials used in chocolate production.
The company, formerly known as Kraft Foods, changed its name to Mondelez International in 2012 after spinning off its North American grocery operations.
