The company has given Bahrain a vote of confidence by deciding to set up another plant in the country that will greatly impact exports to the Middle East and beyond
Mondelez Bahrain will make further footprints into regional and international markets with the move by Mondelez International to build a biscuit plant near its existing production facility in the kingdom.
The new $90 million facility, which becomes operational at the Bahrain International Investment Park (BIIP) in 2016, will supply markets in the Middle East and Europe. The announcement was a boost to Bahrain’s plans to welcome foreign direct investment and develop its industrial base. The new plant is designed for capacity to produce annually 90,000 tonnes in the first phase on a site of 250,000 sq m. Mondelez’s existing plant makes Kraft cheese and Tang beverage powder.
Brands to come out of the new production lines include Oreo, Barni, Prince, belVita, Tuc and Ritz. Vishal Tikku, Mondelez International’s vice president for the Middle East, has pledged competitive advantage through deployment of state-of-the art equipment and practices so “no one can produce a better product at a cheaper price” – a sentiment he stressed was in line with the company’s vision.
Mondelez International declared it was happy with Bahraini government support all the way from concept to the construction of the existing plant and thereafter. “Business-friendly Bahrain is the reason why we are here,” said Tikku. Bahrain’s location at the heart of the Middle East, proximity to Khalifa Bin Salman Port and to the Gulf’s biggest market Saudi Arabia along with a skilled workforce also help realise Mondelez’s aspirations.
The company has dubbed the new facility as “manufacturing lines of the future.” “We’re designing each new manufacturing site with room for new lines,” said Tikku.
Key markets for the new plant have been identified as the Gulf Arab region, the Levant and Africa. It will generate 300 new jobs, a third taken up by Bahrainis, along with several hundred indirect jobs, and Modelez will try to employ as many women as possible, said Tikku.
A cost-saving factor is sourcing much of the raw materials in the Bahrain market including flour and sugar. A local sugar factory of capacity 50,000 tonnes per year is expanding and should prove a perfect fit for the new plant. Packaging will also be sourced within the country.
“We want to have our suppliers closer to our door,” said Tikku. Chocolate chips and cocoa powder will be imported.
“The Middle East has a mandate to grow fast,” observed Tikku, adding that Mondelez would expand the plant from time to time depending on growth.
Bahrain’s Minister of Commerce and Industry Dr Hassan Fakhro hailed the Mondelez announcement of the new plant saying it was ”a very special day for Bahrain” and that it reflected the company’s confidence in the country. Bahrain was honoured to host a company that encompassed brands well known in every country of the world, he said and highlighted that the new facility would tap into suppliers adjacent to the site, enabling some kind of locational integration.
Dr Fakhro recalled that Mondelez was among the first in Bahrain to invest at the BIIP. Later many other companies came on board with total investments at the park now reaching $2 billion, 88 per cent coming from multinationals with headquarters in 20 countries. Industrial giants at the park include Siemens and BASF.
“Bahrain is a natural choice in the Gulf and Middle East, given its excellent logistics, the availability of a skilled workforce and a business-friendly environment,” Dr Fakhro said.
Dr Fakhro and Tikku signed a document formalising an agreement between the Ministry of Commerce and Industry and Mondelez International for setting up the plant at the BIIP.
Investment at the existing plant, whose annual capacity is 110,000 tonnes, has reached $75 million, double the level when it started, and its contribution to the Bahraini economy is $250 million, according to Tikku
An overwhelming portion of output from the plant is exported – more than 95 per cent. On average, the plant produced around 70,000 tonnes annually, Tang accounting for about 40,000 tonnes and cheese 30,000 tonnes. As much as 50,000 tonnes was exported to the Gulf region.
The Mondelez plant at BIIP has enjoyed year-on-year growth and sales generated in 2013 were around $300 million.
THE BROAD VIEW
“This investment in Bahrain is part of our ongoing supply-chain reinvention plan,” said Daniel Myers, Mondelez International executive vice president, Integrated Supply Chain. “We’re implementing several such initiatives around the world to capitalise on growing demand while also reducing costs and improving productivity. We’re pleased with our progress in regions such as Mexico and India, where we’ve already begun to invest.”
Modelez International’s supply-chain reinvention plan is expected to deliver $3 billion in gross productivity savings, $1.5 billion in net savings and $1 billion in incremental cash over the next here years. These savings will be a primary driver of significant improvements in the company’s base operating-income margin in the near term.
Thomas Gangler, Mondelez International’s vice president, integrated supply chain, Eastern Europe, Middle East and Africa, was present at the announcement.