Toms Group, Denmark’s largest confectionery maker, is downsizing operations in its home market and expanding a factory in Poland.
The branded sweets and pick-and-mix business plans to phase out production of chocolate at its facility in Ballerup, Denmark, but will keep its headquarters at the site. The plant is Toms’ oldest, running since 1962.
Toms will then have one manufacturing facility in Denmark, its Helseholmen sweets factory producing products such as liquorice and wine gums. Its remaining chocolate plant, located in Nowa Sól, Poland, in the west province of Lubusz Voivodeship, will be the target for investment and expansion.
A “nine-figure” sum has been earmarked for the Nowa Sól site in the “coming years” to add additional space and compensate for the phase down at Ballerup.
Toms declined to elaborate on the investment amount but a spokesperson told Just Food that work at the plant is expected to be completed by 2028.
“Less than” a 100 jobs are expected to be affected by the shift from Ballerup, although some of those could move to the other Denmark site, the spokesperson confirmed, adding that 90-100 positions would be created at Nowa Sól once the switch is completed.
“The transformation is an impactful strategic action to support our vision of creating a profitable, growing and competitive Toms,” CEO Annette Zeipel said in a statement.
“It will move us closer to [the] industry benchmark in terms of profitability, simplify processes and enable us to strengthen our strategic sourcing.”
Toms’ spokesperson declined to comment further on the profitability objective. Net profit in the 2023 financial year fell 25% to DKr54.3m ($7.6m), while EBIT dipped 1.5% to DKr97.6m.
Revenue rose 3.1% to DKr1.7bn, the Toms Guld Barre, Anthon Berg and Hachez brand maker reported in its annual results in April.
The company supplies markets across Europe but Denmark is the largest revenue earner. It also serves destinations further afield in North America, China, Australia and the Middle East.
Toms described 2023 as a “challenging year” marked by raw material price increases, currency pressures and “consumers increasingly seeking deep promotions and private-label offers during inflation”.
CEO Zeipel commented: “Our outlook for 2024 is that the entire business will remain under heavy margin pressure from increasing raw material prices - especially significantly increasing cocoa prices - and consumers staying with shopping patterns established during last year’s inflationary environment.”
The gross margin dropped 170 basis points last year to 27.5%.
In the statement announcing the downsizing plans and the Poland expansion, Zeipel said: “This is an investment in the future of building a stronger Toms Group.
“With an improved profitability follows the ability to invest further in our beloved brands, product innovation, our international growth and footprint, and in our commitment to sustainability and talent development.”
Zeipel added that transition from Ballerup could take three to four years but any impact on staff at the site is not expected in the immediate two years.
“This transition is a necessary part of our efforts to strengthen Toms Group’s position as a modern and profitable company," she said.
