CANADA – Canadian dairy giant Saputo says it is considering more closures of its plants as part of a four-year “optimization” strategy introduced in Canada, which has proved to benefit the dairy.
Under the planned move, Saputo has already made some pre-announced plans to shutter a site in Belmont, Wisconsin, and switch the Reedsburg facility in the same state from mozzarella to goat’s cheese production.
Another plant in Tulare, California, has also been earmarked for closure, along with Australian factories in Maffra and Cobram, both in Victoria.
The dairy said its network optimization is at the center of Saputo’s five strategic initiatives to achieve an adjusted EBITDA of CAD2.13bn (US$1.61bn) by the end of fiscal 2025.
President and CEO Lino Saputo, Jr., has pointed to the US and Australia, and a lesser degree Canada and the UK, as the likely targets for plant closures, but replete with CAPEX to improve efficiencies at other facilities.
Mr. Saputo said the optimization strategy had been put to work in Canada three or four ago, where the company is now seeing “benefits” to manufacture “more efficiently and more effectively”.
He added: “It’s very much the same architecture that we’ve asked all of our other divisions to focus on. How much milk do we need to process and what are our most effective, most efficient plants to process it in? And then what plants need to be shuttered in the system?
“I will say that, by the end of this strategy plan, we will have fewer plants in the US network, we will have fewer plants in the Australian network, still some tweaking that we can do in Canada, not so much tweaking in Argentina because we’ve got two plants running super efficiently. And a little bit of tweaking in the UK, especially now with some of the acquisitions we’ve done.”
Looking ahead, Mr. Saputo explained that Saputo plans to expand its market presence beyond the UK and Germany, Canada, and the US for Dairy Crest’s signature cheese brand Cathedral City, which has just launched a vegan variety.
However, he is concerned that there are not so many consumers in the UK that are going to eat this high-valued, high-priced [cheese] because Saputo is selling its product 30% higher than the private label but still maintains that the company will pivot and enter into other regions and countries.
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