Mondelez International has shortened its Cadbury ingredient supply chain by at least two months after opening a $22 million facility in Malaysia.
The Shah Alam facility opened on Friday, September 11. It produces chocolate crumb, an ingredient that contributes to Cadbury chocolate’s taste and texture.
Local production replaces imports from Australia and South Africa. The investment brings a key manufacturing input closer to Mondelez’s Southeast Asian operations.
“Producing it directly in Shah Alam removes at least two months from our supply-chain lead time,” Nitin Binnani told CNBC.
Binnani, Mondelez’s vice president of integrated supply chain for Southeast Asia, said the facility would lower import and transportation costs. It will also support expected volume growth across the region in the coming years.
Malaysia hub also supports Pakistan
Shah Alam serves as Mondelez’s sole Cadbury manufacturing hub for Southeast Asia. It produces more than 130 chocolate varieties and around 100 million bars annually, according to Binnani.
The company is also exporting crumb to Pakistan to help address supply disruptions from interrupted shipping channels, he said.
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That gives the Malaysian operation a role beyond supplying its immediate regional market. For Pakistan, the shipments provide an alternative ingredient source while shipping disruptions affect supplies.
The change concerns ingredient sourcing and delivery times. The supplied report did not announce any reduction in retail chocolate prices.
Southeast Asia’s expanding role
Mondelez sees further growth opportunities in Southeast Asia’s snacking market. Its factories across the region already serve both domestic consumers and overseas customers.
“Our Cikarang plant in Indonesia, for example, supplies products to nearly 40 countries including Australia and Japan, while Thailand operates as an export-oriented hub for gum and candy,” Binnani said.
The Malaysian investment adds ingredient production to that regional network. It also reduces the time needed to bring crumb into the Shah Alam operation.
The expansion follows a turbulent period for chocolate manufacturers. Cocoa prices have eased after a record-breaking rally over the past two years, CNBC reported.
Adverse weather and poor harvests fuelled that surge, increasing costs for producers. Mondelez’s investment addresses a separate pressure: the cost and time involved in transporting ingredients across borders.
Cargill expands chocolate ingredient capacity
Other American businesses are also expanding chocolate-related production in Malaysia.
Cargill announced a new specialty fats production line at its Port Klang edible oil facility on March 31. Its expanded capabilities include cocoa butter equivalents and low-trans cocoa butter replacers.
Read More: This Chocolate Is So Thin, It Melts Before You Can Bite It
The facility also supplies specialty fats for bakery, dairy, frying and filling applications. Cargill said the investment would help manufacturers develop products suited to different consumer and market needs.
Chicago-based Mondelez owns Oreo, Ritz, Cadbury and Sour Patch Kids. Formerly Kraft Foods, it adopted the Mondelez International name in 2012 after separating its North American grocery business.
