Russell Stover announces 400 layoffs and 300 new jobs

Dive overview:

  • Russell Stover Chocolates will fire around 400 employees if he closes a plant in Montrose, Colorado next year and closes distribution and execution centers in Cookeville, Tennessee and Butler, Missouri. Russell Stover stores with little traffic will also close next year. The company will add approximately 300 employees while expanding the facilities in Corsicana, Texas; Abilene, Kansas and Iola, Kansas.
  • “Being active since 1923, we know the importance of keeping pace with the changing tastes and preferences of the people who buy our chocolates,” said Andy Stister CEO Andy Deister in the release. “Just as consumers change their favorite taste or package, they also change the way they shop for our products, and we ensure that we have the infrastructure to meet their expectations.”
  • Last week, Lindt & Sprungli AG, the parent company of the Kansas City chocolate company, announced a separate round of around 300 layoffs, said KSHB of Kansas City. These layoffs include sales and managerial positions in merchandising teams including Russell Stover. A representative from Lindt told the local TV station that this would only involve a “low, one-digit number” of employees in the Kansas City area.

Dive Insight:

With so many staff announcements in such a short period, it’s hard to figure out how these movements affect Russell Stover and his employees.

A simple deduction shows that the company loses a network of more than 100 jobs, but given the locations of factory closures and extensions, plus the blurry announcement of the parent company of 300 layoffs – which appears to have been reported only by the Kansas City media – it is unclear how deep these cuts are. Neither Russell Stover nor his Swiss parent company Lindt & Sprungli make many business announcements that are not marketing related or that are not related to the financial details of the entire company, so there are many gray areas.

However, it is clear that business is good for Russell Stover and Lindt & Sprungli, who bought the Kansas City-based chocolate company in 2014 for $ 1.6 billion. The Swiss pastry chef also owns chocolate brands Ghiradelli and Lindor and is the third largest chocolate maker in the United States. Lindt & Sprungli published its global sales report for 2019 on Tuesday, with organic sales growth in North America of 5.4%. All three brands of the chocolate maker, the company said, contributed to the increase. Russell Stover’s press release says the 2019 fiscal year was “strong.”

It took time for Russell Stover to establish himself as part of the Swiss chocolatier’s portfolio. When the company was purchased, many consumers considered it a chocolate brand in boxes. After the brand sales volume fell by 20% in six months in 2016, Lindt & Sprungli began to reposition Russell Stover as a brand that makes ‘everyday’ chocolate in bags and bags. Russell Stover also launched a stevia-sweetened sugar-free line of chocolates in 2017.

Turnover has increased for Russell Stover and Lindt & Sprungli has the financial ability to make major changes now. According to the sales report from Lindt & Sprungli 2019, these changes cost 60 million Swiss francs ($ 62.2 million), but the costs are offset by a one-off Swiss tax benefit. The company states that this will support future growth in the US

And it’s all about modernizing. The Colorado plant that will close next spring was the fourth Russell Stover plant and built in 1973. The Kansas and Texas plants that are being expanded are state-of-the-art plants with a total area of ​​more than 1.2 million square feet, according to a case study from the engineering and construction company that worked on it. They all have specialized equipment and are designed for the ultimate expansion and easy transportation of sweets, both in the United States and abroad.

It is also important to be prepared for the following, said David Abbott, senior director of supply chain planning at Lindt & Sprungli USA, Supply Chain Best Practices.

“We have to stay ahead because of the scale,” Abbott told the website. “For example, if we no longer have the capacity to make our Lindor truffles, buying a new machine has a long lead time in designing, buying, installing and producing Lindor truffles.”

Several other food companies are investing in improving production and logistics to improve sales and delivery. Kellogg and Nestlé have both made the switch to warehouse distribution in the name of cost savings. For Kellogg, this resulted in more than 4,499 lost jobs, while the Nestlé layoffs amount to around 4,000.

It remains to be seen how these changes will affect Russell Stover, who started as a family business and a local business. Given the tax-related windfall that the Russell Stover parent company receives from the Swiss government, this may now be a good time to make those shifts.