Packaged food company Mondelez International is set to build a $90-million biscuit plant at the Bahrain International Investment Park (BIIP) in bid to reduce costs and meet the growing demand for its biscuits in the Middle East and Europe.

An agreement was signed in this regard by Bahrain’s Minister of Commerce and Industry Dr Hassan Fakhro and Mondelez International’s vice president for the Middle East Vishal Tikku at a ceremony held at the BIIP on Wednesday.

Mondelez said work would begin by the year-end to set up the plant, which will have annual production capacity of around 90,000 tonnes in the first phase.

The production site, near where Mondelez has its existing cheese and Tang beverage powder factory, will cover an area of 250,000 sq m, roughly the size of 30 football pitches.

"The new facility would produce major brands such as Oreo, Barni, Prince, belVita, TuC and Ritz, and enjoy competitive advantage through the deployment of hitech equipment and practices in line with the company’s vision to utilise top-edge technology to ensure “no one can produce a better product at a cheaper price,” remarked Tikku.

Thanking Dr Fakhro and the Bahraini government for their support all the way since Mondelez set up its first plant, Tikku said: “Business-friendly Bahrain is the reason why we are here.”

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 the official.

Mondelez said the new plant had features to promote sustainable and profitable growth including a strategic location at the heart of the Middle East and Africa, excellent transport links, a long-term partnership with the Bahraini government, a business-friendly environment, a skilled local workforce and much-loved snacking brands.

The key markets for the packaged food company would be the Gulf region, the Levant and Africa.

The plant will create 300 new jobs, a third taken up by Bahrainis, along with several hundred indirect jobs, and Modelez would try to employ as many women as possible, said Tikku.

Discussing the raw material needs, he said much of that would be sourced in the home market.

“The flour and sugar will be sourced locally. There’s a suitable local sugar factory of capacity 50,000 tonnes per year which is expanding – a perfect fit. The chocolate chips and cocoa powder will be imported. Packaging will be sourced locally. We want to have our suppliers closer to our door,” he remarked.

Tikku said the company would expand the facility from time to time depending on demand growth. “The Middle East has a mandate to grow fast,” the official said.

He said investment at the existing plant, whose annual capacity is 110,000 tonnes, had reached $75 million, double the level when it started, and its contribution to the Bahraini economy was $250 million.

An overwhelming portion of output from the plant is exported – more than 95 per cent. On an average, the plant produces around 70,000 tonnes annually, Tang accounts 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 the sales generated in 2013 were around $300 million.

“This investment in Bahrain is part of our ongoing supply-chain reinvention plan,” stated Daniel Myers, Mondelez International executive vice president, Integrated Supply Chain, talking about the new plant.

“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,” he added.

Modelez’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 three years. These savings will be a primary driver of significant improvements in the company’s base operating-income margin in the near term.

Minister Fakhro, hailing the Mondelez's plant announcement, said it reflected the company's confidence in the kingdom, adding it was “a very special day for Bahrain.”

The country was honoured to host a company that encompassed brands well known in every corner of the world, he added.

Dr Fakhro said the new facility would tap into suppliers adjacent to the site, enabling some kind of locational integration.

He recalled Mondelez was among the first in Bahrain to invest at the BIIP. Later many other companies came on board with total investments now reaching $2 billion. Of this, 88 per cent came from multinationals with headquarters in 20 countries and industry giants including Siemens and BASF.

“Bahrain is a natural choice in the Gulf and the Middle East region, given its excellent logistics, the availability of a skilled workforce and a business-friendly environment,” remarked Dr Fakhro.

Thomas Gangler, Mondelez International’s vice president, integrated supply chain, Eastern Europe, Middle East and Africa, was also present at the meeting.-TradeArabia News Service