Dive Brief:
- PepsiCo says it plans to close a distribution center in Muncie, Indiana, “in the coming months” with work at the location being distributed to neighboring locations. The earliest the plant would close is September, according to The Star Press in Indiana.
- In a statement, PepsiCo said the facility currently employs about 100 people. The company is in talks with the union representing the employees.
- PepsiCo joins a growing list of CPG companies that are closing facilities throughout their networks to increase efficiencies. At the same time, companies, including PepsiCo, are opening newer, more modern plants.
Dive Insight:
PepsiCo’s decision to close the distribution center comes as food and beverage makers are looking for ways to cut costs amid ongoing supply chain disruptions and higher input costs due to inflation.
“PepsiCo is always evaluating our network solutions and reviewing the best possible ways to optimize our service,” the beverage and snacking giant said in a statement.
PepsiCo has a long history in Muncie dating back nearly a century, according to the Star Press. The paper said operations moved to its current location in 1957.
Food and beverage manufacturers have been especially active lately in shuttering older, less efficient facilities that are costly to run while constructing new, more advanced locations to meet the growing demand for their offerings.
Just last summer, PepsiCo’s beverage division announced it would build a 1.2 million-square-foot manufacturing facility in Colorado. The new bottling plant, with three times the capacity of the nearby facility it will replace, will produce many of the company’s popular beverage products including Pepsi, Pepsi Zero Sugar, Gatorade, bubly, Rockstar, Propel and Muscle Milk.
As companies deal with aging infrastructure across their networks, it makes fiscal sense to consider closing a plant. Companies are finding that they can move the lost production to other plants, or build an entirely new facility, rather than spend money to refurbish the older building by incorporating updated technologies, such as artificial intelligence.
Similar to PepsiCo, several other companies, including Tyson Foods, Mondelēz International and Nestlé have announced they are closing plants while simultaneously expanding others or building new ones. As companies look for any advantage they can for their businesses, executives will closely monitor the health of their production network to determine what changes they need to make.
