Dive Brief:
- Nestlé is spending $150 million to expand a plant in Gaffney, South Carolina. The packaged food company opened the facility in 1980.
- The Stouffer’s and Lean Cuisine manufacturer said the money will be used to build a new production line for single-serve frozen meals and to enhance automation and digital technology.
- Nestlé is the latest CPG company to add to an existing facility or to announce the construction of a new, more modern plant. At the same time, companies are aggressively shuttering plants due to inefficiency or to bring production in line with consumer demand.
Dive Insight:
The U.S. frozen food market is rapidly growing, and Nestlé, with a large portfolio in the space, is positioning itself to capitalize. The segment was valued at $56 billion in 2021, and it is expected to expand at a compound annual growth rate of 4.7% through 2030, according to Grand View Research.
The reason is people are looking for meal options they can easily prepare at home due to time constraints arising from work, childcare and other responsibilities. At the same time, inflation is causing consumers to eat less at restaurants, making the home a cheaper option to prepare food.
This investment “reflects our continued commitment to enhance our U.S. manufacturing footprint and in-house capabilities,” Nicole Caldwell, Nestlé USA’s Gaffney factory manager, said in a statement. “These enhancements will enable us to meet the consumer demand for the beloved brands in our frozen meals portfolio.”
Despite the promising outlook for frozen, Nestlé saw negative growth in the category in North America for the first nine months of the year due to “intense competition, particularly in pizza.” Nestlé’s frozen portfolio also includes Hot Pockets, DiGiorno, Sweet Earth and its newest brand, Vital Pursuit, which targets GLP-1 consumers.
Many food and beverage companies have announced changes recently to their manufacturing network.
PepsiCo is constructing a 1.2 million-square-foot manufacturing facility in Colorado, that will be its largest plant in the U.S. The facility is reportedly behind schedule. Earlier this year, PepsiCo announced it was permanently closing a Danville, Illinois, Quaker Oats plant and four bottling locations.
Campbell Soup announced in May it was closing one plant and reducing the size of a second facility. The soup and snacks maker also announced it would invest $230 million through fiscal 2026 in newer, more efficient plants as it aims to improve the competitiveness of its supply chain.
Other companies also have announced closures of plants, including Wonder bread maker Flowers Foods, canned fruit and vegetable giant Del Monte Foods and Slim Jim manufacturer Conagra Brands.
