50 jobs lost as Glanbia ends Yoplait franchise

APPROXIMATELY 50 jobs are to go at Glanbia’s manufacturing site at Inch, Co Wexford, following the company’s decision to end its franchise agreement with Yoplait.

The Irish plc announced yesterday that it has sold back the franchise rights to Yoplait for €18 million. It will continue distributing the product.

Glanbia has operated the Yoplait franchise for almost 40 years, processing and packaging Yoplait products at its facility in Inch.

While the factory in Inch will close with the loss of approximately 50 jobs, farmers who supply the plant with milk will be unaffected, with their milk going to one of Glanbia’s other facilities.

Glanbia said the decision to end the franchise “recognises the current challenging Irish retail environment” and would help the company to focus on its other consumer brands such as Kilmeaden cheese and Avonmore milk.

It is less than three years since Glanbia signed a 15-year renewal contract with Sodiaal, the then owners of Yoplait. At the time Yoplait’s sales in Ireland were estimated to be worth around €70 million.

Yoplait has since been acquired by US company General Mills.

At the time of the takeover General Mills, which had already owned the franchise for Yoplait in the US, indicated an interest in acquiring some of Yoplait’s other regional franchises.

Last week General Mills announced it was ending its franchise agreement with Canadian licensee Ultima Foods, and would begin selling Yoplait in Canada itself.

Glanbia’s consumer foods division in Ireland has been under pressure since the onset of the recession. According to its 2011 full-year results, the food retail market had a difficult year, particularly towards the end of 2011. The high cost of milk coupled with continuous promotional pricing put a pressure on margins at the consumer foods division.

Glanbia, which enjoyed Ebita (earnings before interest, taxation and amortisation) of €212 million last year, has been generating an increasing proportion of its profits from the lucrative nutritionals and food ingredients sector in recent years.

Latest results for the first half of 2012 state that growth in the company’s global nutritionals business offset lower volumes in its other main divisions, Dairy Ireland and agri-businesses.

Yoplait, which was bought by General Mills in 2011, was founded in France in the early 1960s by a number of French farming co-ops. Having launched its first franchise agreement with Switzerland in 1969, Yoplait went on to become one of the most successful franchise businesses in the world.

It now sells in around 50 countries, mostly through franchise agreements.