Terry's melts away

FOR the 316 Terry's workers who learned yesterday that their factory is to close, the news was devastating, if not a complete surprise. Many of the workers leaving the factory at the end of their shift admitted they had seen the writing on the wall for some time.

"There has been a feeling it has been coming," admitted Mark Calpin, of Dringhouses, who has worked at the factory for 19 years.

It is not difficult to see why they felt that way.

Just over a year ago it emerged that confectionery giant Kraft, Terry's parent company, had been seriously investigating selling the old factory, the land for which even then was valued at £1million an acre.

The talk then was of building a new factory elsewhere in the York area, not switching production of brands such as All Gold and Chocolate Orange to continental Europe. But for those in the know, yesterday's announcement came as no surprise.

John Band, a consumer analyst with business information company Datamonitor, said the UK chocolate market was notoriously cut-throat - and Terry's simply didn't have the muscle to compete with the 'big three' of Nestl, Cadbury and Mars.

Between them, they gobble up about three-quarters of the £4billion-a-year UK market each - leaving Terry's with a comparatively tiny three per cent share, according to Mr Band.

So while the announcement that Terry's would be closing its York factory sometime next year was "very unfortunate news" for the people who worked there, it did make perfect sense for Terry's parent company Kraft, Mr Band said.

Part of the problem for the York company, he said, was that its main brands, Chocolate Orange and All Gold, suffered from being neither one thing nor the other - and Terry's had not put enough effort into developing innovative new products.

All Gold and Chocolate Orange could not compete with Kit Kat, Dairy Milk or Mars in the 'popular' chocolate market, Mr Band said, but also weren't seen as being 'luxury' chocolates such as Green and Black's. "Chocolate Orange is something that you buy your grandmother," he said. "But none of its Terry's brands are very sexy or dynamic."

John Pollock, the director of Terry's York plant, yesterday blamed a 'combination' of factors, including a decline in export volume and the 'size and configuration' of the York factory, for the decision.

To that can probably be added the high cost of sugar in the UK - and the fact that foreign labour can be cheaper. "Sugar prices in the UK are twice what they are elsewhere," one chocolate industry insider said.

So where does this leave Nestl Rowntree? With the demise of one famous York chocolate factory, questions will inevitably be raised about another.

Chris White, Nestl Rowntree's York managing director, was quick to quash any suggestion that the future of his Wigginton Road factory was in doubt.

"We are all about growing and so far so good," he told the Evening Press.

"We've had a really good first quarter and I'm really happy with the way things have gone. We're not thinking about closure."

Nevertheless, life has not been smooth for Terry's bigger rival in recent months.

While Nestl bosses insisted Kit Kat never lost its position as market leader to Mars, as some national newspapers claimed, competition between the 'big three' has been increasingly fierce. So fierce that at the beginning of this year Mr White sent a blunt message to his factory managers - sell more chocolate at higher prices to increase profits, or else. Employees who were not excited by this idea "should be working somewhere else," he said.

In February, Mr White was reported in Marketing magazine as having said Nestl Rowntree was a "business in crisis" - something he immediately denied, insisting his comments had been taken out of context.

Then at the end of last month, Nestl announced it was axing 270 jobs at a former Mackintosh factory in Halifax. Mr White reassured workers in York that the job losses in Halifax would have no bearing on the company's plans for York - but the Terry's announcement is likely to have heightened the unease of chocolate workers across the city at Nestl.

There is no doubt that competition between the 'big three' of Nestl, Mars and Cadbury for the UK chocolate market is growing increasingly vicious.

The problem they and other chocolate-makers faced, Mr Band said, was that the chocolate market in the UK was already just about glutted. British people already spend about £4 billion a year on confectionery, with the average Briton eating about 10kg of chocolate a year. "So it is hard to get British people to eat more," he said.

For chocolate firms desperately fighting to increase sale and profits, that leaves two options: increase your market share in the UK at the expense of competitors or increase exports.

If, like Nestl and Terry's, you are a British subsidiary owned by a foreign company which already has other brands of its own established in overseas markets, increasing exports will be difficult. Which leaves increasing your share of the market here as the only real option

True to form, Nestl, Mars and Cadbury are "fighting pretty viciously" for market share, Mr Band said. They are each developing new versions of their leading brands to try to boost sales - Nestl by introducing its successful Kit Kat Chunky, which for a while saw it push ahead, Cadbury's responding by introducing a range of new Dairy Milk bars, such as Dairy Milk crunchy, biscuit flavour and mint flavour.

The key to success for all three firms, Mr Band said, would be to continue innovating and producing new brands - and new variations on popular brands such as Kit Kat - that will continue to catch people's eye.

He remains optimistic about Nestle's future, however, insisting it is not about to go the same way as Terry's.

For a start, he said, Kit Kat was a big hit on the continent, ensuring Nestl maintained a healthy export income.

Then, too, the company was big enough to remain profitable in an ever more competitive market. "Nestl UK has enough volume that it is profitable - and that is not going to change for the foreseeable future," Mr Band said.

Let's just hope that that is so.

Chocolate people

FORMER employees of Terry's today described the news the factory is to close as the 'end of an era.'

Pauline Brigham started work at the factory in 1953, when she was 15. She worked at first on the factory floor, rising to a responsible 'time and motion' job in which she set targets for other workers.

In all she worked at the factory for 17 years, before leaving in 1970 to have her twins.

"I thought it was a happy place to work," said Mrs Brigham, 65 and living in Bishopthorpe Road. "You will always have the occasional bad day at work, but I never found them her employers uncaring."

The company celebrated its bicentenary while she worked there, and the 4.30pm rush as workers left at the end of their shift had been part of the life of the city for generations, she said. "So I feel sad. It is the end of an era."

For retired firefighter John Leeming, Terry's has strong family associations. His mother Dorothy and father Hubert both worked at the factory, as well as his Uncle Ron and Auntie Madge.

As a boy, he remembers his family bringing home bags of Terry's Waste - pieces of broken chocolate in a little yellow bag with blue print. "They used to sell it off cheap," said John, 61.

Back then the factory had been one of the main employers in York for years, he said. "It was like the railway, the carriage works, more or less. Part of your family worked at the carriage works, part at Terry's and part at Rowntrees. It will certainly be missed."

Terry's timeline

1767 - two importers of citrus peel, Robert Berry and William Bayldon, begin making confectionery in York.

1823 - Joseph Terry joins the partnership. His cakes and sugared sweets, candied peel and medicated lozenges prove popular.

1828 - Joseph becomes sole owner

1840 - Terry's products being sold in 75 towns across the north of England

1850 - Joseph Terry dies. His sons Joseph junior, Robert and John take over, and the company becomes Joseph Terry & Sons

1862 - Clementhorpe factory built, for production of 'Boiled Sugars, Candied Peel, Comfits and Marmalade'.

1886 - first chocolate factory built

1920s - company moves to its famous Bishopthorpe Road factory

1963 - Terry's bought by Fortes, later the Trusthouse Forte group

1982 - Terry's bought by United Biscuits for £24.5m

1993 - Terry's, which has a workforce of 1,000, sold to Kraft for £220m.

April 19, 2004 - announcement that Terry's is to close with the loss of all remaining 316 jobs

Updated: 09:56 Tuesday, April 20, 2004