Biscuits fixture

The 2 Sisters site in Uttoxeter makes private label biscuits for the mults, as well as some Elkes branded products

2 Sisters Food Group is exploring the closure of its own-label biscuit factory in the Midlands as cost pressures facing the food industry intensify.

The move – part of owner Ranjit Singh’s drive to focus on the group’s core poultry and ready meals divisions – puts more than 500 jobs at risk.

The Elkes Biscuits site in Uttoxeter was part of Fox’s Biscuits but not included in the £246m acquisition by Ferrero in October last year.

The Italian confectionery giant was only interested in the two other factories, in Lancashire and Yorkshire, responsible for the branded side of the business.

A spokesman for 2 Sisters confirmed the group had been reviewing all options for Elkes, including turnaround opportunities and a potential sale. However, talks with trade buyers have come to nothing.

“The Uttoxeter site is significantly loss-making and we have been unable to reverse this situation in the face of strong competitive pressure and cost inflation, nor have we been able to secure a viable offer,” he added.

“We now believe the site is no longer commercially viable.”

A consultation with the 528 staff at Uttoxeter runs until March 2022.

The union Unite criticised the decision and said the closure would be “a catastrophe” for the employees and the wider regional economy.

Unite told The Grocer that 2 Sisters had been close to securing a sale sometime in August, with the business discussing the prospect of a TUPE transfer, but the buyer is understood to have pulled out.

The union added the length of the consultation gave them hope that another buyer would step forward to save the Uttoxeter factory.

Unite regional officer Rick Coyle said: “It is Uttoxeter’s biggest employer so the knock-on impact on the shops and hospitality outlets that rely on the spending power of the workforce would be substantial,” he added.

“However, we know that Elkes Biscuits has a wide range of biscuits that are very popular with consumers, and this is underpinned by a dedicated and hardworking workforce. All these factors make it an attractive proposition to another company wishing to buy the site.”

An industry source said 2 Sisters would clearly prefer “any kind” of sale rather than the costly process of closing the site.

However, he added the solution now rested with the factory’s supermarket customers.

“Retailers have pushed prices down so far as to make the business unsustainable If supermarkets decide they don’t want to suddenly lose a business generating more than £40m revenues annually then they need to come up with more favourable terms to make it financially viable.”

Elkes Biscuits has a long history dating back to the early 20th century and is credited with creating the malted milk biscuit in the 1920s. In 1986, it was acquired by Fox’s, which was owned by Northern Foods at the time, with Elkes repositioned as a budget offering.

The business was formally brought under the Fox’s banner in 2003 before 2 Sisters took over Northern Foods in 2011 for £342m.

2 Sisters is also currently trying to off-load other core assets it picked up in the Northern Foods deal as part of its ongoing transformation.

The group offloaded the majority of the Northern assets in 2018 as part of a turnaround effort following years of losses and a food safety scandal in 2017.

Goodfella’s was the first brand to go, with Birds Eye owner Nomad Foods taking ownership of the pizza supplier, followed by Matthew Walker to Valeo in 2019 and Fox’s to Ferrero in a £246m deal late last year.

2 Sisters also sold its red meat division to Kepak Group in 2018 and the Manton Wood sandwich business to Samworth in 2019.