Dive Brief:
- Kraft Heinz plans to spend more than $400 million to build one of the largest automated CPG distribution centers in North America, the food giant said in a statement. The facility is expected to bring more than 150 jobs to the region.
- The 775,000-square-foot distribution facility in DeKalb, Illinois, will feature state-of-the-art automation technology and national railway access, enabling Kraft Heinz to drive greater supply chain efficiencies and distribute its products to retail and food service customers faster.
- The company behind Heinz ketchup, Jell-O and Lunchables is the latest food and beverage giant to announce plans to build a new facility to increase efficiencies and reduce costs amid escalating demand for their offerings.
Dive Insight:
As food and beverage companies announce new buildings to help manufacture or distribute products, a pair of themes are often embedded in the news: efficiency and the environment. The planned Kraft Heinz building about 30 miles south of Chicago fits squarely into that theme.
In a statement announcing the new facility, Kraft Heinz said the outlet includes a 24/7 automated storage and retrieval system that can handle twice the volume for Kraft Heinz customers. This will allow it to distribute more than 60% of the company’s food service business and approximately 30% of all dry goods.
As food and beverage companies continue to deal with a challenging supply chain environment, the new facility could give Kraft Heinz a valuable tool to help it navigate and remain competitive.
In addition to increased efficiency, the company said the new center also will contribute to Kraft Heinz’s ability to achieve its broader environmental, social and governance goals. The food maker will reduce its environmental footprint through sustainable technology and solutions that curtail waste produced at the facility.
“The DeKalb distribution center is expected to play a critical role in our larger distribution strategy, moving more than 60 percent of Kraft Heinz dry goods in North America through our automated facilities,” Carlos Abrams-Rivera, president of North America at Kraft Heinz, said in a statement.
During the last few years, nearly every major food and beverage company has announced plans to build a new plant or expand an existing one.
PepsiCo’s beverage division is building a 1.2 million-square-foot manufacturing facility in Colorado that will be its largest plant in the U.S. It will aim to achieve 100% renewable electricity, best-in-class water efficiency and reduced virgin plastic use. Cargill also announced an expansion to an Iowa corn syrup refinery that will use energy-efficient technologies and processing methods and heavily depend on renewable energy.
Other companies that have announced expansions include Mondelēz International, Nestlé, J.M. Smucker, Post Holdings and Coca-Cola.
Even as some companies announce new construction projects, many of these same businesses have simultaneously shuttered older facilities. Oftentimes, the buildings are in dire need of technological upgrades and it would be too costly to retrofit them, or the company is aiming to improve efficiencies and margins across its network.