Post Holdings said it plans to spend up to $110 million to expand its grain production capacity at a Nevada facility that serves the West Coast.
The St. Louis company behind Honey Bunches of Oats, Pebbles and Great Grains, said the proposed expansion will provide the company with additional production volume, address capacity constraints to better meet consumer demand and reduce transportation costs to serve West Coast customers more efficiently.
The Sparks, Nevada facility, which will create up to 40 new jobs, is expected to be completed in 2025.
During the company’s first quarter earnings call in February, CEO Robert Vitale said consumption of its U.S.-branded grain products “continues to exceed pre-COVID levels by nearly 2%.” He noted that its market share was just under 20%. A bright spot for Post continues to be Pebbles.
The popular Pebbles have been an anomaly in an otherwise downtrodden cereal market, grabbing the biggest market share of any brand in 2021 and recording eight consecutive years of growth, according to data provided by Post earlier this year. .
Post Consumer Brands, which is also home to Post’s Better Oats oatmeal, Malt-O-Meal and cereal, among other offerings, has nine manufacturing plants in North Carolina, Michigan, Arkansas, Utah, in Ohio, Nevada, Ontario and two in Minnesota. . Its Utah and North Carolina sites are the only new grain production facilities it has built since 2000, the company said on its website.
The factory addition appears to be the newest construction project for Post. Last year, it announced plans to spend $86 million to build a new 215,000 square foot manufacturing facility in West Jefferson, Ohio. At the time, the company said the facility would likely produce protein shakes for BellRing Brands. The company sold 80% of its stake in BellRing in March to Post shareholders.
Cereals as a whole have been among the beneficiaries during the pandemic as people spend more time eating at home. Demand is expected to continue. Statistical estimate that 283 million Americans consumed cold cereal for breakfast in 2020. That figure is expected to rise to 290 million in 2024, according to the data.
The plant’s expansion is as much a bet that demand for its grain portfolio will continue as it is to increase efficiency throughout its supply chain, saving money in the process.
With 34.4 million people living on the West Coast, or about 11% of the US population, according to US census data, the Post has a broad market base there. The CPG no doubt wants to ensure that it can better respond to changing consumer appetites and compete with behemoths like General Mills and Kellogg.
The food sector has seen a rapid pace of expansion as companies such as Post ramp up production to set the stage for future demand.
Nestlé plans to spend $675 million on a facility in Arizona to manufacture creamers for its Coffee mate, Coffee mate Natural Bliss and Starbucks brands.
Mondelēz International announced it would invest $122.5 million over three years to expand capacity at its Richmond, Va., site where it manufactures Oreos, and JM Smucker committed $1.1 billion to build a new manufacturing facility and distribution center in Alabama to produce its Smucker’s Uncrustables sandwich.
And eight months later announcing a 70,000 square foot expansion at its manufacturing center in Bloomington, Illinois, Ferrero this week announced a investment of up to $214.4 million to further expand the plant still under construction.