Nestlé to close Hungary confectionery factory as seasonal chocolate demand declines

HUNGARY – Nestlé has announced plans to close its confectionery factory in Diósgyőr, Hungary, by the end of the year, citing a sustained decline in demand for seasonal chocolate products.  

The move marks a significant restructuring of the company’s confectionery operations in the country while production of its hollow chocolate products shifts to a co-manufacturer in the United Kingdom. 

The Diósgyőr facility, located in north-eastern Hungary, produces chocolate hollow figures for Nestlé’s Smarties, KitKat and Milky Bar brands.  

According to the Switzerland-based food manufacturer, weakening demand for seasonal confectionery has significantly reduced production volumes in recent years, making continued operations at the plant unsustainable. 

Nestlé said the factory contributes less than 3% of its revenue in Hungary and accounts for under 1% of the company’s domestic manufacturing volume. The facility began operations in 1962 and became part of the Nestlé network in 1991. 

The company said it has started discussions regarding the sale and future operation of the factory, adding that further details will be announced at a later stage. Nestlé said it aims to transfer the site to “an investor who wishes to continue confectionery production.” 

Although the company has not disclosed how many employees could be affected, it said its objective is to transfer “as many colleagues to the new owner as possible,” helping preserve jobs where feasible. 

Nestlé also assured consumers that its hollow chocolate products will remain available despite the factory closure, with production moving to a manufacturing partner in the UK. 

The company continues to maintain a significant manufacturing presence in Hungary through its headquarters in Budapest, a regional beverage factory in Szerencs and a Purina pet food production facility in Bük. 

Meanwhile, Nestlé is expanding its pet food business in Europe through a new SFr520 million (US$642.7 million) investment in Mantova, northern Italy. The new factory, scheduled to begin operations in 2029, will produce single-serve wet dog and cat food. 

“Our pet food is a fast-growing segment and this plant specifically will be producing single-serve wet dog and single-serve wet cat,” said Rafael López, CEO of Nestlé’s Purina business in Europe. 

“This is a fast-growing segment because the consumers love variety, great taste and great nutrition. In particular, wet cat is growing around 8%.” 

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