Greencore has made little secret of the fact that it is conducting a major review of its sugar business in the face of impending reform of the EU sugar regime.
While the company declined to comment yesterday on speculation that it was about to announce sugar plant closures, the group is known to be examining how best to safeguard the profitability of its sugar business in the new era.
Sugar now accounts for less than a quarter of Greencore's profit following the group's diversification into the convenience food sector in recent years. However it remains a key element of the former State-owned business as it generates significant cash, which has been used to fund Greencore's expansion into other areas of the food business.
While there is still little clarity on the final shape of the EU plan, cuts in both the price of sugar and in quotas are in the offing. In an attempt to ensure the sugar business remains profitable, market observers have long felt that Greencore chief executive, Mr David Dilger, will opt to consolidate processing at a single location.
Of the two plants, Carlow is seen as the more vulnerable. Situated close to the heart of the town, it is considered unsuitable for expansion while its prime location means it could net the company a tidy sum if sold
Mallow, in contrast, has space for expansion and is well-served by rail links although it will lose its biggest customer, Nestlé, when the contract to supply the confectionery giant runs out in April.
A move now by Greencore would have a certain logic. The company must process nearly 200,000 tonnes of sugar when this year's campaign begins in November. If it wants to increase capacity at one plant to handle the full quota, it needs to act now.
There are also signs that its continental rivals are beginning to respond to the impending sugar regime reform. Just last week, Dutch food group CSM announced plans to close its beet processing operations in the south-western city of Breda with the loss of around 75 jobs.