The fierce competition in the crisps market took its toll on Golden Wonder yesterday, as the firm announced the loss of 375 jobs in Lancashire.
Golden Wonder is to close its factory in Skelmersdale, Lancashire, a move the Transport & General Workers union has described as "devastating".
Golden Wonder, which employs 1,400 people, blamed the closure of its Skelmersdale site on the strong competition in the crisps market. There is, it says, overcapacity in the market, which has led to a price and promotional war.
The Skelmersdale site produces 7.6 million cases of Golden Wonder crisps a year. But a review of the factory, one of its three production plants in the UK, found that it was working at only 60 per cent capacity.
Ed Jackson, chief executive of Golden Wonder, said that "every possible option has been explored' before the decision was taken to close the factory.
Golden Wonder is the third largest supplier in the UK's £2.2bn crisps and snacks market, claiming to have a 14 per cent share. It supplies nearly 75 per cent of all supermarket branded crisps but, Mr Jackson said, this sector of the market had been in decline for several years.
Walkers Crisps, the brand that made itself famous by depicting football's good guy Gary Lineker as a villain, has long dominated the crisps arena, and has more than 53 per cent of the market, according to the market research company, Mintel.
Walkers last year bought one of Golden Wonder's best known brands, Cheesy Wotsits, which contributed to the decline in Golden Wonder's market share.
Golden Wonder has also been losing market share to KP Foods and Procter & Gamble, according to Mintel, and now has only a 5.5 per cent share of the market by value, a drop of 30 per cent on its position in 2000.
"Walkers continues to dominate the market, growing sales by over 17 per cent between 2000 and 2002. Part of this will come from the acquisition of the Wotsits brand, but it is also happy to acknowledge the phenomenal impact of a series of adverts featuring Gary Lineker. This has, however, had a knock-on effect on other brands, with KP and Golden Wonder branded crisps both suffering, along with the own-label crisp sector," analysts at Mintel said in a report published last month.
Golden Wonder was founded in 1947 and was last year sold by the venture capital group Bridgepoint Capital to a private company, Longulf, which merged Golden Wonder with its Snack Factory business. This included the Skelmersdale site, which has been operational since 1989.