Morenitos, Violetas, Milanes, Guayabitas, Tapitas and other Gallito brand sweets that Costa Ricans have traditionally identified as Tico-made will no longer be manufactured here.
Illinois-based parent company Mondelēz International said Wednesday that it will close its Costa Rica factory on July 30.
The closure means the dismissal of 300 local employees, some of whom worked for decades at the company that started as a small shop in downtown San José more than 100 years ago.
Mondelēz Corporate Affairs Manager Silvia Alvarado Marenco said the company has yet to define where it will move the manufacturing of the iconic sweets that happened here.
The Costa Rica plant also produced powdered drink mix brands Tang and Clight, and Royal gelatin. Production of these products will move to the company’s factory in Puebla, Mexico.
Alvarado told The Tico Times that the Puebla factory “has a larger capacity and more advanced technology, enabling us to increase the scale of production.”
The decision to relocate the manufacturing process was based on recent evaluations showing that Costa Rica is a better fit for the company’s administrative and services operations, she said.
Last year, Mondelēz opened a shared services center for its Central America operations that currently employs 320 people in Santa Ana, west of San José. The center provides support in information technology, human resources and other administrative services.
“Our services center and our administrative offices will remain in the country,” Alvarado said.
She denied any link between the factory closure and the country’s business and manufacturing environment, unlike some other transnational companies that have closed or downsized in recent years.
“We need to maximize our production scale in order to meet our growth goals in the long run,” Alvarado said. “We have larger and more advanced manufacturing plants in other countries.”
Latin American operations director Juan Ignacio Muñoz said in a news release that company leaders decided to tell their employees about the closure three months in advance in order to help them face the transition.
“We will offer our employees all the support we can. We will comply with all severance payments established by law and even give them some additional benefits,” he stated.
Business leaders lament exit
José Manuel Hernando, president of the Costa Rican Food Industry Chamber, said Gallito’s exit is bad news for the industry.
Hernando said that while relocations of global companies are normal in the international context, for Costa Rica the exit of such an important and traditional company “is a call for political leaders to rethink” the country’s loss of competitiveness in recent years.
Francisco Gamboa, executive director of the Costa Rican Chamber of Industries, said he understood Mondelēz’s decision. He said given the country’s obvious loss of competitiveness, local companies must compensate in other areas, such as innovation.
Tico businessman Raúl Odio Herrera opened El Gallito in 1909 as a small shop right across the street from the central market in downtown San José. Odio, who was just 17 years old at the time, started selling ground coffee. Soon after, he started making chocolates and candies.
In 1947, he moved his factory to a larger building in Guadalupe, under the name of El Gallito Industrial, where the company operated for some 50 years and became a popular landmark north of San José.
He also moved the small store in San José to a bigger space on the capital’s Avenida 2 and turned it into El Gallito Comercial, a distribution company for his sweets and for industrial equipment and supplies. That new company, known as Almacén El Gallito, expanded to six locations.
International company Kraft Foods acquired El Gallito Industrial in 1994, and in 2000 the company relocated its manufacturing plant to its current location in Belén, Heredia.
In 2012, Kraft Foods became Mondelēz International.
Almacén El Gallito closed all of its locations in 2015, arguing financial problems caused by a legal conflict with a supplier. The company dismissed more than 200 employees from stores located in San José, Heredia and Alajuela provinces.
Gallito TV spots and jingles were very popular in Costa Rica during the 1970s and 80s.
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