PARIS (Reuters) - Food giant Nestle (VTX:NESN) will shut a frozen meals plant at its site north of Paris after sales were hit by a Europe-wide scandal that saw horsemeat find its way into processed products such as ready meals, company officials said on Thursday.
The scandal started in January when traces of horse meat were found in frozen burgers sold in Irish and British supermarkets, sparked concern among French consumers and put them off frozen foods, a Nestle France spokeswoman said.
"The closure is a direct consequence of the horsemeat crisis," she said. "In supermarkets, ready-meal aisles were deserted ... It's what you call collateral damage."
She noted that sales of ready meals were down by a quarter from a year ago, after falling 40 percent in the immediate aftermath of the scandal, making the Beauvais plant, which produces meals under the Maggi brand, uneconomical.
The plant closure will lead to 165 job cuts, but employees will be offered packages or new jobs at an ice cream factory on the same site that is set to expand, plant director Patrice Raut said.
The frozen food factory that is being closed had been loss-making for at least two years, Raut said.
"The French market is falling bit by bit as consumers turn to fresh food or, for those seeking competitive prices, to preserves," he said.
France is Nestle's second-largest market in the world behind the United States. It has 30 plants in France, employing 16,000 people.
(Changes headline and first paragraph to read "meals" instead of "food" to make clearer that Nestle is not closing the entire site)
(Reporting by Sybille de La Hamaide and Natalie Huet; Editing by Greg Mahlich)