Cadbury Trebor Bassett is to shut its Keynsham factory, with the loss of 500 jobs.
The move is being taken, said the firm, because "in order to continue to grow and remain competitive we need to operate more effectively".
CTB said it would be moving production from the site near Bristol to the Bournville factory between 2009 and 2010. It is also intended that some chocolate assortment production will move from Bournville to the firm's factory in Poland in 2008, with the loss of 200 jobs.
The firm is hoping any phased redundancies "can be achieved voluntarily".
Kate Harding, acting head of customer relations at the firm, told MB&R: "The closure proposal is phased to ensure manufacturing and supply is efficiently maintained".
Trevor Bond, MD of CTB, said: "While the proposed closure will be difficult for those affected, our ongoing commitment to manufacturing in the UK is absolute." He added: "In order to continue to compete, we need to make the right decisions today".
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