Operations at Sanitarium's Weet-Bix plant in Christchurch have been suspended indefinitely, after engineers' reports showed its tower block was a safety risk because of earthquake damage.
Operations at the plant have been on hold since November 2011 and the 65 staff have been on full pay since then.
Sanitarium general manager Pierre van Heerden says the decision to suspend work indefinitely was not taken lightly.
He says staff are being offered redundancy packages.
Mr van Heerden says warehousing, distribution and sales teams will continue to operate from the Christchurch site and it hopes to get Marmite production back on track as soon as possible.
Work will begin on Thursday to demolish the block.
Mr Van Heerden says a final decision on the future of the site has not yet been made.