A brief look at Atria Group's 2012-12-04 Capital Market Day presentations

Yawn freely, but Atria has updated its strategy. The slogan is now “Atria’s way to number 1”.  There are three lanes:  Commercial excellence, efficiency and Atria way of work. Commercial excellence is about branding, understanding consumer, being a preferred partner and creativity. Efficiency is about processes, production, R&D, purchases and upstream activities. Atria way of work is about leadership governance, knowledge and synergies and positive atmosphere. 

That’s it.  Forget it.  It is first class nothingness.  Or is it even that?  Somehow I feel, that public sector is better when it comes to producing this kind of general nonsense, namely every now and then they manage to be even interesting. 

Juha Gröhn, CEO Atria Plc nails these theses and the country managers apply them to their plans and the presentations are cut from the same cloth. Their content looks somehow orchestrated.  However, for whatever reason, Olle Horm, EVP Atria Baltic, did not follow the format, and his presentation is the most interesting.  Anyway, there is some useful content in all of these CMD presentations.  Let’s take a look. Links to presentations are found here.

Atria Group – Juha Gröhn, CEO

Atria Group’s core is cold cuts and processed meat products.  There is nothing new but it is good to know that there are no changes. Gröhn also gives arguments for the stated core:  High volume and value potential, strong expertise in recipes and production, flexibility in sourcing, strong categories in more or less all countries, opportunity for synergies and state-of-the-art product portfolio.

In all, the Group core is solid and clear, and arguments for it are convincing. Next we will have a look at local cores.

Atria Finland - Mika Ala-Fossi, EVP

Atria Finland’s core is wide.  It includes practically the whole product range.  But a large food company must have products in all product and price categories for every consumer.  Perhaps the core just couldn’t be less wide. Upstream activities – a new term in Atria’s vocabulary, mentioned also by Gröhn, is now repeated here.  One may wonder what kind of changes it means or already has meant for Finnish farmers.  Not anything good, I suppose.

In his market update Ala-Fossi gives some interesting info about consumer trends.  Organic food and ecological aspects shouldn’t pose big problems for Atria. Finnish origin is of course a big plus.  However, Ala-Fossi mentions still another emerging trend: Cooking at home is growing. If this is a valid research result, there is a huge threat to Atria. The presentation includes also some info about retail chains, and in this context is the following announcement:  Market development is based on price increases.  Volumes have been developing far less excluding in poultry category.  This is quite frightening. 

Atria Scandinavia Tomas Back, EVP

Back does not explicitly state Atria Scandinavia’s local core, but instead repeats the old and familiar strategy:  To be market leader or to have a strong second position in cold cuts, sausage and delicatessen in our markets in Scandinavia through strong brands, innovation and successful sales.  

Quite funny, but this statement gives the chance to be only the second, perhaps Back should update it. But practically speaking, the statement looks sound: Cold cut brands Lönneberga and 3-Stjernet prosper, Lithells sausages likely are ok and Ridderheims goes well with its deli products.  But something is missing: Where is fast food?  It is indeed thought-provoking that specifically in Atria Scandinavia’s presentation Sibylla is just mentioned once and only due to its expansion in Russia.

Atria Russia Jarmo Lindholm, EVP

Atria Russia’s local core looks clear:  Processed meat products, convenience food and Sibylla, concentration on branded products, and only in St. Petersburg and Moscow.

One question arises instantly:  Is Sibylla Atria Russia’s business in Russia?  I thought that Sibylla is a part of Atria Concept in Atria Scandinavia.  Another thing is that it has now become obvious, that Atria’s primary production in Russia will be closed down.  Why it is not stated explicitly in the presentation or someplace else? 

Lindholm’s arguments for the local core are clear but they are mostly wishes, a list of potentials like these:  High market value potential in cold cuts, strong market growth potential in convenience food and Sibylla, strong assortment management and new product development implementation. Only one argument is a realized fact:  Strong market position in sausages category. And this is valid only in St. Petersburg, of course.

There is nothing wrong with the presentation but Atria Russia will not convince anyone until there is more evidence about successful launches and until Gorelovo’s plant is running at full steam.

Atria Baltic Olle Horm, EVP

Horm, not following the given presentation format,defines Atria Baltic as a full circle meat company, which is a fact of course.  Reading on the presentation, one could suspect that Horm himself is a man of 180 degrees, and when compared to the rest of the pack, he goes into the opposite direction in a number of issues. 

Straightforwardly he defines Atria Baltic’s two main focus areas.  They are sales improvement and cost efficiency.  This is not original, but his means for sales improvement might be. He plans to restructure sales and marketing organization, reduce the share of campaigns in daily sales and he also aims to growth in meat sales. One cannot know, what he means by restructuring, but surely it will lead to major changes.  Less campaigns is an unexpected and  bold move and growth in meat sales is just opposite to the previous strategy, according to which highly processed products have seen to be  the only way to success.

Unfortunately Horm’s cost efficiency measures are not quite as straight talk although saving targets are clearly expressed.  Measures include optimizing office and management personnel, centralizing logistic operations to Valga factory and tightening general cost control.  But what means optimizing and what is general cost control? One more target there is listed, namely the factory outlet in Valga.  We discussed about the matter in this blog four weeks ago.  Now the closedown looks certain.  Not a great move.

In the future outlook section Horm, just in case, repeats the new strategy:  Our focus is on increasing sales, especially in fresh meat segment.  However, elsewhere in his presentation, Horm brings up processed products and somewhat softens the strategy change. He says that Atria Baltic has been losing market share in processed products and gaining market share in meat, and in this instance he declares that the primary target is to stop the loss of market share.  No doubt, Horm will implement at least some of these activities.  Atria Baltic’s long-awaited entry into the black may be just around the corner.

We will look at Atria again later but on Friday, January 4th we are going to study HKScan’s businesses.  If snow turned green, it would not make summer, in my opinion.

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