Atria Plc - Focus in Russia and a new brand strategy for Finland

Atria’s yearly Capital Markets Day 2013 has been held earlier this month.  Let’s look at what the executives have said.  Olle Horm, EVP Atria Baltic, apparently was not present.  Only a Doctor of Kremlinology or whatever could tell what it means, perhaps nothing.

Juha Gröhn, CEO Atria Group, repeats the vision: “We create inspiring food for every occasion with strong brands and passion.” It is of course in accordance with the current strategy:  To be number one in commercial excellence, efficiency and way of work.

It comes very clear that Sibylla and Deli expansion both are important parts of commercial excellence. Factually this means that the group sees Russia as a very important business area.

Gröhn’s summary by business area is this:  In Finland market development is challenging, business in Russia is turning healthy and development in Scandinavia and in Baltic shows improvement.

Gröhn does not praise Group’s success, but rather presents statistics, for instance stats about challenging Finland. One of them tells that meat production growth in Finland was halted in 2009 and the production is predicted not to grow.  Meat imports instead have been increasing relatively sharply, the figures tell.  Meat consumption on the other hand is growing very slowly.

Consumer poll results, shown in the presentation, tell that a great proportion of Finns value for instance domestic food.  This is of course good for Atria Finland. On the contrary, a bad thing is that brand is generally not been considered important, but instead affordability is important for large proportion of consumers.  A puzzling thing is the fact that just results from two particular meat product categories, namely chicken and minced beef are presented. Why these categories, one may ask.

Mika Ala-Fossi, EVP Atria Finland tells that commercial excellence in Finland is to be achieved through category leadership.  For instance, according to him,  it means aggressive market share growth, close co-operation with clients and strong brands.  Indeed, Atria Finland has increased its market share during a couple of quarters and now Ala-Fossi tells that they have three new big partnerships in Food Service sector.  That’s a lot in Finnish setting. Furthermore, Atria Finland is planning a new brand strategy and increasing brand presence in multichannel marketing ecosystem.  Facebook and food bloggers, I suppose, but what else, we’ll see. On the basis of the presentation, it is clear that the new brand strategy will focus on emphasizing domestic origin, traceability, transparency, simplicity, and quite surprisingly, on tradition which Atria Finland seems to consider one emerging trend. It may be but I don’t think so.

Also Ala-Fossi presents cold facts about general Finnish economy:  Consumer purchasing power will decline in 2014 - 2015 approx. 0,8% to 1,1% annually and unemployment rate will grow and estimated BKT for year 2014 declines 0,8%.  Moreover, referring to Nielsen data, he tells that consumption in Finland will decline in consumer packed meat, cold cuts, sausages and convenience food. Poultry consumption will increase. Sales value however will increase but mainly or only because of higher prices.

Tomas Back, EVP Atria Scandinavia tells that they are the market leader on the Danish cold cuts market and number two in company’s core categories on the Swedish market (market leader in several subcategories). He gives one figure, which surprised me a lot: Atria Scandinavia’s cold cut sales in Denmark are worth of as much as 57 million euros.

One note of trends is the latter part of this statement: The total consumption of meat increased 1 % during H1 in Sweden, while average prices increased 4,8 %. It is quite a rice of prices during only six months. No wonder that according to Back, there is strong competition from private label with growing market shares in Atria’scategories in Sweden and Denmark. Based on info given in the presentation, it is clear that at least Lithell’s sausages face this problem.  

Jarmo Lindholm, EVP Atria Russia tells in turn in his presentation, what commercial excellence means in Russia.  Quite expectedly it means category leadership, strong Sibylla expansion, and strong new product development. In addition to Sibylla, Atria Russia’s core business consists of processed meat products and convenience food, he says.  That’s no surprise.  Lindholm  continues by saying that growth will come through cold cuts and convenience food and Sibylla of course. 

Atria Russia has now begun to differentiate its brands.  Apparently Pit-Product means now Health and Safety, Campomos means Convenience and Speed and Ridderheims will be tied with Pleasure and Good Taste.  Not bad. For reason or another Sibylla’s slogan in Russia, Tasty and Healthy, is not mentioned in the presentation.

All in all, Lindholm notes that Russia has grown to the biggest retail market in Europe making it attractive due to high consuming power.  He shows statistics which tell that France, Germany and U.K. have been left behind. 

So, I guess one can expect growth for Atria Russia. Profitability - one may doubt.

In his Atria Baltic overview Juha Gröhn amazingly strongly states that primary production is a vital part of the company.  He even presents a map with pig farm locations. 

Gröhn does not boast of success but gives some bleak facts about Estonian economy: GDP is not growing, rising wages hinder export which is important to Estonia, inflation is still high and population is diminishing. 

Moreover, Gröhn says, convenience food is gaining ground. I suppose, Atria Baltic has no suitable products for that trend.  And more, Gröhn notes a couple of challenges for Atria Baltic: it is dependent on feed prices and in addition to all, private label products as well as imported fresh meat take market share.

                                                                                         

We will look at Atria later but on Friday, January 3rd, we are going to look at HKScan’s businesses.  Brand / and / expand.

                                                                                                                     

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