Artoparto's Blog

Friday, January 16, 2015

Atria’s shrinking markets in Scandinavia

Atria’s Capital Markets Day has been held in 3^rd December 2014 and presentations are available on the Group’s pages. Let’s look just Finnish and Scandinavian market updates.

According to Mika Ala-Fossi, head Atria Finland, Finnish retail market in Atria’s categories has shrunk 3.4% in value and 2.0% in volume. In food service sector the corresponding shrinkage in value is even 4.4%.

In Sweden, the situation is not much better. According to Tomas Back, head Atria Scandinavia, Swedish cold cuts market has shrunk 2.1% in value and 3.8% in volume. Back also tells that in this product group Atria’s branded value share is 11.5% and Atria’s total value share, private label included, is 12.7%, both decreasing slightly. If I get it right, these share figures tell, that Atria is not a big player in cold cut private label market but instead the company is highly dependent on its own brands. On the contrary, it can be noted that in sausages the readings are 10.4% and 15.5% indicating that Atria has a strong presence in Swedish private label sausages.

Seriousness of the situation in Sweden is revealed, when Back notices that private label growth in cold cuts has been 15.8%. That’s truly enormous growth, I think. It does not help much that, according to Back, Lönneberga products are keeping their position versus other branded products. I personally think that this means just that all brands wither.

Denmark does not bring relief. According to Back’s presentation cold cut market declined 4.0% in value and 3.7% in volume. Atria’s 3-Stjernet brand was able to raise its market share but at the same time, Back tells, hard discounters are increasing their share on the market.

We will look at Atria again later but on Friday, January 30^th we are going to look at HKScan’s businesses. Only Estonian punk can save us - and not always even that.

This is Artoparto and here is my Disclaimer. Please read it.

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Friday, January 2, 2015

HKScan and a Danish giant

HKScan announced in December the sale of their egg business in Estonia and also becoming a minority shareholder in their Finnish hatcheries. Of course those were separate deals de jure but it was unpleasant to see that HKScan left without telling the simple fact that both contracting partners are part of the same group. Such secrecy gives an impression of dishonesty.

DAVA Foods Holding A/S ja Danish DanHatch AS both belong to Danish Agro corporation, with holdings in Finland already before this, among others 50% share of Muna Foods, formerly known as Munakunta, and 60% share of Hankkija Oy and the rest of Hankkija will likely be sold to Danes in no time.

HKScan Estonia’s egg business sale should have been guessed already a year ago, when the Group announced that Tallegg’s egg production will be separated from poultry meat production. Teet Soorm, head of HKScan Estonia, almost revealed it by first saying strongly that Tallegg’s focus is on poultry and then adding that egg production is still important business for the company. I would imagine that the negotiations were already advanced at that time.

Hannu Kottonen, CEO HKScan comments the two December sales: “These deals are further steps in our efforts to rationalize our operations, focus on our core business, improve our productivity and further simplify and clarify the Group structure. The changes allow us to further strengthen our position as the leading Nordic meat company.”

Yes, yes, Kottonen talks about core business. Core today, niche tomorrow, HKScan is shrinking fast. But what might be Danish Agro’s core business? Apparently they focus on … that’s right, they focus on agriculture. They are not shrinking, but in Finland, is it this, what is left of truly Finnish agriculture?

We will discuss HKScan later but on Friday, January 16^th, we are going to look at Atria’s businesses. Harvest Samba!

This is Artoparto and here is my Disclaimer. Please read it.

Friday, December 19, 2014

Atria Finland and Heinon Tukku - practical cooperation

Recently, Atria has reported on success in the Food Service segment, at least in terms of net sales. Now it seems that one reason for this success is revealed in company's Success Stories column. According to it, a year ago, collaboration with a wholesaler Heinon Tukku was taken to a new level, from a customer to a partner.

“The key idea of the partnership agreement is that Atria will ensure the flexibility of the deliveries made by Heinon Tukku and the availability of goods” and “Heinon Tukku, in turn, will help Atria to reach restaurant-sector customers in greater Helsinki.”

Cooperation has expanded this autumn. The column tells, that the companies started a new type of service counter for the meat sector:

“Heinon Tukku has previously provided whole fillets and carcass parts, but now we can also cut meat into desired pieces and steaks of a specific weight.”

What does it mean? Overall, it means that the biggest rival HKScan is challenged in its home ground. Without a doubt, this simple step may have brought a significant increase in Atria Foodservice sales. Heinon Tukku is a major wholesaler, sales of more than EUR 200 million and its range covers all from food to tableware. Pre-cut meat for its part further facilitates the everyday life of a pro kitchen. All in one cargo.

But what about the other half of the agreement? How does Atria ”ensure the flexibility of the deliveries made by Heinon Tukku”? And what might it mean? Well, I don’t know, but this cooperation surely will increase Atria's net sales and may be also profitable in the near future. Especially demand for most valuable parts of the carcass will hopefully increase. Moreover, one could think that for instance Ridderheims’ products could be included in the range of Heinon Tukku as well.

We will look at Atria again later but on Friday, January 2^nd we are going to look at HKScan’s businesses. Slow food is slow food but fast food is fast food.

This is Artoparto and here is my Disclaimer. Please read it.

Friday, December 5, 2014

A few remarks about HKScan’s poultry business

But at first shortly about meat export. In a recent issue of Kauppapolitiikka, it’s Trade Policy, published by the ministry concerned, there is, under the title “Blue and white food tours” (in Finnish), an interesting article about HKScan and the main message is that reputation of cleanness and safeness boosts Finnish food export. As an example of Finnish quality, Hanny Kottonen, CEO HKscan, mentions that in Japan, Finnish pork is served raw in local sushi. This is something that even Sweden has failed to do, Kottonen notes. By-products, those parts of carcass, which do not sell in Finland, are perhaps another key to success. Still one key, mentioned by Kottonen, is that HKScan should also export - in addition to raw meat - also consumer products with strong brands. Now we can only hope that the new Flodins brand does the job. However, the article tells, export is not easy business, even close neighbors, like Russia and Norway, have proven to be challenging.

And now shortly about poultry. Of all Group’s units only HKScan Denmark, is unprofitable. For reason or another, this is now explicitly stated in a Danish newspaper. Chicken do not sell and prices are low. Group’s problem child is the term used. It just came into my mind that Rose Poultry could be for sale. After the fire, the factory has of course been renovated and it might interest possible buyers. The Group after all, has invested heavily on poultry in Estonia and plans to invest in Finland, as already noted on this blog earlier. One additional fact is that Denmark is more vulnerable to avian influenza. Perhaps the group does not even think of selling Rose Poultry but I think that there’s some idea to go through this case more closely in the near future.

Talking about chicken, the valuable Finnish brand ”Kariniemen”, is in fact not that valuable. On the Finnish list of most prestigious brands, it holds rank number 121 of all 1043 examined brands. Considering that “Kariniemen” is an old brand and its awareness is high, ranking outside top 100 is terribly bad.

Now Kariniemen is campaigning ethical farming. Ordinary people, picked by the company, were allowed to videotape freely in a henhouse and make questions freely, company’s Youtube Channel tells. Well, think about this: they were free to ask anything they wanted. Superb! Okay, I don’t think that this kind of theatre has any positive impact. Factory farming is factory farming and that’s it. Personally I would have liked to see chicken catcher in operation and I would have liked to ask about tetracycline use.

We will discuss HKScan later but on Friday, December 19^th, we are going to look at Atria’s businesses. Chicken rocks!

This is Artoparto and here is my Disclaimer. Please read it.