Creating a winning product portfolio with increased resource efficiency was in focus in 2016. Fazer Bakery improved its market position in Finland, Russia and Estonia. In Finland, sales development was very good, with the new root vegetable bread and doughnuts selling particularly well. The shop-in- shop business continued its excellent performance. In Sweden, the tough competitive situation coupled with major business transformation projects took its toll on business results.
However, Fazer continued to improve its position in fresh bread, and the company’s overall market share remained stable. In Russia, the weakened rouble affected Fazer Bakery’s result, but sales development in local currency was good, with bake-off in particular continuing its strong performance.
Rooting for healthy bread
The growing health and well-being trend is an opportunity for Fazer to develop products that exceed expectations in not only taste but in nutritional value as well. New product ranges are introduced, and existing ranges are improved and upgraded to provide healthier taste sensations. Snacking products with long shelf life answer two consumer demands at the same time: they provide healthy energy on-the-go or between meals. Innovative grain and plant-based products allow expansion into adjacent categories, offering health- conscious consumers delicious natural wellness.
The combination of bread and greens has proved successful: the Fazer Root Vegetable Bread was internationally recognized in October 2016 in the Gama Innovation Awards, in which it won the Positioning category as the top new launch. Fazer Root Vegetable Bread was launched in Sweden in 2015 and in Finland in 2016. In both countries, it has become one of the most popular products in its segment. The bread was also launched in Russia in November 2016, and sales have been promising. The Baltic countries will get to enjoy Fazer Root Vegetable Bread in 2017.
In September 2016, a series of new, belly-friendly bread was launched in Finland. With as many as one in five Finns experiencing stomach symptoms after eating bread, the new product family answers to a clear consumer need. Successful new products were introduced also in Russia: The Healthy Energy series includes six breads that support well- being, and the Burge product family features European tastes inspired by Fazer’s history. More information about Fazer’s approach to promoting health and well-being can be found in the Group’s Corporate Responsibility Review.
Sustainable farming in focus
Corporate responsibility is embedded in all Fazer’s operations. In Fazer Bakery, it involves the effort to use domestic grain and the development of sustainable farming through the Fazer Grain Vision. Fazer Bakery aims to improve its material efficiency at all production sites and in the manufacturing of products in order to reduce the amount of waste created in production processes.
Fazer Bakery saw improvements in work safety in 2016. Lost time accident frequency (LTAF) was 13 per cent lower than in the previous year. This was the result of hard work, which will continue in 2017.
More detailed information about Fazer’s sustainability efforts, waste reduction campaigns and safety development can be found in the 2016 Corporate Responsibility Review.
Artisanal bread on the rise
The increasing popularity of artisanal bread creates possibilities for growth as well, and Fazer is investing strongly in this category. The acquisition of the Leipomo Keisari artisanal bakery in Finland in 2016 tripled the number of Fazer’s artisanal bakery shops in the capital area, making it the area market leader in artisanal baking. Fazer continues to invest in bakery shops and Fazer Shop-in-shops to capitalise on the premium bread trend. Gateau Bakery Shops expanded to a new geographical area with the opening of a new bakery and two shops in Gothenburg, Sweden.
However, demand is polarising as consumers call for low- priced products in retail. In pre-packed bread, Fazer is the market leader in Finland and Russia, and in the top 3 in Sweden and the Baltics.
In Russia, Fazer continued to invest in frozen markets, in both bake-off products and those sold as frozen to consumers. In 2015 and 2016, Fazer has rolled out hundreds of branded bake-off points in Russia.
Welcome to the Perfect Store
In order to increase sales in the entire bakery category, Fazer has invested in the consumer experience at the points of sale. “We have carried out Perfect Store pilots in cooperation with our customers, developing the retail shopping path together to increase the attractiveness of the product displays as well as the ease of purchase. The pilots have been extremely successful: in Finland, all pilot stores performed better than average, and in Russia the pilot outlets saw major increases in average gross margin. With these experiences, we have great confidence in the concept and will roll out the Perfect Store in 2017,” says Petri Kujala, Managing Director of Fazer Bakery.
New products transforming the business Fazer Bakery is transforming its business to continue providing exceptional products in a changing environment. A renewed product portfolio will better serve consumer and customer demands and allow more focused product development. Fazer will also exit some less attractive product segments in order to enable investments in growth segments and trending product categories.