Fazer’s strategy involves many ways of creating profitable growth, including developing its current businesses to better meet the consumers’ evolving demands. As people’s schedules become more varied and flexible, the change is reflected in meal preferences, calling for products that are tasty, wholesome and easy to eat on-the-go, at any time of the day. Healthy, high-quality nutrition combined with a variety of snacking products – with room for a delicious treat every now and then – forms the basis for Fazer’s future.
Fazer pursues growth by acquisitions as well as organic growth. In 2016, three acquisitions were completed. Fazer Mills grew its oats capacity with the acquisition of Frebaco mill in Sweden. Fazer expanded its Bakery offering by acquiring the Finnish artisanal bakery Leipomo Keisari, recognising the growing consumer interest in artisanal bread and gaining market leadership in artisanal baking in the Helsinki capital area. The Finnish Seniori Ateria, bought in the end of 2015, became an integral part of Fazer Food Services. Additional initiatives are ongoing.
Fazer Confectionery took the leading position in the Finnish biscuit market with the acquisition of three well- known and highly valued brands – Domino, Fanipala and Jaffa. All three biscuits were originally launched by Fazer, although Fanipala was originally named Fasupala to reflect the Fazer brand – and will be again, as the delicious chocolate-covered waffle resumes its original name in 2017. Further opportunities in the snacking category are being examined. All businesses work to optimise their product portfolios to meet customer demands while improving profitability.
Efficiency and effectiveness through High Performance Culture
In order to grow current businesses and enable international expansion, Fazer is fearlessly renewing and developing its businesses into even more efficient, world-class operations. This efficiency boost is driven by a high performing organisation. This performance culture is built around Fazer behaviours – engaging, developing and performing.
This culture emphasises shared responsibility for the success of the company, recognising that everyone at Fazer plays an important role in creating taste sensations and exceeding consumers’ expectations. With consistent leadership and active dialogue, Fazer strives to ensure that employees enjoy their work and commit to doing their best, aware that their contribution is valued and appreciated.
Responsibility for people and the planet Corporate responsibility is embedded in Fazer’s businesses and observed in everything the company does. At its core is Fazer’s responsible offering, which supports people’s well- being, sustainable use of the planet’s resources and shared value in society. Fazer’s corporate responsibility programme involves five key themes through which Fazer ensures that its business is conducted in a sustainable way, enhancing the company’s reputation and increasing the brand value. More about Fazer’s corporate responsibility work can be found in the Corporate Responsibility section on page 12 and the Group’s 2016 Corporate Responsibility Review.
With an enhanced focus on the quality of products and services, environmental impact of operations and health and safety of the personnel, Fazer also improves its operational excellence. A resilient QEHS culture with clear management and leadership is a key factor in creating a safe and healthy work place. A learning organisation can support all its members as well as Fazer’s businesses, allowing them to create exceptional products and services every day.
Good growth despite challenging operating environment
The economic situation in most of Fazer’s main markets continues as challenging. The Finnish economy seems to be slowly recovering, but the Russian economy is still weak. The sanctions imposed on Russia by the EU and the food import ban in many categories set by Russia as well as the fluctuations of oil prices and the rouble create an uncertain environment, which reduces foreign investment activity. Household consumption is weak, as real wages have decreased. Despite the challenging operating environment, Fazer’s net sales increased by 2 per cent, totalling 1,603.5 million euros in 2016. Profitability exceeded previous year’s level as well, which was further supported by the acquired businesses.
Operating profit before amortisation of goodwill amounted to 87,7 million euros, 10 per cent up from 2015. In the tough business environment, there is still work to be done, with focus on various efficiency improvement actions.
The full impacts of Brexit remain to be seen, but as the pound sterling is the main currency used in the cocoa trade, Fazer remains alert to changes in its value and hedges pound sourcing in order to counteract the adverse effects of currency volatility.
In Finland, the government’s decision to withdraw the excise duty on confectionery in the beginning of 2017 will restore equality in the market.
Focus on oats
Super-foods have gained in popularity in recent years, and in 2016, oats received significant attention as a nutritionally valuable ingredient with several health benefits. Fazer sees oats as a major opportunity for healthy and tasty innovations, investing strongly in developing new oat-based products for existing markets as well as to function as gate-openers for international expansion. Fazer already exports more than half of its net sales of oats to 30 countries.
In 2016, Fazer launched value-added oat ingredients – oat beta-glucan, oat protein and oat oil – aimed at the global market. With the acquisition of Frebaco and an increase in production volume in Finland, Fazer Mills will quadruple its oat capacity.
Developing a future-proof business
Fazer continuously focuses on developing a future-proof product portfolio. Recognising trends is only the first step; research and renewal is needed to develop new products and services that spark consumers’ interest. Scientific methods are also used to examine the health impacts of products and ingredients. Fazer engages in proprietary research as well as cooperation with universities and start-ups.
Despite the challenging operating environment, Fazer’s net sales increased by 2 per cent. Profitability exceeded previous year’s level as well, which was further supported by the acquired businesses.
The international Fazer Brainfood Hack, held in October 2016, brought together teams of scientists, developers and designers to find ways to improve cognitive performance with methods relating to eating habits. Fazer Brainhow is a research and business development programme that examines the connection between food and cognitive performance. Fazer sees its role in everyday life as an opportunity to explore nutrition and encourage healthy eating habits.
Digitalisation enhances customer experience
Digitalisation, the megatrend of the decade, influences all businesses regardless of industry. To Fazer, digitalisation is an opportunity to lift the customer experience to new heights as well as to improve internal efficiency. With several ongoing initiatives across the businesses, Fazer is applying digital technology to increase its dialogue with consumers, share product information, collect, analyse and exploit data to support sales, marketing and portfolio development and increase production effectiveness, among other things. Development initiatives in the area of e-commerce and digital services are also under way.
Strategic steps in Fazer businesses
All Fazer businesses have their own strategic targets that support the group-wide strategy.
Fazer Food Services seeks to further strengthen its position in the Business cluster and grow in the Public and Concession clusters. The municipal sector is presenting interesting opportunities. New operating models are applied to increase efficiency and generate growth.
Fazer Bakery sees growth in new emerging categories, with health and well-being as a major driver. As the artisan trend is rapidly growing, Fazer answers consumer and customer needs by investing in bakery shops and Shop-in- Shops as well as with the acquisition of Leipomo Keisari in 2016. Frozen markets are in strong focus in Russia.
Fazer Confectionery is prioritising its portfolio to respond to current as well as future demands, with chocolate brands as major drivers. Development of next-generation sugar confectionery and snacking products, including biscuits, complements the chocolate business, which will be strengthened further.
Fazer Mills is significantly increasing its oats capacity. Entry to Sweden in 2016 is one of the main steps in this process.
Fazer Cafés has developed the café chain and focused on growth.
Enjoy the brand experience
Fazer’s brand strategy is constructed around a central brand experience Fazer wants to create: “I’m inspired to enjoy the moment and feel good about my choice”. This is what Fazer wants consumers, customers, colleagues and other stakeholders to feel when they interact with Fazer people, products and services. The brand experience is a shared goal based on thorough consumer and market understanding, and everyone at Fazer contributes to creating it.
The Fazer brand experience has also inspired the refreshed Fazer logo, which features the familiar Fazer signature and a brush stroke, or ‘smile’, under it. The smile recalls Fazer promise to make the world taste good. With the revamped logo, Fazer aims to create a more cohesive brand experience across the Group.
Brands play a pivotal role in creating growth. The Fazer brand naturally takes centre stage, and its visibility will be increased in all businesses, with the value add of the brand demonstrated to both customers and consumers. The Fazer brand also leads the way in innovations and investments as well as marketing. It is supported by several renowned and cherished brands such as Karl Fazer, Geisha and Fazer Marianne in Fazer Confectionery and Reissumies, Hlebnyi Dom, Skogaholm and Gateau in Fazer Bakery.
Fazer’s brands are continuously developed to ensure that consumers, with their changing lifestyles and habits, are always given more than they expect – a delicious moment, alone or in good company, at work, school or at home, at any time of the day. A good example of the Fazer brand experience is the new visitor centre at Vantaa – Fazer Experience.