A company on the move

In 2019, Fazer continued executing its strategy and informed about the sale of Fazer Food Services in order to focus on its fast-moving consumer goods (FMCG) and direct-to-consumer businesses. Financially, the year was satisfactory. Net sales for continuing operations increased by 7% and the operating profit was close to the previous year’s level.

Trends are heavily shaping the world of food. Consumer lifestyles are changing at an increasingly rapid pace, and disruptive trends challenge companies. Convenience is becoming more important at the same time as companies are required to act sustainably. Consumers expect companies not only to be good at what they do, but also to do good to others - to society in general and to the environment. To be able to keep the pace in the race, we need to understand how consumer behaviour is evolving and to take action.

Fazer sold Fazer Food Services to Compass Group in January 2020, aiming to focus its efforts and to streamline its business portfolio. I wish all our former Fazer Food Services employees all the best in the future. I am convinced that employees and the business will continue to thrive and develop as part of Compass Group.

The funds from the sale of Fazer Food Services will be invested in Fazer Group’s FMCG businesses with the objectives of strengthening our position as the leading FMCG brand in Finland and our position in the Northern Europe and beyond. We will grow in on-trend categories, such as non-dairy and plant-based meals, and invest in the development and renewal of our product and business portfolio, based on deep consumer insight and research. We will become more integrated and more agile, and focus on value creation through portfolio choices, growth and operational excellence. We will place the consumer first in all our operations and leverage on our renewed brand positioning - Northern Magic. Made Real. - to be meaningfully different in the eyes of consumers.

Fazer is The Food Experience Company. We build on our achievements and are supported by our company-wide sustainability approach. Sustainability is an integral part of Fazer's strategy. Fazer sees food as a solution. How we grow, produce and consume food has a significant impact on the environment, on society and on our well-being. Fazer is committed to continuing the innovation of sustainable solutions to benefit people and the planet. Our sustainability core goals by 2030 – 50% less emissions, 50% less food waste, 100% sustainably sourced and more plant-based – guide us in our daily work.

Sustainability is closely interlinked with foodtech. Foodtech makes the food system more productive, affordable, sustainable and healthy. Developing Fazer’s position in foodtech and our ability to commercialise significant innovations will, in the future, play an even more important role in executing our ambitious growth strategy. We will build on our current strengths in research, development and innovation and on agile collaboration with universities and research networks to innovate, develop and leverage the full potential of new food solutions.

In the beginning of 2019, Fazer started the construction of a xylitol manufacturing facility next to its oat mill in Lahti, Finland. This investment, one of Fazer’s most significant investments in years, is a great example of foodtech aligned with our sustainability goals. The facility will use patented state-of-the-art technology to make xylitol from oat hulls that are a side stream of the mill’s production process. Our strategic partnership with the Finnish start-up company Solar Foods is a good example of co-innovation. The aim of the partnership is to jointly research, develop and commercialise a new protein ingredient developed by Solar Foods.

To reduce the impacts of food on the climate, we all need to adopt new ways of thinking and operating. This requires fearless creativity. Creativity that we shall not limit to technology but that may take many shapes and forms: giving up single-use plastic utensils, including cutlery, straws and cups, in our cafés and bakery shops, reducing the amount of plastic in our bread packages, or the sugar confectionery side stream concept Makea Moka where consumers can buy less-than-perfectly shaped or coloured sugar confectionery as a way to tackle food waste are a few examples of this.

Plant-based products and solutions are an important strategic growth area for Fazer. The acquisition of Kaslink, an expert in oat-based products, is another example of the future direction of the Group. Kaslink became part of the Fazer Lifestyle Foods business area in August 2019.

The 30-million-euro investment in our oat milling business published in November 2019 also exemplifies the rapidly growing global demand for oats. The investment will double our oat milling capacity both in Lahti, Finland and in Lidköping, Sweden.

2019 was a year of many significant developments and changes at Fazer and we look forward to inspiring opportunities in the future, even if growth has slowed down in many markets.

In Fazer Bakery, both the Baltic and the Finnish units showed strong development. The success of in-store bakeries in Finland continued with new bakeries being opened and new products added to the offering. The shop-in-shop concept was also expanded to the Baltics. The market situation in Sweden and Russia is still challenging. In Russia, Fazer is executing an ambitious development plan to enhance the performance of our bakery business. To bring decision-making closer to the customers, the Fazer Bakery Business Area organisation was simplified in October.

In Fazer Confectionery, all units delivered good results, and successful launches secured market share growth. International growth was supported by strong development in Denmark, successful sales initiatives in Asia and the launch of Fazer Nordi premium chocolates in the US.

In Fazer Lifestyle Foods, development was positive in Finland and Denmark. The competitive environment continues to be tough, especially in Sweden. The non-dairy market developed favourably, as did the market for breakfast products. Efforts were put into energising the Froosh brand.

Fazer Retail is facing a challenging market situation, especially in Sweden, but the renewed store concept and successful new openings create interesting opportunities. Fazer Retail was able to grow the café business in Finland. The year was successful for Fazer Experience with, once again, a new record number of visitors.

Despite some degree of uncertainty created by the agreed sale, all Fazer Food Services’ units performed well. Fazer Food Services Finland achieved an all time high result in 2019.

Fazer is on the move and our journey will continue. Our transformation would not be possible without the commitment, skill and determination of all our great people. Together, we will continuously develop the company on its successful path.

Since February 2020, our daily lives have been changed rapidly by a pandemic caused by the Coronavirus. This will have a major impact on Fazer’s operations. Our mission is to provide Food with a purpose. Throughout our history, we have been a part of consumers’ daily lives, making a good day perfect and bringing joy and comfort to the bad ones. This is what we continue to do now also under these demanding circumstances.

And last, but by no means least, I would like to thank all our partners and stakeholders for their engagement and support in 2019.

Christoph Vitzthum
Fazer Group
President & CEO