We updated our strategy in 2020 to better respond to evolving consumer needs and the changing food system. Four cornerstones guide us on our journey:
- We are building an even stronger position as the number 1 FMCG brand in Finland.
- We are developing leading positions in Northern Europe.
- We are accelerating our growth through innovations, on-trend categories and foodtech.
- We are excelling in our ways of working to become the industry leader in profitability.
Our strategy underpins our mission, Food with a purpose, and takes us Towards Perfect Days, our vision. The strategy execution is supported by our brand promise: Northern Magic. Made Real., visible throughout our portfolio and brands. The Fazer brand promise is also reflected in our recently updated company values: Northern Liberty, True Relationships, and Fearless Creativity.
With our updated strategy and recent progress in strategy execution with the sale of the Fazer Food Services business area, we are targeting to increase our market shares in our core markets and categories with organic growth boosted by acquisitions, and an improved EBITDA margin. The profitable growth and our solid balance sheet will secure a competitive dividend yield with a pay-out ratio of >50%.
Our strategy is built on our strengths and is fearlessly forwardlooking. We actively seek and seize opportunities across our current categories and beyond.
Building an even stronger #1 position in Finland
Fazer is the leading FMCG brand in Finland based on leadership in several categories including confectionery, bakery, biscuits, smoothies, and breakfast products. We continue to further strengthen our position as the #1 FMCG brand by matching our beloved product portfolio and new innovations with evolving consumer needs. We continue to leverage our role as a reliable brand and partner and to deepen our strategic partnerships with key customers. To ensure an even stronger position on the Finnish FMCG market, we built a unified field sales organisation and started a cross-company marketing transformation programme in 2020.
Developing leading positions in Northern Europe Our Finnish heritage is backed by a range of strong and developing positions across our key Northern European markets. The sole aim is to further strengthen and continue to build additional strongholds outside of Finland and to become a strategic partner for Northern European retailers.
Our solid basis, consisting of several top category positions in the Nordics, Russia and the Baltics, brings execution power and speed while we continuously seek new ways to become topof- mind for an ever-increasing number of Northern European consumers. To drive us on this journey, we have unified selected commercial functions starting from Sweden, Norway and Denmark to leverage the true benefits of Fazer as a FMCG company.
Accelerating our growth through on-trend categories, foodtech and innovations
A sharpened focus means clarified ways of growing for us. Our growth comes especially from on-trend categories, innovations and foodtech. This means that we anticipate consumer needs, that we combine our unique consumer proposition with innovations to explore on-trend categories and that we seize the first-mover advantage in our core know-how areas related to foodtech.
Foodtech drives change across the food industry and has given rise to unprecedented levels of innovations and new ideas. Founded on our strengths, Fazer is taking a leading role in foodtech development. In addition to our Xylitol factory in Lahti, Finland, which uses oat hulls as raw material, we are constantly developing a broad range of foodtech initiatives in accordance with our foodtech agenda and innovation leadership in oats.
In 2019, we partnered with Solar Foods to jointly research and develop the company’s novel protein ingredient Solein®. The strategic partnership continues and was followed by an investment round in August 2020 where we acted as the lead investor and became the largest shareholder of the company.
The acquisition of Vuohelan Herkku in January 2020 provided us with a larger exposure to the gluten-free market, enabling us to become one of the largest players in the Finnish gluten-free bakery market.
The Fazer Retail business comprising Fazer Cafés and Gateau artisan bakery shops became part of the Fazer Confectionery business area in 2020. This move supports us in strengthening our consumer dialogue and in enabling a more efficient introduction of novelties and other Fazer products in our direct-to-consumer channels.
Excelling in our ways of working to become the industry leader in profitability
The sale of Fazer Food Services in early 2020 increased our focus and strategy execution power as an integrated FMCG company. We put a stronger emphasis on unified ways of working and operational excellence across functions.
Going forward with a clarified FMCG focus requires us to have the right capabilities and a culture that fuels innovation, engagement and ownership. We place great emphasis on developing key competences, engaging our people, fostering individual accountability, developing future leaders of Fazer and embracing continuous learning.
In 2020, we have also started a group wide procurement transformation programme, unifying our ways of working and extracting synergies across our businesses. In addition, we continued to rationalise our manufacturing footprint through some significant changes, including transferring the non-dairy production from Kaarina to Koria and the pastille and gum production from Karkkila to our factory in Lappeenranta.
In the beginning of 2021, we further announced the introduction of a new operating model in Fazer Bakery Sweden. The new mode includes a re-seller and co-distribution agreement with the Swedish bakery sales company Polfärskt and reduces the number of our bakeries from four to three.
Ability to execute during unpredictable circumstances
Rapid and unforeseen changes in consumer behaviour caused by the COVID-19 pandemic changed the demand picture. New ways of working had to be swiftly adopted. Nevertheless, we were able to proceed with our strategy execution with full steam. Our Consumer First approach proved critical as we closely examined changes and alternative scenarios for future consumer demand and started to implement them. The exceptional circumstances truly highlighted the resilience and relevance of our strategy as well as our organisation’s ability to execute in times of change.