Finnish food and drink companies are growing in neighbouring countries

As many as six Finnish food and drink enterprises gain a major part of their income from abroad

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Finnish food corporations have entered the neighbouring markets at a brisk pace.
      Domestic bakery and meat companies in particular have acquired production plants in the neighbouring countries.
     
According to the calculations made by the Finnish Food and Drink Industries’ Federation (ETL), the number of production units owned by Finnish food and drink companies abroad is already more than 70.
      In addition, these enterprises have a significant number of affiliated companies and joint ventures, sales offices, packing plants, and warehouses outside of Finland.
      ”Unlike in many other industries, food companies do not want to become established abroad in order to import cheaper products into Finland. Food and drink industries tend to be local. The companies are attempting to grow abroad and to gain a foothold in the foreign market”, says Managing Director Heikki Juutinen of ETL.
     
In 2009, the Finnish food and drink industries reported net sales of EUR 4 billion resulting from their foreign business operations, ELT calculates.
      The federation has carried out an investigation into the proportion of foreign business operations out of their member companies’ operations on the basis of their annual reports and by conducting a survey.
      The figure does not include the actual export of food and drink products from Finland, which was valued at EUR 1.2 billion in 2009.
      A significant part of the foreign plants are concentrated in the hands of a few large companies.
     
For example, the food and bakery company Fazer has 13 bakeries outside of Finland, while the bakery operator Vaasa Group has ten.
      Another international enterprise in the food industry, the Paulig Group, has seven foreign factories manufacturing spices and Tex-Mex products.
      At present, Paulig is building a coffee roastery in Russia.
      Smaller enterprises operating abroad include the Finnish beverage company Olvi, the meat processing company Snellman, as well as the food products manufacturers Raisio and Saarioinen.
     
When it comes to Finnish manufacturers of meat foods and products, HKScan (formerly known as HK Ruokatalo) has 22 production plants abroad, while Atria has 16.
      They account for a significant part of the Swedish and Baltic meat markets in particular.
      Heikki Juutinen points out that after some company acquisitions, Finnish companies have also closed down some of the production plants they have bought.
      ”In this way, these Finnish companies have contributed to the Nordic structural change”, Juutinen notes.
     
The most recent acquisition took place at the beginning of September, when HKScan bought the leading Danish poultry company Rose Poultry, including its three production facilities in Denmark.
      The Atria Group strengthened its position in Russia by starting up a new meat product plant in St. Petersburg.
      However, the prices of meat raw materials in Russia have risen significantly during the period August-September and are expected to continue for the remainder of the year, which will weaken Atria Russia’s prospects of results, the company said in an announcement on October 15th.
     
Foreign business operations are much more than just a hobby for companies.
      For example, Olvi, Fazer, Paulig, Atria, and Vaasa Group all gathered almost half or slightly over half of their net sales from outside of Finland.
      As much as 67 per cent of HKScan’s net sales came from abroad. Moreover, as the company’s Finnish operations sustained losses in the second quarter, its entire operating profit came from Poland, the Baltic countries, and Sweden.
     
The sale of several well-known Finnish brands to foreign companies has attracted attention in Finland.
      Today, for example the trademarks of Valio ice cream, Panda candies, and Turun sinappi mustard have all been sold to foreign companies.
      However, some Finnish companies have also bought certain familiar brands from the neighbouring countries.
      For example, in order to grow in the fast food market, Atria bought the Sibylla brand, which is among the best-known trade marks in Sweden.
      ”Market access requires the acquisition of a strong local brand. Consumers are likely to prefer food products that have been manufactured in their own country”, Juutinen notes.


Previously in HS International Edition:
  After lengthy delays, Atria sausage factory opens near St. Petersburg (22.4.2010)

Links:
  Atria press release 20.4.2010
  Finnish Food and Drink Industries´ Federation
  HKScan press release 9.9.2010
  Atria company announcement 15.10.2010

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