Foodstuffs industry profits boosted by changing Finnish eating habits
Raw materials price hikes transferred to retail prices
|
|
A group of large Finnish food-processing companies have published good interim reports for the first quarter of 2007.
The largest company in the meat business in Finland, the Atria Group, saw its Q1 profits doubled, while one of the leading food companies in Northern Europe, the HKScan Group (the former HK Ruokatalo) also improved its results, particularly in Finland. After many years of unprofitable trading, even Raisio’s food division reported Q1/2007 results that showed the company’s operating result back in the black.
Only the smallest in the group, Lännen Tehtaat, reported a financial statement that shows a loss. However, the company has only recently started the restructuring efforts that the larger meat companies have already implemented.
The most significant reason for the improved profits is the fact that Finnish consumers are favouring more expensive meat products than before.
The food consumption is moving to more expensive sausages, high-quality meat, health-enhancing food products, light products, and convenience foods.
Consumers are also interested in novelties, for which they are willing to shell out considerably more than they are paying for the old familiar products. Successful novelties have an important role in the profitability of food-processing companies.
HKScan reports that its new line of Potku snacks, launched at the beginning of January, has turned out to be a real success. A cup of Potku contains for example pieces of frankfurters or chicken with a smaller cup of spicy sauce attached to the top of the container.
The food processing companies and retail businesses conduct price negotiations four times a year. Many companies could increase their selling prices already at the beginning of January.
"The price increases are liable to vary, but they are by no means very significant", says Atria CEO Matti Tikkakoski. The negotiating of a price increase for a staple commodity with several alternatives is very difficult, he notes.
Esa Mäki, the Managing Director of HK Ruokatalo, currently a subsidiary of the HKScan Group, reports that even the prices of some old products could be increased by more than five per cent at the beginning of the year.
The increases were partly made to compensate for the increased raw material prices, at the same time relieving some cost pressure. According to Tikkakoski, this was still not enough.
Raisio uses plenty of grain as raw material. According to the President of Raisio’s Food Division Denis Mattsson, the prices of grain and plants for oil production have risen by some 40 per cent on average in Finland.
He reports that moderate price increases continued still in the new pricing period that started at the beginning of May.
Director Ari Akseli from Kesko Food, a subsidiary of the large Finnish retail specialist Kesko, comments that the purchasing prices of the so-called cheap bulk products show no solid upward trend."They are fluctuating", he says.
The majority of the cost-savings achieved by the Finnish food-processing companies accrue from restructuring and centralisation.
For example, Atria has concentrated its production in Nurmo in Ostrobothnia, where the company has established huge production plants and a large logistics centre. HK Ruokatalo has conducted the statutory negotiations with the labour unions in order to be able to close down its Turku plant and to concentrate the manufacture of processed meat products in the company’s Vantaa facility.
Helsingin Sanomat
|
| 9.5.2007 - TODAY |
 Foodstuffs industry profits boosted by changing Finnish eating habits |
|
