Raisio ‘expanding in new markets and categories’, says CEO

Raisio interim CEO Jarmo Puputti

Raisio, the Finnish food group, is forging ahead with its strategy to expand in new markets and categories despite operational challenges hitting first-half results, interim chief executive Jarmo Puputti tells FoodNavigator.

Puputti became interim CEO of Raisio at the beginning of this year after Matti Rhiko left the business. Acting as a steward for Raisio until Oras Group’s CEO Pekka Kuusniemi joins as the new president and chief executive in November, he has overseen the process of Raisio's strategic renewal.

The group’s new corporate strategy, which will guide Raisio’s development until 2022, received board approval in April. “The core of Raisio’s strategy consists of plant-based, healthy and responsible branded products that meet the needs of consumers and customers,” Puputti explained.

While the company’s focus on plant-based sustainable products is on-trend, Raisio has nevertheless found itself buffeted by weakening consumption trends and macroeconomic challenges, particularly in the UK.

Sales and profits under pressure

Last month, the company was forced to issue a profit warning due to “prolonged production and commercial challenges” at its UK confectionery business. Updating the market on its second-quarter performance today, Raisio said that it has started to address the production issues but warned dealing with commercial challenges may take “more time than expected”.

Despite falling UK profits, Puputti said the company’s overall operating performance was “satisfactory”.

For the six months to the end of June, comparable operating profit – stripping out one-off items such as a write-down in the UK – stood at €23.6m versus €24.7m in the first half of last year. On a reported basis, the company’s first-half EBIT totalled €22m, against €3.5m a year ago, as the company lapped costs associated with efforts to revamp its UK business.

Raisio’s sales also came under pressure in the first half of 2017, with currency exchange and the impact of sterling depreciation taking a toll. Net sales slid to €236.5m, compared to €238.1m last year.

Despite the sales and earnings squeeze, Raisio will continue to invest in its brands, product concepts and sales and marketing in order to advance its long-term strategy, Puputti said. The group, therefore, expects comparable EBIT for 2017 to fall “slightly short” of comparable EBIT for 2016.

“The company seeks profitable growth with agile product and brand development, new markets and product categories, digital services, and through acquisitions. The renewed strategy creates a well-targeted and determined operating model for growth,” Puputti insisted.

Nordic oats launching in Poland, central Europe

As part of its broader strategy to grow profitably, Raisio wants to advance sales of its Nordic brand of “healthy” oat snack biscuits, instant oatmeal and oat flakes by launching the products into new markets.

“Raisio’s strategy emphasises the determination to expand into new markets and new product categories and launching Nordic into Poland is aligned with this strategy. With these measures, we ensure profitable growth," Puputti explained. 

The brand, which is already present in Russia and Eastern Europe, will hit the shelves in Poland this autumn, with a broader regional rollout to follow. “Nordic has been on Russian and Eastern European markets for over 20 years. Raisio is now launching the renewed Nordic in Poland and later also in other central European markets,” Puputti said.

He believes that Nordic’s branding and the products it offers are particularly well-suited to consumer preferences in Poland. “Consumers are interested in oats, a natural raw material with health benefits. This can be seen in higher demand for plant-based, natural snacks supporting well-being. Poland is a natural choice for the renewed Nordic as Polish consumers are looking for convenient and healthy snacks,” Puputti suggested.

Significantly, Puputti added, Raisio has a “good foothold in Polish markets with the Benecol brand”. The company, therefore, has the opportunity to leverage existing customer relationships and feed Nordic into Benecol’s distribution channels.

By utilising its existing presence, Raisio has already secured listings for Nordic products. “The launch campaign started in [the] summer and we already have some listings for the autumn,” Puputti revealed.

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