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Private label competition “is here to stay”, says Raisio

Finland-based food manufacturer Raisio expects to continue facing competition from private label in 2024.

The company today (13 February) reported 2023 financial results that included a dip in annual sales amid pressure from own label on its stable of brands, including Benecol.

Speaking exclusively to Just Food, Raisio CFO, Mika Saarinen said the “presence of private label is here to stay”.

He added: “In each category, and especially in the dire times as we are living now, even in this year, in the whole of Europe, purchasing power will be under strain.

“I don’t know whether it’s able to grow much further in the short term but at least it’s there as a one alternative for customers, that’s for sure.”

Raisio’s sales fell in 2023, as the Elovena and Benecol brand owner felt the impact of pressure on consumer spending and a shift to lower-price, own-brand products. Net sales were €220m ($235.7m), a 0.6% decline on 2022.

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By GlobalData

EBIT rose 6.8% to €19.1m but dropped 47.6% in the final quarter to €3.1m.

The company said today (13 February) it intends to shelve its 2022-2025 growth and profitability targets, following its flat sales performance in 2023.

Benecol sales under pressure

In 2023, net sales from Raisio’s low-cholesterol Benecol spreads and yogurt drinks fell 6.3% to €106.5m.

Benecol struggled particularly in the UK, where the market for low-cholesterol products fell back in 2023.

“It seems that the category… didn’t drop that drastically but it did nevertheless and I think it must be due to the fact that, of course, those are premium-priced brands”, Saarinen said.

He added the UK market is now “very much on our sights… because it’s so dominant… All our focuses are there on how to actually promote and regain the volumes that we lost.”

Part of Raisio’s 2024 strategy will involve reassessing its advertising and its use of trade spend, with the aim of “seeing an uptick in volumes in all markets… but especially the UK”, Saarinen said.

Besides the UK and Finland, Benecol’s other European markets outside Finland include Poland and Belgium, as well as Ireland, which has seen “double-digit” growth since 2020, according to Saarinen.

Commenting further on how Raisio will look to build back sales for Benecol, Saarinen said: “We are quite confident on regaining some distribution that we lost partially in the last year.”

Competition hits plant-protein brands

Raisio’s plant-based proteins division, the company’s smallest by sales, includes brands such as Härkis Oat Mince and reported a 17.3% fall in sales to €5.5m in 2023.

The group said the increasing competition in the plant-based protein market was to blame, with it having “been hit hardest by the current market turmoil”.

When asked about the company’s plans to recover sales in 2024, Saarinen estimated the market had declined across Europe by approximately 15% in 2023.

“I think it has to do with one reason, obviously it’s the price point,” he said. “The traditional protein, let’s say meat and poultry [was] able to actually be quite a bit cheaper for the consumer”.

He added: “In every market, it’s still quite a low base… because it is still young… We are believers in the category in the longer term but we are also aware that last year was a disappointment.

“This year, we are aiming for higher volumes, but not that much higher, so we are actually quite cautious”.

Describing the market as a “stalemate situation”, he added a lot of product innovation was still needed to determine what products would stick with consumers.

“Is it ready-made meals? Ready-to-heat meals? Is it [mincemeat alternatives?]… It’s still a very open question.”

M&A possibilities

As part of Raisio’s strategy to build its three core business units: Benecol, plant proteins and value-added oat products and ingredients, the company is also keeping an eye out for M&A opportunities, Saarinen indicated.

When asked whether it had any acquisition plans in place for 2024, he said it was an “ongoing issue that we are looking into”.

He added: “As the times are like they are now there is quite a big group of companies actually on the market.”

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