Altia as an investment
We have identified six key strengths that we believe provide us with competitive advantage and make Altia interesting as an investment.
Nordic market leader with iconic alcohol brands and a large wines portfolio
Altia is the market leader in the combined Nordic wine and spirits markets as well as in Finland, and the market leader in spirits in Sweden.* We are present in all the Nordic wine and spirits markets as well as in the Baltic countries and travel retail. Altia brands are in good position to meet both Nordic and global market trends.
Our selection includes the Nordic core brands Koskenkorva, Chill Out, Blossa, Larsen, O.P. Anderson, Renault, Xanté, and Valhalla, and local heritage brands such as Leijona and Jaloviina in Finland, Explorer and Grönstedts in Sweden, Brøndums and 1-Enkelt in Denmark and Saaremaa in Estonia. Altia’s large wine portfolio includes numerous well-known partner wine brands such as Codorníu, Pasqua, Faustino, Trapiche, Nederburg, Tarapacá, Robert Mondavi, Lindeman’s and Penfolds.
*Measured in volumes. Source: Management consultant analysis.
Experience and scale that provide strong capacity to operate on the stable and profitable Nordic market
Altia has strong capacity to operate in the EUR 12.2 billion* Nordic wine and spirits market (Finland, Sweden, Denmark and Norway). The majority of our revenues in the market comes through the state alcohol retail monopolies in Finland, Sweden and Norway. The sales of the state retail monopolies have historically been stable and have generally been growing during the past years.** In the future, the Nordic wine market value is expected to remain on a stable growth path with an estimated annual growth rate of one per cent for 2017–2021, and the market value growth in the Nordic spirits is expected to remain moderate and stable.*
We have a wide assortment in different product and price categories, and an ability to adjust production and work with wine producers to make local solutions. Altia also has considerable experience of monopolies’ preferences in terms of assortment, vast local market knowledge and understanding of market trends, as well as significant experience in operating in an environment with strict marketing restrictions.
*Source: Euromonitor International Ltd. Alcoholic Drinks data 2017 edition (May 2017)
**Source: Alko, Systembolaget, Vinmonopolet
Clear strategy that builds profitable growth
Altia’s strategy is targeted at delivering profitable growth. Our growth strategy is based on growing Nordic core brands and strengthening strategic partnerships, channel expansion, executing a step change in wine initiatives and operational efficiency. New innovations and international potential of certain core brands are at the centre of the growth expectations. To support these organic strategic streams, we continue active brand portfolio management and development, including potential selective acquisitions and/or divestments.
Altia has a strong foothold in different product and price categories, including value-for-money products and local heritage brands whose demand has been stable. Our scale, wide assortment, product innovation capabilities, market expertise and consumer knowledge place us in a good position to react to the growth opportunities provided by Nordic market trends. Resources and investments have been concentrated to new products and co-operation models which Altia believes to bring growth in wines. E-commerce and other consumer websites, as well as retail and export are essential in our channel expansion.
Integrated operating model that creates economies of scale and synergies, and enables more sustainable production
Altia’s integrated operating model creates synergies and economies of scale and enables full capacity utilisation. We aim to maximise profits through sharing and combining operations and resources between our own brands, partner brands and industrial products. Through our operating model we can take wider advantage of our product development and innovation capabilities as well as market knowledge.
Sustainability is a crucial factor for Altia’s business operations. The impact of this can be seen in our processes as well as in our products. The operations at our Koskenkorva plant are based on circular economy, making use of one-hundred per cent of the grain we use as a raw ingredient through different outputs both for our own operations and industrial customers, and ultimately through Altia’s own bioenergy plant at the Koskenkorva plant. Environmental aspects are considered when we choose packaging materials and ingredients, and we aim to reduce the amount of energy and water consumption as well as waste in production.
Experienced management team delivering on strategy effectively
Altia’s executive management team has a proven record of creating and executing strategy. They have a strong and broad experience in the Nordic and Baltic alcohol markets as well as operating in a brand focused and trend driven market environment, which has been an important contributor in Altia’s financial development and success.
Altia’s CEO has relevant and extensive experience from the Carlsberg Group having worked there for 13 years before joining Altia in 2014. In 2014, briefly after appointing the new CEO, we launched a new strategy for 2014–2016 which was aimed to improve our profitability and shift our focus towards being a brand company. Our current executive management team has increased Altia’s profitability during the recent years. Altia’s Board of Directors also has significant experience in operating in a listed company environment as well as understanding and having the capacity to resolve potential related challenges and opportunities.
Strong profitability and stable cash flow, and an attractive dividend policy
Since 2013, Altia has taken major strategic actions to improve its profitability by strengthening its own brands, streamlining its brand portfolio and improving its presence in key channels. We have also focused on developing our operational efficiency by simplifying the company structure and operations and improving capital efficiency.
Our operations are characterised by stable and diversified revenue streams underpinned by resilient consumption of wine and spirits. We have taken clear strategic initiatives to further expand profitability. Altia’s management believes that focusing on expanding profitability, carefully managed operational capital expenditure requirements and efficient working capital management support high and stable cash flow that enables an attractive dividend yield.