Operating Environment

Large and stable market as operating environment.

The alcoholic beverage market can be roughly divided into wine and spirits markets. The off-trade markets in Finland, Sweden and Norway consist mainly of state retail monopolies while the off-trade markets in Denmark and Baltics mainly consist of traditional retail such as grocery stores. Local and global market trends affect Altia’s operational environment.
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Quality and sustainability – Nordic market trends

Health consciousness and well-being

The consumers’ increased health consciousness has driven the strong growth in low and non-alcoholic wine categories.* The consumption in terms of volume has been recently stagnated and the overall spirits volume development has been moderate.**

Premium products and authenticity

There has been a shift in consumption towards premium and super-premium products, which has led to a stable value growth in the Nordic spirits and wine market. Premium and super-premium products are usually purchased to enjoy value adding characteristics such as quality, uniqueness and locality*, and this trend is believed to remain as a value growth driver in the coming years in accordance with the global trend. **

Sustainability

As consumers are upgrading their consumption habits, environmental aspects have also become an increasingly important part of the consumption decision, which has driven growth in the organic wine category, for example.*

Convenience

Convenience has become an essential aspect for consumers*, and the new packaging techniques, such as bag-in-box and PET bottles, have increased popularity.

*Source: Management consultant analysis.
**Source: IWSR (2017), Forecast 2017-2021 Global Summary Report

Competitive landscape

Market position
Altia's market position

Altia is the market leader in the overall Nordic spirits market measured in volume.*

Compared to the spirits market, the wine market is fragmented as there are several small producers, importers and distributors.

We compete in the wine and spirits market with global, Nordic and small local spirits producers and wine importers.

*Source: Management consultant analysis.

Our competitive strengths in a highly regulated market

Wide assortment and flexibility in sourcing, production and distribution enables us to respond to the tender requirements of the state retail monopolies.

We have knowledge of the state retail monopolies’ preferences in terms of assortment, local preferences as well as the upcoming market trends, and we can take part in the tenders competitively.

We have experience in operating in the highly regulated advertising environment as well as an established position and well-known brands that helps us to execute our promotional campaigns.

Nordic sales channels

The state retail monopolies in Finland, Sweden and Norway (Alko, Systembolaget and Vinmonopolet) form the largest sales channel for Altia’s products.

There are variations between the off-trade market regulations in the Nordic countries that has impact on national retail sales structures, advertising and pricing mechanisms.

Traditional retail, such as grocery stores, is a channel for low and non-alcoholic wines and glöggs, ready to drink products, beers and ciders. This channel is a relatively small in the state retail monopolies, but its significance has been growing due to the growing popularity of lower alcohol products. In Denmark, the majority of sales goes through traditional retail.

The HoReCa channel plays an important role in new product launches and provides Altia with an opportunity to promote and increase customers’ brand awareness as well as monitor and affect future consumer trends. Travel retail, comprising airline, sea and border trade, has traditionally been an important channel in the Nordic alcoholic beverage market due to duty free trade.

The development of Nordic alcoholic beverage market

The Nordic spirits market has been characterised by a stable value growth during 2013–2016. The market value growth has outpaced the volume growth during 2014–2016 as consumer preference has shifted towards products of higher quality and higher price category (premiumisation).*

The wine category is expected to continue as a growth engine in the Nordic wine and spirits market, while consumer trends are creating growth potential in the stable spirits market.*

Nordic market development
Nordic market value

Nordic alcoholic beverage market growth forecasts 2017–2021*

  • Wines 1.0%
  • Spirits 0.2%
  • Total 0.7%

*Source: Euromonitor (May 2017)

Industrial market

Technical ethanols and solvents are produced to meet the needs of a wide range of industries, including pharmaceutical, healthcare, chemical and technochemical industries. Further, a considerable share is used to produce geothermal heat pump fluids, whose market is growing. Barley starch is used for food industry, brewing and technical applications as well as a binding and coating agent in the paper and paperboard industries. General economic conditions affect the demand for industrial products and therefore the end use of the products Altia is supplying. Recent growth in paper and especially paperboard industries has increased the demand for starch.