Finnish dairy company Valio Group has said that its 'flexible production capacity', which enabled it to shift its packaging operations from HoReCa to consumer products, helped it successfully navigate the challenges of the past year.
The company reported net sales of €1.81 million in 2020, an increase of 1.2% (2019: €1.79 million), with domestic sales down 0.9% and international sales growing by 4.3%.
“Despite the coronavirus pandemic, Valio recorded a good financial performance and the milk return continued to grow," commented Valio chief executive Annika Hurme.
"One of our strengths is flexible production capacity, so we were able to shift production quickly from large package sizes designed for restaurants to consumer packages. Additionally, demand in our export markets grew, despite the pandemic."
To cater for the changing consumer dynamic, Valio said that it launched more products under the Valio Hyvä Arki brand, a range of convenient cheese products for at-home consumption, while its plant-based segment also showed growth, with the group introducing Valio Oddlygood Veggie grated, a vegetarian cheese substitute.
International Performance
Internationally, the group said that it saw its strongest growth in China, where demand 'recovered quickly' following the initial wave of the pandemic in early 2020. Net sales were up 40% in China year-on-year, the group said.
“Despite the growth, Valio is a small actor in China. Our most important task is to further improve the profitability of exports and to build recognition of our products and brand,” Hurme says.
Elsewhere, in the US, the pandemic led to steep price fluctuations, which weakened the group's financial performance, however net sales remained at a 'reasonable level'. In the group's neighbouring markets of Sweden, Estonia, and Russia, net sales growth was 'moderate', it added.
The group updated its strategy in 2020, to focus on four areas to drive future financial growth, with its primary focus on the domestic milk market.
“Business operations focusing on milk in the domestic market continue to be the strongest of these, and we will continue its further development," said Hurme. "Raw materials and solutions that generate added value especially for our industrial customers is an important new focus area, whereby we are seeking growth globally, for example in Asia.
"We also see potential for growth in plant-based products, where we are further developing our offering as well as looking to export markets. In addition, we are continuously evaluating various new business opportunities and new partnerships."
The group has also made great strides in terms of packaging reduction and improving the carbon footprint of its logistics operations.
Valio's Current Year
In terms of the current year, the group said that it has started 2021 with much the same priorities as last year, due to the continuing pandemic, while it intends to invest in 'new growth, operational efficiency, and improved profitability' as the year progresses.
It said that retail demand 'is at a good level', however the pandemic continues to make operations difficult for its HoReCa channel customers. It also sees growth potential for its value-added powders business in China and the rest of Asia, it said.
“A key issue regarding product exports, as well as importing ingredients and supplies, is whether international borders will remain open," said Hurme. "Valio’s strength is that milk, the most important ingredient of our products manufactured in Finland, is produced locally, at Valio owners’ dairy farms."
© 2021 European Supermarket Magazine. Article by Stephen Wynne-Jones. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.
