Finnish confectioner Fazer sets ambitious plans for Asia

The confectionery and bakery manufacturer wants to move outside the Nordic market to capitalise on confectionery growth in Asia.

Looking East​

Fazer already has a confectionery presence in travel retail in Asia, but its products are not sold through conventional retail channels.

Fazer president and CEO Karsten Slotte told ConfectioneryNews.com​: “One has to be realistic that we are starting from scratch.”​

He said that Fazer would look for a distribution partner with wide trade channels, but would begin by focusing on a small geographic area.

He suggested that Hong Kong, Singapore and the Philippines made the most sense as Fazer confectionery was already sold at airports in these markets.

“I believe the greatest opportunity is in China,”​ he said, but added that it was too earlier to discuss a strategy for such a large market.

International strategy​

Fazer has no immediate plans to start production in Asia and will instead begin by exporting. However, Slotte said he would not rule out on-the-ground production in future.

Fazer currently has three production sites, which are all located in Finland.

In January, Fazer announced a strategic partnership with media company Rovio Entertainment to make branded confectionery for the mobile phone franchise Angry Birds. Slotte said the partnership had potential in Asia and was already undergoing a trial period in this market.

Fazer is also among the leading bakery firms in Russia and plans to expand its bakery operations there. Slotte added that there could also be scope for a confectionery partnership in this market.

Effect of Cloetta-Leaf merger​

In December last year, Swedish confectioners Cloetta and Leaf signed a €753m merger deal, which allowed the new Cloetta to overtake Kraft in Sweden and become the largest confectioner in Scandinavia.

The merger followed a previously unsuccessful union between Cloetta and Fazer, which ended in 2008.

Asked how the Cloetta-Leaf deal would affect Fazer, Slotte said: “The impact is very limited.”​

He said that the merger would not interfere with Fazer’s market share and added that the new Cloetta had such a large product portfolio that it left shelf space for other market players.

Home markets​

Fazer is the market leading confectionery firm in Finland and recently became the third largest confectioner in Sweden.

In 2011, Fazer’s turnover increased by 4.1% and the group’s operating profit stood at €54.2m.

Slotte said that a Finnish confectionery tax implemented at the beginning of 2011 had harmed consumption of Fazer products and impacted sales.

Fazer said that the tax, which was raised beginning of 2012 by 26.7%, increased consumer prices by nearly 13%, causing Fazer’s production volume to decrease by 3.5%

However, Fazer expects raw material costs to ease in 2012 and has reported a strong start to the year.