Northern Europe
“Overall, our Northern European business performed very strongly in 2023. The mature markets, Finland, Denmark, and the Baltics, increased net revenue and earnings despite cost inflation and an unfavorable summer. In Norway, the integration is well under way, and we have secured important customers for the future. ”
Kalle Järvinen,
SVP Baltic Sea, Sweden & Norway and Managing Director Hartwall, Finland
Financial performance
Total volumes increased by 4% in 2023 to 10.8 million hectoliters. Organic growth amounted to 1% despite high price increases, resulting in improved market shares, and was realized despite poor summer weather. Net revenue increased from DKK 8,943 million in 2022 to DKK 10,023 million in 2023, corresponding to a growth of 12%. Organic net revenue growth amounted to 8% and were driven by price increases as well as an improvement in price/mix.
EBIT increased by DKK 198 million from DKK 1,247 million in 2022 to DKK 1,445 million in 2023. This corresponds to an organic growth of 16% and resulted in an improved EBIT margin that expanded by 50 basis points from 13.9% in 2022 to 14.4% in 2023. The improvement in EBIT and profitability is driven by Finland, Denmark and the Baltic countries.
Development and initiatives in 2023
The Finnish market declined in 2023, as a result of inflation and higher living costs in general, which towards the end of the year also started to impact consumer behavior. In this challenging market environment, our strong and wide beverage portfolio delivered a solid performance with market share gains in RTD, CSD and water.
The Original Long Drink Pineapple launch in 2023 was very successful and one of the top launches of all Fast Moving Consumer Goods (FMCG) launches in Finland measured by value. The launch, which turned Finland yellow during the summer, expanded the RTD market, and the strong demand for the new variant continued throughout the year.
We continued to drive our agenda of providing healthier options for our consumers, and within our non-alcoholic portfolio, no sugar versions secured market share growth in 2023. PepsiMax strengthened its position as the number one cola variant in the market with an all-time high market share, and no sugar Jaffa increased volumes by double digit percentages.
In 2023, we strengthened our position in On-Trade by gaining new customers within fast food and events, while at the same time extending contracts with important customers. We are expanding our market leadership in wine and spirits On-Trade to a market leadership in the total market, as a result of new customer wins in 2023.
We continued our work to reach our sustainability ambitions. Lahti biogas plant (operated together with Lahti Energy) was taken into use in H1 2023 with full circular economy cycle and getting us to zero CO2 emissions (scope 1 & 2).
In Denmark, the year was only a few days old when we announced a deal to acquire the Copenhagen-based brewery, Nørrebro Bryghus – a strong, locally rooted brand with two decades of history and a flagship in Danish beer culture. The range consists of 100% organic craft beers, which are to be continued, developed, and expanded – even outside the capital region – through our robust distribution platform. The integration of Nørrebro Bryghus was successfully completed in the last quarter of the year.
The new addition to the portfolio instilled confidence in further positive expectations for growth and progress in the Danish business, and these expectations were met to a satisfactory extent, especially considering what turned out to be another year of challenging market conditions. Inflation persisted, and both On- and Off-Trade had to navigate a very unpredictable and hesitant market. Month by month, we observed the increasingly negative consequences of climate change and the geopolitical world situation, with ongoing warfare in Europe, influencing shopping patterns. The consumer trend towards more discount shopping remained dominant, leading supermarket chains to contemplate and initiate radical changes in their setups, including the closure of chains and stores.
We closely monitored the developments, engaged in many close dialogues with our customers and partners, and drew on our experiences from the years with COVID. Thus, we succeeded in identifying current needs, adjusting and developing campaigns to remain attractive to our customers and consumers. A good example is the expansion of the Faxe Kondi series with an orange variant, which received an overwhelming and extraordinary reception in the market. But other collaborations have also been a great success. Overall, we have gained market shares, especially in the soft drink segment – but also in the water, snacks, and craft beer segments.
Recognition of our targeted efforts and strategy came again in the form of top rankings in customer satisfaction analyses, including collaboration at the head office level and efforts in physical stores – Royal Unibrew is the Preferred partner in the category. Likewise, we achieved significant progress in our NPS Score in the On-Trade market.
As the expansion of our portfolio, increased complexity, and interest in our brands have been growing, we have also experienced a need to adapt the organization. This has meant welcoming several new colleagues both at the head office in Faxe and at our other locations in Denmark.
The integration of Hansa Borg & Solera in Norway moved into its next phase in January 2023, to further increase the commercial focus, harvesting the advantages of having all categories in one house and being even more closely integrated into the Group.
Our portfolio was further expanded by the introduction of PepsiCo snacks (Lay’s® and Doritos®) at the beginning of 2023 as well as an extended long-term partnership agreement with Diageo to include all products in Diageo’s spirits portfolio for the Norwegian market, strengthening our position as a multi-beverage business in the Norwegian beverage market, both On-Trade and at Vinmonopolet.
The Norwegian Krone weakened in 2023. The high inflation affected the Norwegian beverage market, consumer purchasing power and consumer behavior.
The Norwegian summer was cold and grey, taken to the extreme with landslides and floods in August, affecting both sales and distribution. Despite this, we delivered numerous successful festivals during the summer and succeeded in closing several large customer agreements with existing and new customers, aiming to be THE PREFERRED CHOICE.
Focus on sustainability efforts increased throughout the year. Inbound empty can transport from Sweden to Norway, Bergen, transferred from road to railway in August, reducing the carbon footprint by 95 percent on the distance. During the year, 60 percent of the total shrink film usage on own produced beverages was converted to recycled materials and 100 percent recycled corrugated trays was implemented.
In addition, energy efficiency measures continued, and we succeeded in reducing energy spend with as much as 13 percent per produced hl throughout 2023. ISO 14001 certification was achieved within Hansa Borg’s supply chain, in addition to re-certification of ISO 9001 and FSSC 22000.
We have a strong portfolio of both own brands and partnership brands with a solid customer base both in On-Trade, Off-Trade and at Vinmonopolet in Norway. Hansa is Norway’s strongest beer brand, and we have succeeded in growing our strong cider and RTD position. In addition, we have in 2023 developed our market shares in the Energy category with our brand CULT. Nøgne Ø continues its role as Norway’s leading craft brewery, and its barrel aging program has received international award, making Nøgne Ø the 69th most checked in brewery on Untapped in Europe out of a staggering 7120 breweries in total.
Our ambition is to be THE PREFERRED CHOICE for customers and partners, offering the best access to market as well as the broadest and most attractive beverage portfolio. Hansa Borg & Solera Norway closed the year by winning two central long-term collaboration agreements on everything from wine, beer, cider & RTD to spirits. The agreements, shows our strengths as a multi-beverage partner to our customers, and we aim to create even more value and opportunities for our customers and consumers.
In the Baltic countries, the focused attention on our beer and cider portfolio, coupled with premiumization efforts and timely price increases, resulted in a significant growth in net revenue for the beer category compared to 2022. Despite volume declines in the beer market and a flat cider market, we continued to gain market share with our local and imported premium brands.
CULT, through intensive brand activation efforts including the introduction of new products, enhanced visibility in stores, and targeted brand-building activities, especially in social media with influencers and communities, expanded its consumer base. Despite the overall strong category growth, CULT outperformed significantly and secured additional market share.
Our commitment to growing the PepsiCo brands portfolio, resulted in market share gains, and the growth was facilitated by increased investments in expanding cold space, enhancing brand visibility in media and events, and a successful third-year execution of a massive blind tasting. The results revealed that over 60% of cola drinkers prefer the taste of Pepsi. The heightened focus on zero-sugar cola also yielded outstanding results, with the market share of zero-sugar carbonated soft drinks increasing significantly.
In line with our commitment to sustainability, our Off-Trade and On-Trade clients participated in a survey for the second consecutive year, selecting Royal Unibrew companies in Lithuania and Latvia as their top 1 and 2 sustainable partners. Over 40% of our marketing budget is dedicated to sustainability initiatives, including the no/low agenda and support for various communities and initiatives such as Malt Order and WWF. One of our significant achievements was the installation of solar panels in the Kalnapilis brewery.