The UK is the largest market area for Raisio's Brands Division. The key product groups are cholesterol-lowering functional foods, snack bars and cereals. Benecol, Honey Monster and Harvest Cheweee are Raisio's brands. In addition, Raisio produces snack bars under its customers' brands. 2014 was challenging for the cereal and snack bar business.
Main events in 2014
- The snack bar production was centralised to the Newport factory in South Wales and the Tywyn factory was closed.
- At the end of 2014, Raisio managed to fix the factory's service level problems resulting from the production transfer. Customer confidence began to return.
- Challenges continued in the cereal sales.
- At the end of 2014, Honey Monster cereals were relaunched with a new recipe containing less sugar.
- With the acquisition completed in November 2014, the UK is now Raisio's home market for Benecol products together with Ireland and Belgium. From the beginning of 2015, Benecol markets are reported as part of the Benecol unit figures.
Net sales for Western European Cereals and Snacks business decreased significantly from the comparison year due to the declined sales of Honey Monster cereals. The whole UK cereal market remained competitive and continued to decline.
Net sales for the snack bar business remained at the comparison period level despite the challenges related to the centralisation investment at the Newport factory. Over the last five months, the Newport factory delivered positive EBIT every month, excluding one-off items.
As a whole, EBIT for the Cereals and Snacks business was negative and clearly weaker than in 2013.
Centralisation of snack bars enabling growth
Raisio's snack bar production was centralised to the Newport factory in the UK. The Tywyn factory was closed and its production lines were transferred to Newport. The existing lines were operated as normally as possible in spite of the ongoing construction and installation work.
Challenges related to the centralisation of snack bar production now solved
As a result of the problems due to the start-up of transferred lines and training of new employees, the factory service levels declined significantly. In the second half of the year, the issues were resolved; the service level improved back on its normal level and customer confidence began to return. Production efficiency and flexibility as well as high quality of products are competitive advantages of the Newport factory. These factors enable growth and the introduction of novelties matching customer needs.
Difficulties in the cereal business continued
The problems that started in Raisio's cereal business in 2013 continued in 2014, mainly due to the continuing negative sugar-related media visibility. Sales in Sugar Puffs cereals were clearly below the comparison year and fixed costs of the business also weakened profitability.
Measures taken to assess the future of the cereal business.
At the end of 2014, the relaunch of Sugar Puffs cereals began and the product name was changed into Honey Monster Puffs. The change was made because the Honey Monster character is well-known and the recipe of the cereals was renewed to match consumer needs. New Honey Monster Puffs cereals contain less sugar. Advertising and media measures supporting the relaunch were introduced in January 2015.
In November 2014, Raisio recorded a write-down of EUR 10 million of the Honey Monster brand's book value. The UK's breakfast cereal category has not grown and its profitability has declined. Therefore, Raisio expects the sales and profitability of Honey Monster cereals to remain permanently below the normal levels of recent years. Raisio has taken steps to assess the future of the business.