Snacks driving growth at Chips
the first nine months of the year, helped by acquisitions in Sweden
and Russia. But while the group said it expected further gains in
most markets this year, it also warned of increased competition
from own label snacks.
Chips, the Scandinavian food manufacturer, posted an 11 per cent increase in sales for the nine months to 30 September, driven entirely by its fast-expanding snacks division.
The company said that turnover reached €215.0 million for the first nine months of 2003, helped by a 15 per cent improvement from the snacks division. The company's other main business stream, processed foods, posted flat sales for the year-to-date period.
The snacks arm, which accounts for 76 per cent of the company's sales, has benefited from a rapid programme of expansion in recent months, with acquisitions in Russia and Sweden this year alone helping to lift sales at the unit to €162.9 million.
The company claims to be the snack market leader in the Nordic countries and in Latvia, while the acquisition in May of the Russian Snack Company gave a strong foothold in that potentially lucrative market. Also in May, the company acquired the Parrots brand of natural snacks in Sweden and Finland.
But Chips is not content to rest on its laurels, since even in markets such as Norway, which already has the highest per capita consumption of snacks in the Nordic region, it sees significant potential. Norwegians already crunch their way through 6kg of snacks a year, according to Chips, but the market as a whole increased by 10 per cent in the first nine months of the year, giving the company further opportunities to expand its market share there.
Per capita consumption in Sweden is around 3.8kg a year, the company said, while in Denmark it is nearer 3.5kg. In Finland it is 2.3kg, in the Baltic countries under 1kg and in Russia under 0.5kg - signs of more clear potential for the ambitious group.
But taking advantage of this potential will not necessarily be an easy task, Chips said, noting a distinct toughening of the competition in many of these markets during the first part of the year, in particular from retailers' own labels. "The share of private label products on several markets is currently around 15 per cent, which means we should clearly focus our business on our own strong brands, giving consumers security and a quality guarantee," Chips said in a statement.
Chips' other business stream fared less well during the nine-month period, however, with sales of €52.1 million level with those a year earlier. There were some good performances within the unit, with the Food Brands Finland division increasing turnover 5.1 per cent, helped by a substantial increase in sales of Oolannin vegetables and chips.
In Sweden, where overall sales were flat, the star performer was the Topp ready meals brand, but potato product sales suffered at the hands of intense competition from own labels. Exports were lower than the year-before period, however, and this pushed down operating profits at the division.
The overall increase in sales helped lift operating profit by 13 per cent to €23.7 million during the period, but net profits of €8.8 million were lower than the previous year when a number of one-off gains and strong dividend income inflated the figure.