Competition remains fierce in cholesterol-lowering niche

Benecol buy-back boosts Raisio Q2 results


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Raisio CEO Matti Rihko: “All in all a good performance..."
Raisio CEO Matti Rihko: “All in all a good performance..."

Related tags Stanol ester Benecol Snack

Sales and profits were up in Q2 at Raisio, with CEO of the €500m Finnish agro-food player Matti Rihko content its re-housing of key brand Benecol was paying off.

Benecol paid €88.4m to licensee Johnson & Johnson in November last year to bring the plant sterol, cholesterol-lowering brand with EU-backed claims back under its direct control in the UK, Ireland, Belgium and the US.

This saw a dramatic lift in the bottom line for Benecol with net sales jumping from €27.1m in the first half of 2014 to €70.5m this half. Q2 sales went from €13.9m to €36m year to year and accounted for about 40% of the Brands Division Q2 sales of €97.8m (from €73.7m) that includes confectionery, cereals, bars and snacks. H1 sales went from €146m to €191.6m.

Benecol contributed about 50% of the Brands Division’s EBIT (earnings before interest and tax) of €14.3m excluding one-off items.

“Benecol made a strong quarter – it was driven of course by the good acquisition we made,”​ Rihko said.

“But also I think we should note that on the ingredients side we made a lot of new launches like China on the second quarter. The pipeline of launches before that was South Korea and Brazil.”

The firm that trades in some ingredients and has a milk-based feed project called Benemilk, said the Chinese Benecol powdered drink concept was available in 1700 specialist outlets like hospital shops, pharmacies and through medical professional channels.

"We are continuing the active work to launch Benecol products with partners in new markets especially in Asia,"​ a spokesperson told us after publication.

Benecol’s spread

Rihko noted while the financial result was good it was not 'perfect' and the firm said even big markets like the UK were proving challenging “especially when retailers tightened their selection criteria and price competition further intensified.”

It said sales in South Korea were “good”​ while its partner in Brazil was expanding its distribution network but continued to face challenging markets in Spain and Greece. It retained market leadership status in Poland despite intense competition and a new competitor.” ​Sales were up in home market Finland and also in Hong Kong.

He added of the other brand sectors that confectionery, snacks and cereals “had a good quarter and is in black numbers but it is still far from the level where it will be.”

“All in all a good performance and again we made profit in Russia [where trade sanctions have dented business].”

The company said it was investing in healthy snacking R&D but said while demand for healthy snacks was increasing demand for weight management bars declined further.”

It noted the UK cereal market was in decline and affecting its Honey Monster brand, as concerns about sugar content rose. Raisio said it will soon launch “its new Honey Monster multigrain cereal containing 22 per cent sugar.”

In Finland it was launching gluten-free Elovena snack biscuits.

Across the firm’s divisions H1 sales rose from €249.1m to €264m while EBIT went from €13.8m to €23.7m.

Benecol’s place at the table


Raisio also makes the plant stanol ingredients that appear in Benecol and are responsible for its cholesterol-lowering potential.

Plant sterols and stanols won EU approval in 2009 that allowed them make cholesterol-benefitting claims under article 13 (general function) and 14 (disease risk factor reduction) of the EU nutrition and health claims regulation (NHCR) such as: “Plant sterols and plant stanol esters have been shown to lower/reduce blood cholesterol. High cholesterol is a risk factor in the development of coronary heart disease.”

When Raisio last November took Benecol back from Johnson & Johnson analyst Julian Mellentin from New Nutrition Business​ agreed the brand was better served under Raisio’s roof than at J&J which since 1998 had tried and failed to turn on a mass audience.

“McNeil plowed a lot of money into the brand but I doubt they ever won a positive return on investment,”​ Mellentin told us. “J&J should have sold it 10 years ago.”

“I think this indicates a problem with trying to market foods with medical premises to a mass public. Food is food and medicines are medicines. Products in between are niche and companies need to understand this and Raisio does so this is a good move for Raisio. They are the correct parent of this niche brand.”

Euromonitor puts the global market for these kinds of products at about €2.45bn with Unilever’s pro.activ and Benecol the clear leaders.

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