Interview with Apetit’s CEO Esa Mäki

Interview conducted the 19th of March

For those who have not heard of Apetit, can tell us a bit about your business?

We have two segments, food solutions and oilseed products.

The food solutions segment includes ready to eat meals, frozen vegetables and frozen pizzas. 80% of raw materials come from Finnish farmers, which is very important for our business, where we have a long-term partnership with local farmers in the Southwestern part of Finland. In 2023 we successfully launched the novelty pizza segment, with a factory in northern Finland. During the past year we have made multiple energy improvement investments in our factories to become more efficient and are starting to use renewable sources such as biogas. Sweden has been a focus area for us since 2019 when we started expanding through establishing a sales organization. Today we have a stable position in Swedish supermarkets such as ICA and during the last year we strengthened our position in other stores as well, resulting in a sales increase during 2023 in Sweden.

The food solutions segment increased net sales 15% in 2023, partly coming from a sales price increase, but also higher sales volumes. EBIT increased 38% year on year, a result we are happy with. Our share of export in the food solutions was 12% during 2023, mainly targeted to Sweden and Italy.

 Our other segment is oilseeds products, where we primarily sell rapeseed oil and expeller. We are the only large player in Finland milling rapeseed and our capacity is 130 000 tones. Our target is to source as much as possible from Finnish farmers, but the oilseed harvest decreased last year compared to 2022, so we have had to source from other countries as well, but we believe the harvest will increase in the coming year. When we are milling rapeseed, we get two products from the oilseed: oil and expeller – which is used for animal fodder.

We are also developing a new product called BlackGrain, a type of rapeseed ingredient. It includes protein, oil and fiber. There are different types of applications for it, for example in meat replacement products, it has good taste and nutritional values so it will mainly target vegetarian food products. We will release more information about this in the second half of 2024. 

The EBIT for the segment increased by 207% during 2023 while the net sales decreased by 13%, the reason for this is the market price was exceptionally high during 2022, resulting in a high comparable for 2023 where we saw more normal prices. We can’t change the market itself, so we have to be more operationally effective than previously, the margin is quite thin so we have to be careful and do good in regards to execution.

Can you elaborate a bit on the products in the food solutions and oilseed segments, what are the benefits and how do they stand against competitors with similar products?

For food solutions, we are the only player in Finland that sell frozen vegetables with Finnish origin where we have a local production, these factors are highly valued by Finnish consumers. We also have many decades worth of experience which creates great operational performance.

In Finnish supermarkets we have a strong position with high brand value and recognition. In the oilseeds products segment we are the only big player in Finland and we are a valuable supplier of oil to Finnish food industry.

What is the reason for discontinuing the grain trade segment?

The reason is that grain trade has been a challenging business area, it was very difficult to manage the margin with many external factors impacting the results. It was a high risk, low yielding business with many fluctuations.

How is the company working with distribution in Sweden and Norway?

In Sweden we export directly to the supermarkets and in Norway, due to the industrial nature of the customers, we do shiploads directly to the customers.

What effects are you hoping to receive from the new bottling plant?

At the moment we outsource the bottling of the oil and during the last years we have seen growing demand for vegetable oils, so we made the decision to take this into our own hands. We expect the bottling plant to be finished in the second half of 2024 and by then we can do all the bottling in-house. The new bottling plant gives us the ability to develop products for new segments and from a sustainability point of view it reduces our carbon footprint as well, since we can lower the need for transport. Additionally, control over the production allows us to reach higher margins as we can more easily control costs.  

Which segment/market are you most excited about in 2024?

In food solutions we expect the operating profit to improve, whereas the segment for oilseed products is expected to decline due to the outlook of market prices. We are however excited about Sweden and the development there. The Swedish frozen consumption per capita is much larger than Finland so there is a lot of potential, but we also know that the share of private label is larger, which creates tougher competition.

What impact will inflation have on 2024 demand and in turn, financial results?

In general the trend is on our side with plant based food and vegetable oil. The effects from inflation can be seen in consumer choices where people choose ingredients that fit the budget for home cooking. Due to consumers having less disposable income and since frozen foods tend to be cheaper than fresh produce, many consumers choose frozen over fresh. If inflation continues being high, we will need to consider price adjustments to meet this during 2024.

Could you give three reasons as to why Apetit is a good investment today?

We have a strong brand in the domestic market with plant based and healthy products that are in the right consumer trends. In addition to this we have a strong financial position with a healthy balance sheet and we are profitable.