4 Gerardo, what impact does the current financial situation in Brazil have on AAK’s investment and growth opportunities there? Gerardo: In the short term the situation is quite challenging given the GDP we saw in 2015 and the forecasts for this year and the next. Also, most of the key economic indicators, such as inflation, unemployment and consumers’ expenditure, show negative trends. Despite all this, Brazil continues to be the world’s fourth largest chocolate manufacturer, the world’s third largest biscuit manufacturer and the world’s third largest market for cosmetics and personal care. In addition, most of the leading global and regional players have a strong presence in South America. All these opportunities in the market remain, which makes us confident in achieving our targets. How will AAK position itself in South America? Gerardo: With our co-development approach and our full capabilities in place, AAK clearly responds to the key trends and drivers in the challenging market environment of South America. This holds true not only for customers looking for productivity, efficiency and savings, formula optimization, new product development and sustainable solutions, but also for consumers looking for health and wellness, nutrition and functionality, affordability, convenience and sustainability. Torben, what are the biggest challenges when entering a new market such as the Indian, and how will AAK position itself in the region? Torben: Although a new market to AAK we believe that we, through our innovative partnership AAK KAMANI, have a very good and close dialogue with the market and the local key players. AAK KAMANI has a unique opportunity to capitalize on growth opportunities going forward, given its strong application focus, a deep understanding of the needs in the market, and a close relationship with customers. Furthermore, in India we have a very well-functioning Customer Innovation Center and we truly believe that working close to our customers is the way forward. What will the nearest future for AAK look like in your region? Gerardo: We will consolidate our position as the supplier of choice when talking about innovation and value-adding vegetable oil solutions, and we will deliver upon our promise as the co-development company. We will furthermore achieve an aggressive sales volume growth, capturing our fair market share, while still maintaining our leading position in the market. Torben: We believe the predicted GDP growth in India will provide additional opportunities and an increased spending power within the industrial and the artisanal food categories. AAK KAMANI plays a leading role in the industry, and we will seek to engage with all relevant opportunities on a national level. Jan: AAK has a strong reputation and high credibility with our customers in the Russian market. We undoubtedly can stay ahead of the competition simply by acting faster, offer new innovative solutions and strengthen our collaboration in order to deliver more value to our customers, constantly bringing the co-development company alive. Torben: India obviously holds a huge potential. We see a great match between our customers’ need for differentiated consumer products and our co-development approach. One thing to keep in mind though is that India has very strict regulations governing the formulation and production. However, through AAK KAMANI, we are well aware of these regulations. Our focus going forward will be within bakery, confectionery, frozen desserts, culinary, infant nutrition, and nutraceuticals. Jan: In Russia, the CCF category offers growth opportunities in affordable CBE and CBR solutions for chocolate and candies as well as for the growing segment of glazed bakery products. Filling fats that are able to deliver new functionalities and textures with the right organoleptic properties are also attractive to develop. However, we have of course the ambition to broaden and expand our base by acquiring new customers within all of our main industries. What impact does the current situation in Russia have on AAK’s growth opportunities? Jan: The conflict between Ukraine and Russia has had, and still has, a huge impact on our business in Russia. The effects of the embargo together with significantly dropped oil prices resulted in a profound rouble devaluation which led to a significant price increase for ingredients across many industries. On top of that, a double-digit inflation has put pressure on consumers’ purchasing power and consumption has dropped. However, we remain very confident in these markets and in our winning strategy. Our superior application knowledge and innovation capabilities combined with a closeness to our customers and their opportunities will allow for strong growth momentum.
AAK Insight Magazine nr 2 2016
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