Food Union reports 30% profit jump in latest annual report

By Teodora Lyubomirova

- Last updated on GMT

GettyImages/We Are
GettyImages/We Are

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One of Europe’s major ice cream makers and dairy producers has reported a 30% profit increase following ‘significant investment in new products, automatization and e-commerce’.

The Food Union Group has grown net profit by almost a third year on year, the organization's annual results revealed. Profits rose to €10.8m, with net revenue consistent with 2020 at €291m, and a new ice cream sales record achieved in June and July.

Despite the strong results, however, the group will consider implementing cost-cutting strategies over the coming year to tackle rising costs.

E-commerce success

While overall sales remained stable, Food Union tripled its revenue from e-commerce achieving three-digit year-on-year growth in most markets. The company's online shops present in Denmark, Latvia, Lithuania, Romania and Norway generated revenues of €3.8m in 2021. The most significant growth, in excess of 300%, was shown by the Latvian e-shop, while Food Union's own Danish e-shop remained its largest online sales channel, more than doubling its net sales in 2021 compared to 2020.

“Our e-commerce solutions have improved because of investments and innovations made over the course of 2019 and 2020 to expand our door-step-delivery services to be closer to the customer, and to create a more intuitive consumer experience,​” a spokesperson for Food Union told DairyReporter.

“We expanded our door-step-delivery routes and optimized our stop accuracy and consumer interaction platforms to ensure we reached consumers in a timely manner. We also reviewed our product offering to bring consumers the highest quality product. In 2021 and 2022, we placed more focus on consumer data platforms and digital marketing which has resulted in growth in both sales as well as basket size.”

As part of its investment strategy, the group acquired 24 new trucks with multi-temperature chambers, able to transport both frozen and non-frozen products at the same time. “We are gradually changing our trucks in Latvia to build a greener and more efficient fleet,”​ said the spokesperson. “Thanks to the cars purchased in the last two years, the number of kilometers driven in 2021 alone has been reduced by 26.5%.”

Novelties lead the way

Product innovation also increased Food Union's consumer appeal. 

During 2021/22, Food Union introduced more than 140 novelty ice creams in six markets; these products were among the best performing in markets the group was present. In Latvia and Estonia, Food Union Group companies received Nielsen awards for the best-performing novelties in ice cream categories and food categories, while eight out of 10 best-performing novelties sold there were produced by Food Union Group companies.

In Norway, Denmark and Romania, three of the top 10 best-selling SKUs were produced by Food Union companies Isbjorn Is, Premier Is and Alpin57Lux.

Streamlining structures and digitalization

Innovation and digitalisation will play important roles in Food Union's strategy over the coming year as the ice cream maker works to manage escalating costs.

Speaking of Food Union’s strategy for 2022/23, a spokesperson said: “Firstly, we plan to simplify the structures of our organization and implement some cost-cutting procedures to withstand the current market situation and the rapidly growing costs.

“Secondly, we will continue to review our product portfolio, brand building in sectors we are not yet leaders in, with the possibility of creating international brands and expanding into new dairy categories.

“Finally, we plan to further use digitalization in marketing, e-commerce, fleet management, and other processes. We are striving to fully understand our customer’s needs, wants, and services they are interested in, and implementing digital tools which can do both - provide insights and allow us to build unique interactions and relationships with our target audience.”

Management changes

As previously reported​, a new CEO of Food Union Europe was appointed earlier this year, with Artūrs Čirjevskis recruited internally into the role.

Meanwhile, Food Union’s business development in Europe, focusing on e-commerce and DSD segment, will be led by BDO Sergey Beskhmelnitskiy, former CEO of Food Union in Baltics.

The implementation of commercial strategy in Denmark, Norway, and Romania will be supported by CCO Aivar Aus, CEO of Premia TKH.

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