As part of our continuous strategy process and yearly evaluation, and to identify new opportunities for future growth, we continuously review our market and capabilities.
In 2019, we launched an updated strategic direction, including our portfolio strategy and key enablers. In 2022, we defined a new strategic aspiration and updated our portfolio strategy to reflect our updated view of how to invest to reach our aspiration.
Our assessment shows favorable market and consumer trends and new opportunities for continued profitable growth. We are building on a solid historical performance, and although we will preserve the DNA of our company, we will going forward, prioritize and operate our business somewhat differently.
In line with our overall vision to be the first choice for plant-based oil solutions and our purpose Making Better Happen™, we have set an overall strategic aspiration that is valid across all industries we operate in. The strategic aspiration is a milestone toward our vision, purpose, and financial ambition. Our 2030 aspiration is to double our value creation per kilo and continue our speciality journey, to grow faster than the market average in our prioritized speciality markets, and to be recognized for our increasingly positive impact by our stakeholders.
Acknowledging that various market dynamics characterize different industries, it is important to differentiate our approach to each of them. Therefore, we have identified four different portfolio roles: "Invest in continued growth”, "Bet for the future", "Optimize for value creation", and "Maintain and cultivate".
Our overall strategic actions across all industries are to:
• Target and invest in higher-value opportunities and sub-segments
• Truly differentiate and innovate
• Optimize to create a smarter and better core
• Drive impact
Financially, we believe the strategy supports our ambition of an average 10 percent year-over-year operating profit growth combined with good and consistent earnings per share improvement.
Invest in continued growth
Chocolate & Confectionery Fats
Special Nutrition and Health
Our strong historical growth in Chocolate & Confectionery Fats has been made possible by industry-leading application knowledge and an ability to offer customers the best solutions. Continue strengthening our key supply chains, and innovation capabilities will enable us to capture the growth in high-value applications.
In Special Nutrition and Health, high-quality solutions tailored to our customers' needs have enabled high growth rates over the past decade. A strong innovation pipeline and investments in our ability to serve important markets such as China are key to continue growth.
The market shows an apparent increase in consumer demand for healthy and fortified nutrition. As a result, consumer goods companies are looking to develop product offerings to meet this demand. This allows AAK to build capabilities related to oils and fats health claims to enable our customers to claim health benefits. Targeted Health opportunities are primarily within Special Nutrition segments.
We will enable the continued growth of these two industries by ensuring the necessary investments in innovation, new value propositions, optimization, and a reliable supply of key products.
Optimize for value creation
The overall bakery and dairy markets are characterized by more standard solutions with a strong focus on the cost of ingredients and fewer opportunities for further premiumization of AAK's offering. However, some underexploited, high-value product applications exist. Opportunities to increase product mixes towards these higher-value products in specific applications and continuously optimize how we serve the markets are therefore pursued.
In Foodservice, our business is also characterized by significant variations in the value we can capture depending on the applications. As in Bakery and Dairy, there are pockets of high-value applications and products. Therefore, the focus is to increase our share of the higher-value products in the portfolio and continuously optimize our business.
Bet for the future
Plant-based and New food solutions
In the plant-based foods market, oils and fats can be an impactful differentiator to the final product's quality, taste, and texture. Our deep and broad knowledge of oils and fats provides an opportunity for AAK to become the preferred provider to plant-based food companies. AAK is investing in lifting our capabilities further to respond to the fast-moving market requirements. In addition, AAK closely monitors and selectively invests in new food solutions and emerging oils and fats technologies with the potential to drive significant impact. New food solutions and technologies such as fermentation, cultivation, and Power-to-X solutions such as Green-On can enable new value and a faster shift to a more sustainable oils and fats industry.
Personal Care is a growing business with a strong value proposition in the beauty industry’s quest to move to more natural ingredients. The industry’s ongoing replacement of mineral oils drives the growth rates.
Technical Products is another growing business, functioning as an outlet for various sidestreams and serving the market with strong value propositions, such as waxes for candles.
Environmental challenges, consumer pressure, company sustainability policies, and legislative forces are driving a shift from fossil-based ingredients and materials to more sustainable alternatives creating business opportunities within Personal Care and Technical Products. We aim to capture these business opportunities by ensuring the necessary investments in innovation, new value propositions, and capabilities.
Maintain and cultivate
We will continue to grow and develop regional strongholds and portfolios in the Maintain and cultivate part of our portfolio.
Natural Emulsifiers (lecithin) is a speciality segment with a large overlap with AAK product applications. We are developing our capabilities and value propositions to enable a leading speciality lecithin position.
Within Feed and Fish Feed, we serve the market with strong value propositions and capabilities connected to regional market opportunities. We have a profitable business that we maintain and cultivate.
Key enablers to deliver on the ambition
We have developed a strategic roadmap with key focus areas that will be addressed by a range of initiatives to lift our performance for the future. The goal is to further differentiate ourselves from competitors by enhancing our Customer Co-Development approach and sustainability offerings. To succeed, we need to offer a customer experience that is second to none and create even more differentiated solutions meeting the needs of our customers, consumers, and the world we live in.
We aim to continue our growth journey by further utilizing our global strengths and harvesting synergies. We will continue strengthen our global product management to leverage insights, expertise, and resources fully. We aim for global scale effects and efficiencies with more integrated and holistic end-to-end supply chain planning and execution.