Benecol, the brand that claims to reduce cholesterol levels, was launched 12 years ago but its growth has been hampered by restrictive marketing agreements. However, now free from those arrangements and with a new structure and new leadership in place, Raisio, the Finnish company behind the brand, is planning a major push into North America and Asia. In this month’s Just the Answer, Simon Haydon caught up with CEO Matti Rihko.
Go deeper with GlobalData
just-food: Some observers have suggested Benecol is an unfinished story and its promise has not yet been fulfilled. Is that a fair analysis?
Rihko: Maybe it’s that we are good engineers but not such good salesmen. In the beginning, instead of opening out the patent, the company wanted to create a monopoly out of it and it thought that the ingredient was enough to conquer the world. We have created the conditions to make it more dynamic, to have the applications outside the yellow fats segment and so on.
j-f: How do you see the changes affecting Benecol over the next year or two?
Rihko: One year is quite a short timeframe. We want to have Benecol in the market with partners who are keen on growing their own business by adding the ingredient into their own application. So the implication is we get a partner with more applications and we get more business. Secondly, in practical terms the USA is open to Raisio once again. Even if we are only able to attract the most healthy customers from the west and the east coasts, that will still be a really big market. Then we have Asia, where diets are moving to a more healthy style, although cholesterol levels are increasing a lot. There authorities are talking about the cholesterol epidemic.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataj-f: How would you evaluate Benecol’s potential in North America, and what are you looking for in your marketing partners there?
Rihko: It’s interesting. More and more people in the USA are starting to talk about health, and healthy is the DNA of Raisio so I think we have plenty to offer the market. But we need to find a partner who is keen on driving their business by partnering with us. The partners we are looking at have a strong brand, are leaders in their category or they are the first challengers. We’re looking for a partner who thinks innovation is critical for their success. I don’t want to comment on whether we’re holding any talks at the moment.
j-f: Is the situation the same with Raisio’s operations in Asia?
Rihko: There are differences. We are at an early stage in both of the markets but the difference is that in the USA it’s the commercial element that we have to speed up while in Asia and many other markets we are still involved in the regulatory stage.
j-f: Is it unfair to say Raisio has been too modest in its ambitions?
Rihko: No it’s not unfair but it doesn’t reflect the future.
 |
| Raisio CEO Matti Rihko |
j-f: The culture and outlook of the company seems to be becoming more international. Is this the case?
Rihko: Yes. Raisio has been a very Finnish[-focused] company but as a matter of fact in the management team we have two foreigners already so we are changing. Currently when there are jobs outside Finland we tend to employ a local person. We haven’t been shouting very loudly about the excellence that is hidden inside our products and you also have to bear in mind this is a year of restructuring.
j-f: Will the restructuring continue into next year?
Rihko: In a sense it’s an eternal process but I would say it’s more or less complete in terms of business procedures, in terms of having the right competencies and the right people in the right roles. We have pretty much accomplished what we wanted in some respects. If you take our markets and our businesses it looked like a broken chess board. We had bits and pieces all over. We have divested already the potatoes and diagnostics [operations]. However, in terms of restructuring we need to decide on the drivers for growth in the future. Eventually the restructuring might lead to the situation that we become very focused in terms of business areas.
j-f: Why don’t we see Benecol with other spreads on supermarket shelves? Is it still a niche product?
Rihko: Category management plays a big role. Normally category managers in this segment will be someone like Danone or Yoplait; one will be chosen as category captain and major competitors can be placed far from their products.
j-f: Given that Benecol retails at a significantly higher price than standard margarine, do you need to look at the brand’s pricing structure?
Rihko: Not really. Margarines are low-price products while our plant stanol ester-based applications are expensive to produce. The big difference is that it should be more expensive because it’s better.
j-f: What about new product lines, or even a move into confectionery?
Rihko: We had investigated this but met resistance from those who felt that a healthy application like Benecol should not be applied to that kind of product.
j-f: Has the rise in grain prices impacted on your profits?
Rihko: In February this year we talked in our annual report about the China phenomenon [of high grain demand]. With grain we were the first to talk about it. We also talked the talk and walked the walk, changed the purchase system for grain and we changed the pricing system for the customers. In the future, changes in the grain prices are flowing straight through to the customers.
j-f: The food division made a small loss in 2007. Will there be a profit in 2008?
Rihko: We only make statements about next year when we give out those figures [in February] but what’s the reason for waiting? Nobody gets a bonus if they make a loss.
j-f: How do you plan to improve Raisio’s global spread?
Rihko: The appointment of Vincent Poujardieu in charge of group business development is important. One of his main tasks is to accelerate the growth of the company’s ingredients division.
