Altia Annual Report 2010

Altia Annual Report 2010 1 Altia’s year 2010 2 CEO’s review 4 Operating environment 6 Strategy 8 Comprehensive product portfolio 10 Brands 11 Trading 12 Industrial Services 13 Supply Chain 14 Expertise in alcoholic beverage business 24 Growing and responsible Altia 26 Financial responsibility 27 Environmental responsibility 30 Social responsibility 34 Board of Directors 35 Executive Management Team 36 Contact details

Altia’s year 2010 The Group operated according to the renewed strategy and operating model. Resulting from the business acquisition, Altia became the leading actor in its operating area. Operating profit tripled. Altia’s year 2010

Your 1st Choice Altia is the leading wine and spirits company offering quality brands in the Nordic and Baltic countries. Altia produces, delivers, markets, sells, imports and exports alcoholic beverages in these markets. Altia’s own brands such as Blossa, Chill Out, Explorer, Grönstedts, Koskenkorva, Jaloviina, O.P. Anderson, Renault and Skåne Akvavit have a strong market position and many of them a long heritage to cherish. Altia’s partner brands represent both local and international brands from all over the world, such as Codorníu, Drostdy-Hof, Hardy’s, Jack Daniel’s, Bowmore, Nederburg, Ravenswood and Robert Mondavi. Altia serves its customers, partners and consumers close to markets with its wide production, sales and logistic set-up.

Key Ratios for Altia Group 2010 2009 2008 Net sales, EUR million 487.9 407.3 463.3 Operating profit, EUR million 32.6 15.6 9 (% of net sales) 6.7 3.8 1.9 Profit before taxes, EUR million 29.6 9.4 9.9 (% of net sales) 6.1 2.3 2.1 Profit for the period, EUR million 25.7 5.3 6.1 (% of net sales) 5.3 1.3 1.3 Balance sheet total, EUR million 581.1 398.4 402.2 Return on equity, % 17.2 4.3 4.7 Return on invested capital, % 10 4.2 6.8 Equity Ratio, % 29.6 34.3 30.3 Gearing, % 76.3 55.5 87.4 Capital expenditure, EUR million 106.5 6.7 14.7 FINLAND total 30.2% Average number of personnel 1,122 1,042 1,108 NORWAY spirits 54.4% total 7.3% wines 29.3% spirits 4.6% wines 7.9% Altia market shares 2010, % SWEDEN total 9.2% ESTONIA In monopoly markets, (Finland, Sweden and Norway) spirits 29.7% total 13.0% market share means monopoly sales. In open markets, wines 16.7% spirits 19.0% (Denmark, Estonia and Latvia) market share is an estimate. wines 6.0% The market share of Sweden is for the latter half of the LATVIA year 2010, during which the acquired brands were total 9.5% included in reporting. spirits 8.0% wines 13.0%

DENMARK total – spirits 3.5% wines 2.0% CEO’s review

CEO’s review

I am pleased to announce that Altia Group’s profits Dear reader, have improved substantially compared to last year and we have also achieved the financial and operational goals we set ourselves for 2010. We continued to execute our strategy as planned. I would like to extend my thanks to all our staff for their excellent work and strong commitment to the Group during the year. Altia Group’s net sales amounted to EUR 487.9 (407.3) million in the reporting period. Operating profit grew substantially from the previous year and totalled EUR 32.6 (15.6) million. Return on invested capital increased to 10% (4.2%) and return on equity increased to 17.2% (4.3%). Profit improvements have been generated through enhanced efficiency across the Group, profitable growth, efficient utilisation of capacity and operational improvement in Sweden. The units that were already performing well, particularly in Finland and Norway, have continued their stable performance and provided a valuable contribution to the Group. The integration of the business acquired in Sweden and Denmark proceeded as planned and we succeeded in achieving the goals set for the first year after the acquisition. All those involved in the project, both new and existing employees of Altia, have made a significant contribution to this success. We have achieved remarkable integration benefits during the year, which will continue in future years. Following the acquisition, Altia has become the biggest wine and spirits producer and importer in the Swedish market, and we now have an excellent opportunity to become the leading wine and spirits producer and importer in our operating area. In Sweden, our largest market, the development and efficiency improvements made in 2009 have been highly successful and we achieved substantial operational and financial improvements compared to the previous year. At the same time, we have created a strong basis for operational growth in this market.

2 Altia Annual Report 2010 In Denmark, we increased our market share as years, thanks to excellent cooperation between our a result of the acquisition and our strategy is to product development, marketing, sales and produc- continue strengthening our market position. In tion professionals. This will create a strong basis for Norway, we embarked on an efficiency improve- growth in the future. ment project during the year. The competitive We continue in 2011 guided by our strategy landscape between importers continues to be In 2011, we will continue to execute our strategy. exceptionally tough, but we believe that we are well Together with operational efficiency improvements, placed to strengthen our market position. our strategy work will concentrate on growth In the Baltic countries, market volume stabilised and developing competencies required in strategy during the year but was clearly below the level of realisation. Our goal is to grow faster than the 2008. The benefits of our efficiency improvement markets, and we will seek growth both organically project will be delivered in 2011. Once the overall and through acquisitions. economic situation improves, we will be able to leverage our strong market position in these countries. In Finland, our performance was substantially affected by alcohol tax increases, which caused a Antti Pankakoski decrease in the market volume of spirits of approxi- CEO mately 7%. Despite this, our financial performance was at the same level as last year due to our programme of operational efficiency improvements. We achieved remarkable cost savings in production, purchasing and logistics operations during the year, which increased supply chain efficiency, and we also achieved a high capacity utilisation rate. In 2010, we acquired the Renault cognac trademark, which supplements our product portfolio and gives us significant efficiency benefits within the cognac business. Revised operating model reflects our strategy Our operating model comprising three business areas (Brands, Trading and Industrial Services) has turned out to be highly successful. All business areas have created their own competition strategies and operating models best suited to them. We have already been able to find substantial synergy opportunities through better cooperation between the supply chain and business areas, which will give us remarkable efficiency and competitive advantages in the future. During the reporting period, we have brought more new products to market than in previous

3 Altia Annual Report 2010 Operating environment

Altia’s knowhow is emphasised at divergent market areas National celebrations, beverage and food culture have their own history and idiosyncracies, which in turn affect Altia’s strategic choices. Although the countries in our areas of operation are geographically close to each other, cultural and drinking habits differ significantly between each market. Finns have their own tradition of spirits, but beer Norwegian wine market continues. In Estonia constitutes more than 50% of alcohol consumed and Latvia, where the alcoholic beverage trade is and the growth of wine consumption has stabilised. characterised by a strong grey economy, the wine Cognacs and brandies are popular drinks in both market is growing, although the volumes are small. Finland and Norway. In the Danish, Swedish and In Finland, the wine market has potential for Norwegian drinking cultures, aquavit plays an growth. important part. The Danes, who drink almost as Consumers interested in responsibility much wine per capita as the inhabitants of the and environmental issues traditional South European wine countries, also Across all our markets, a noticeable trend empha- drink beer and bitters. Swedes favour light wines sising responsibility and environmental themes is and whisky from spirits. In Norway, the popularity engaging consumers’ interest, for example towards of wine has grown steadily. Estonia and Latvia are organic and fair trade wines, recyclable plastic clearly vodka countries where wine consumption is bottles, bag-in-boxes and lighter glass bottles. The low. economic recovery is gradually increasing demand The markets are expected to for the more expensive product categories, such as develop favourably finer cognacs and malt whiskies. The development of Altia’s operating environment Combining alcohol beverages, especially wine and in 2010 and the anticipated future trends create food, together stronger than earlier shows changes prerequisites for the execution of the company’s in lifestyle. As living standards rise, consumers growth strategy. Despite continuing economic naturally associate a variety of different alcoholic uncertainty, each of Altia’s markets is expected to beverages with celebration and everyday situations. experience growth during the current year. Altia aims to provide the most appropriate products Growth expected in wine markets for these situations across all its markets. Looking ahead, spirits sales are expected to grow Looking ahead, the cocktail culture and the in Estonia and Latvia. In Denmark and Norway, popularity of ready-made cocktail drinks is spirits markets are expected to remain at the current expected to rise. Consumers are interested in new, level. In Finland and Sweden, increased taxation exotic flavours and shot drinks. In Norway and of alcohol has resulted in the decline of spirits sales Denmark, the so-called old world wines are valued, and the trend is expected to continue. while in Sweden and Finland, the new world wines Altia’s largest wine markets are Sweden and are proving more attractive. Denmark. In addition, the steady growth in the

Wine market forecast 2010–2015, mill. litres Spirit market forecast 2010–2015, mill. litres 240 30

188 22 22 20 17 2010 16 2010 96 2011 2011 67 2012 2012 2013 2013 16 14 2014 2014 2015 2015 Sweden Denmark Norway Finland Estonia Latvia Finland Estonia Sweden Latvia Denmark Norway Source: Euromonitor Source:

4 Altia Annual Report 2010 Monopolies as major business partners The main competitors in the operation area are In Altia’s operating area, retail sales of alcoholic large global alcoholic beverage companies, several beverages is executed through monopolies in Nordic companies as well as the local producers and Norway for over 4.75-percentage, in Sweden for importers. over than 2.23-percentage and in Finland for over Competition will further intensify in future. The 4.7-percentage alcohol beverages. In the monopoly business is characterised by constant changes and countries, 88% of Altia’s local beverage sales are acquisitions, tightening regulation (particularly channelled through Vinmonopolet in Norway, in advertising), increased taxation and increased Systembolaget in Sweden and Alko in Finland. border trade. Altia’s other clients are wholesalers of alcohol beverages, restaurants, grocery stores, travel retail and importers. The cross-border trade of alcohol increases competition in Altia’s market area and differences in alcohol tax as well as fluctuations in exchange rates affect the border trade of alcoholic beverages. In 2010, border trade was active and is expected to continue at the same pace. Water and harvest season products as raw materials The production of grain spirit and alcoholic beverages processed from grain spirit is a central part of Altia’s business. The key raw materials for Altia’s own production are barley and water. Approximately 80% of Altia’s barley supply is based on contract production. The market price of barley is mainly determined by world market conditions. During 2011, new ways are sought to hedge against barley price fluctuations. Altia buys also finished alcoholic beverages for its own bottling purposes. Alcoholic beverages are typi- cally products of the harvest season whose world market price is affected, amongst other factors, by Codorníu is the world’s abnormal weather conditions and natural disasters. largest sparkling wine Competitive situation intensifies producer which exploits traditional method with Altia holds a leading market position in Sweden and a history that reaches Finland. In Norway, Altia has less than 10% market to the year 1551. At the share and in Denmark a smaller market share. In end of the year 2010, Codorníu became the Estonia and Latvia Altia is the second largest actor. Swedish Systembolaget’s most selling cava. Altia’s competitive advantages include a compre- Altia represents the hensive range of products, local market knowledge, brand throughout its extensive sales force and knowledgeable staff. operating area.

5 Altia Annual Report 2010 Strategy

Strategy to increase company value Altia’s objective is to increase the value of the company through a growth strategy implemented in three waves: efficiency improvement, growth and expansion.

Growth strategy markets with centralisation opportunities and Expand to new attractive bolt-on-acquisition targets will become Penetrate the home geographies and extend service scope topical in the third wave. Restructure the market to increase market share business and operating The company’s financial goals are operating profit model to improve profitability 2013–2015 (EBIT) of 10% from net sales and return on capital 2010–2014 employed (ROCE) of 15%. – Geographical Renewed operating model and 2009–2012 – Growth exceeding expansion into developing the competencies of market average growing (neighbour- personnel are in key position – Increasing efficiency ing) markets that of supply chain and – Corporate and brand have consolida- Altia is the largest wine and spirits producer and processes acquisitions tion potential and importer in the Nordic and Baltic countries. Altia’s – Specifying the exciting bolt-on business portfolio acquisition targets product selection, comprising own and partner – Developing – Utilising the products, is the most extensive in these markets. performance culture competitive and competencies advantages obtained Altia consists of three business areas: Brands, – Geographical growth Trading and Industrial Services. The Supply Chain of product segments provides the business areas with cost-effective sourcing, production and logistics services. All the During the first wave, the operating model will be business areas are strategically important to Altia further improved and competitiveness enhanced. and the synergy advantages that they create for Efficiency improvements are mainly sought from each other are remarkable. Thanks to this operating the Supply Chain, as well as from all operational model, synergy benefits are created in sourcing, processes. logistics, production and Group services both through specialisation and scale benefits. Increased Thanks to the work undertaken during the first levels of efficiency generated through this has a wave of this strategy, operating profit for 2010 major impact on Altia’s competitiveness. increased to EUR 33 million (in 2009 EUR 15.6 million and in 2008 EUR 9 million) and return on The Brands business area is primarily responsible invested capital increased to 10% (in 2009 4.2%, in for the development of Altia’s own products and 2008 6.8%), which encourages Altia to continue brands, marketing and sales. It is, from category pursuing this strategy. point of view, a commercial operation steering the whole market area. Its competitive advantage is In the second wave, the position in the Nordic and driven by the expertise of the marketing and sales Baltic markets will be significantly strengthened, professionals of Altia and strong brands, as well as with the objective being to increase market share by the resulting leading market position and effi- faster than overall market growth. Growth is ciency advantages of logistics and own production. pursued both organically and through acquisitions. Bolt-on-acquisitions are especially suitable for Altia, The Trading business area is primarily responsible as the aim is to acquire strong and active brands, for partner relationships, as well as marketing and whose value can be increased by incorporating sales of partner products. Its competitive advantage them into Altia’s operating model and by expanding is formed by the marketing and partner manage- their target markets. ment expertise of the professionals in the sales companies, the sales network covering the Nordic After these two stages have been successfully and Baltic countries, and by the synergies provided completed, regional expansion to growing (close) by logistics and production.

6 Altia Annual Report 2010 Altia's operating model

BRANDS TRADING INDUSTRIAL SERVICES

SUPPLY CHAIN: Sourcing, logistics, production

Services to all business areas

SUPPORT FUNCTIONS

The Industrial Services business area is responsible for contract production, logistics, technical ethanol, and the feed and starch businesses. The Supply Chain operations are responsible for the Group’s production, logistics and purchasing activities, with the goal of achieving cost leadership in the operating area. During 2011, in addition to enhancing operational efficiency, we will invest in the development of new own and partner products as well as in developing competencies important for the strategy. Important areas of focus are leadership, sales, marketing and project management. With these actions we aim to build a competitive and financially sustainable way of operating that enables the creation of even higher added value to the customers and suppliers.

Breakdown of net sales

Blossa Glögg is made Brands 45% with over one hundred Trading 32% years of experience. Blossa X in Christmas Industrial Services 22% 2010 received its flavor Others 2% from saffron.

7 Altia Annual Report 2010 Comprehensive product portfolio

Own and partner brands are the cornerstones of the unique product portfolio

Altia's own brands – monopoly markets

Finland

Publishing pictures of strong spirits in the internet is illegal according to the Finnish legislation.

Sweden Norway

Altia's own brands – open markets

Denmark Travel Retail

Estonia Latvia

l Altia is the leading alcoholic beverage producer and importer chosen brands and by introducing consumer-driven novelties to in the Nordic and Baltic countries. It markets and sells both the markets. own and partner brands from all over the world. l Altia’s operating model provides partners with the best solutions l By combining its own brands, most of which are part of for the Nordic markets through local companies. Both tailored the cultural heritage of their countries of origin, with the local solutions and regional operating possibilities are on offer. international brands of its leading partners, Altia offers its Altia’s goal is to grow the partner business by further developing customers the most extensive and unique product portfolio its strengths and service offering to the partners. in its operating area. l In its operating model, Altia takes advantage of its regional l Altia has control over the whole value chain of its own grain strength, local market and consumer expertise, as well as spirit based brands. Many of the own brands are bestsellers, the efficiency benefits created in logistics, production and and the market position has been strenghthened through support services. These create value for partners, customers and acquisitions. The goal is to further grow the business through consumers.

8 Altia Annual Report 2010 Altia's partner brands

Finland

Sweden

Norway

Denmark Latvia

Estonia

Travel Retail

9 Altia Annual Report 2010 Brands

Brands built the basis for operations A strong basis for the development of centrally managed operations was built in the business of own brands during 2010. The acquisition of the significant product portfolio in Sweden and Denmark played an important role in the development of the Brands business area. Through the acquisition, Altia became the leading actor in its operating area and market leader in Sweden and Finland.

The Brands’ business goal is to further strengthen Finland, but Altia maintained its market position. its position in the domestic market by developing The growth in the wine market stalled and thus the selected brands and launching consumer-driven set targets were not reached in this area. innovations to the market. Market growth of wines also slowed down in Sweden The Brands business area consists of sales, and competition tightened. The spirits market in marketing, product management and product Sweden is stable, however, the overall objectives were development activities. Business operations are achieved. controlled centrally from a category perspective and In Norway, Altia’s goal is to significantly increase implemented locally in each market in the Nordic market share of its own products. The acquired and Baltic countries, and in the travel retail. product portfolio has accelerated this development During 2010, the basis for the operations was built; and the sales targets of own products were exceeded new organisational structure was launched, strategic in Norway. choices were made, planning and meeting practices In the Baltic countries, market conditions are difficult implemented, monitoring and reporting systems and the share of illegal alcohol trade is large. The sales were formed, and processes and working practices and profit targets were not reached, but the economic were intensively developed. For example, the situation already seems slightly brighter than before. innovation and product development process was developed to create new product concepts. This has Denmark is a very challenging and competitive already produced the first results: The Latitude 55° market. Through the acquisition, Altia has become a whisky was listed in the selection of Systembolaget credible actor in the Danish market, which is a good in Sweden and the listing of Dos Caras wine to starting point for further development. Alko was prepared in Finland. The acquisition has also made Altia the leading Best-sellers’ market position is strong actor in travel retail in the Baltic Sea region. The The integration of the acquired businesses has sales targets for 2010 were exceeded with operations proceeded according to plan. Through the acquisi- development and a product portfolio corresponding tion of the product portfolio, the Brands business to consumer demand. Export to the Polish market area has many best-selling products. Prior to the declined due very challenging market conditions. acquisition, the brightest stars in our portfolio were Strengths of Brands in the markets Koskenkorva and Jaloviina in Finland and Saaremaa The strengths of the Brands business in the Baltic Sea in Estonia, and the new brands complement the markets are: existing portfolio extremely well. − Knowledge of consumers, customers and markets The brands acquired in the spirits product portfolio − Leading position are, among others, O.P. Anderson Akvavit, Skåne − Strong resources and skilful personnel Akvavit, Svenska Nubbar, 1-Enkelt Bitter, Explorer − Strong brands and products vodka, Kron vodka, Lord Calvert Whisky and – Strong product expertise and product development Barracuda rums, Blossa Glögg, and Renault know-how: we develop suitable new products for premium cognac, acquired in the fall. The acquired the markets wine portfolio includes, among others, Chill Out, − Management of the whole value chain in own grain Aussie, Opal Springs and Santa Christina wines. spirit based products Development of Brands in the markets The sales of own brands declined and traveller imports increased as a result of tax increases in

10 Altia Annual Report 2010 Trading

Trading – Best solutions for the Nordic markets The Trading business serves Altia’s partners by offering them a complete set-up with local companies and regional functions. These leverage on Altia synergies and thereby create value for partners, customers and consumers.

Trading was introduced as a separate business area The Trading business area has excellent knowledge in October 2009 and it consists of seven local of wines and spirits and an extensive network with companies in three countries: Philipson Söderberg leading partners from all over the world. Trading and Bibendum in Sweden, Wennerco and SkyCellar personnel are experts in Altia’s local markets and in Finland and Strøm/Bibendum and Best Buys know how to sell, adapt and develop partners’ in Norway. The strong portfolio of international brands for each individual market. brands includes among others Codorníu, Hardy’s, Developing strengths and services Jack Daniel’s, Bowmore, Midori, Finlandia Vodka, The goal of the Trading business area is to become Masi, Nederburg, Drostdy-Hof, Amarula, Robert the “first choice” for any producer and partner Mondavi, Ravenswood and Raimat. for the Nordic region. The regional perspective The business operates under a centrally steered and provides a strong competitive advantage. Trading regionally focused structure. It operates through is seeking growth by continuing to develop its local business units where partner and portfolio strengths and improving its value added services for optimization are at the core, supported by strong partners. pan-Nordic platform. During the first full year, the Trading business had a very good start with an increase of 8 percent in net sales. Positive growth accumulated mainly from Sweden. Finland and Norway have great potential in the future, although they are facing a somewhat challenging year due to changing market conditions. Offering for the partners The Trading business area offers its partners the best platform to penetrate the Nordic market through an extensive network of local sales and marketing companies. The value added services creating volume, scale and new business opportunities for the partners are: − Tailor-made solutions suited to every partner’s specific needs − Deep insight of the Nordic consumer and strong market knowledge − Market leadership in On Trade and Off Trade channels − Bottling facilities and packaging services close to the markets − Efficient logistics set-up, benefiting from Altia’s scale − Strong platform for consumer marketing The panel of the fair − Altia Academy, offering customer and consumer visitors in Sweden chose Ravenswood’s education Lodi Zinfandel as the − Strong Nordic Travel Retail organization best bag-in-box wine in 2010.

11 Altia Annual Report 2010 Industrial Services

Industrial Services complement service selection The objective of the Industrial Services business area is to guarantee that Altia’s industrial capacity is fully utilised. Industrial Services consists of four business units – contract services, starch and feed, technical ethanol and the logistics company VSD – which serve both external and internal customers.

Effectiveness to bottling and logistics In future, Altia is seeking closer cooperation with through contract services starch and feed customers and also planning to Altia creates cost efficiency by providing contract develop new applications for the food industry. services in bottling and logistics to suppliers and Technical ethanol increased and external customers. The largest contract customer is profitability further improved Brown-Forman, for which Altia produces Finlandia Altia has a significant market share in technical Vodka by contract manufacturing, and which ethanol and ethanol-based product applications accounts for a significant proportion of the capacity used in the industry. During the year, growth of both the Koskenkorva and Rajamäki plants. continued to be strong, particularly in the Altia produces Finlandia Vodka from Finnish barley geothermal applications. and Rajamäki’s groundwater. Finlandia Vodka is delivered around the world. Strengths of Industrial Services in the markets During 2010, a significant agreement on production Competitivity of industrial services is based on the and logistics services was signed with Pernod Ricard. following drivers: The products are manufactured in a factory located − Increased production volume is contributing in Svendborg, Denmark, which was transferred into to cost savings in material sourcing and Altia’s ownership following the acquisition in spring transportation. 2010. Logistics services are provided in Denmark − Material efficiency of Koskenkorva plant, and Sweden. producing grain spirit, starch and feed, is unique. The logistics company VSD offers comprehensive The plant uses the whole barley grain and all 4PL logistics services in Sweden and Norway. fractions material- and cost-effectively. During 2010, VSD rationalised its operations and − All plants provide contract manufacturing reduced its costs due to the intensified competition opportunities close to the markets and customers. in logistics markets in the Nordic countries. Plants’ packaging capacity enables growth in own Starch and feed business grows strongly products, as well as offering services to partners. − Alcoholic beverage plants create potential for At the Koskenkorva plant, Finnish barley is used to specialisation and development of expertise. produce grain spirit as raw material for alcoholic beverages and starch as binding material for the paper and paperboard industry. Barley starch is also used in the food industry as raw material, for example in beer brewing. Animal feed for agricul- ture is generated as a by-product from the process. During 2010, demand in paper industry increased, which contributed significantly to increased demand for starch and starch volumes. During the year, a strong Finnish operator, Chemigate, was established in the starch industry. The company undertakes both the basic production and the downstream operations of finished products for customers. Altia has a 19.9% non-controlling interest in Chemigate. Prospects for 2011 are showing an upward trend.

12 Altia Annual Report 2010 Supply Chain

Supply Chain pursues cost leadership

The Supply Chain operations include logistics centres with warehouses and customer service operations located in each of Altia’s operating countries, the alcoholic beverage plants in Rajamäki, Svendborg and Tabasalu, the Koskenkorva plant, and sourcing and development activities. The Supply Chain creates competitiveness for the Brands, Trading and Industrial Services business areas.

Supply Chain aims to renew operational practices and to improve cost efficiency in line with the first wave of Altia’s strategic objectives. The aim is to achieve industry cost leadership within Altia’s market area. To achieve these goals, Altia has launched several development projects aimed at: − Utilising economies of scale, − Producing even better services to the business areas, − Simplifying structure and practices, Publishing pictures − Improving operational efficiency and flexibility, of strong spirits in as well as the internet is illegal according to the − Developing selected competencies, processes and Finnish legislation. tools. During 2010, significant results were achieved in sourcing and inventory turnover, and in the efficiency of the operations. In the new units at the Svendborg plant and in the logistics centres of Odense and Årsta, an ERP-system project was launched during 2010. Implementation took place in the beginning of 2011.

13 Altia Annual Report 2010 Expertise in alcoholic beverage business

Best brands on the market

Strong brand knowhow is one of the cornerstones of Altia’s success. Professional personnel focus on the development of both its own and partner brands.

Publishing pictures of strong spirits in the internet is illegal according to the Finnish legislation.

14–15 Publishing pictures of strong spirits in the internet is illegal according to the Finnish legislation.

Altia is active in bringing new tastes and packaging styles to the market. Consumers find the new alternatives attractive.

DRINK RESPONSIBLY. With you in the best moments of life

In Sweden, Finland and Norway, Altia’s products reach consumers mainly through retail sales monopolies. Altia has in total over 2,000 items in the selections of Systembolaget, Vinmonopolet and Alko. On the open markets of Denmark, Estonia and Latvia, products are mainly available to consumers in grocery shops.

DRINK RESPONSIBLY.

16–17 Publishing pictures of strong spirits in the internet is illegal according to the Finnish legislation. Recipes for all tastes

Altia’s experts together with well-known culinary professionals guide consumers to combine delicious foods and quality beverages on many attempting websites.

Publishing pictures of strong spirits in the internet is illegal according to the Finnish legislation.

18–19 Altia generates success concepts suitable for the Nordic taste with its own product development. Strong marketing knowhow is complemented by deep understanding of the consumers in the market area.

DRINK RESPONSIBLY. Customer is the most important

Altia serves its customers with dedication. Mutual trust and a straightforward way of operating are most important in customer relationships.

20–21 Publishing pictures of strong spirits in the internet is illegal according to the Finnish legislation.

Altia’s objective is to support its customers’ businesses. Framework for unforgettable consumer experiences is built together with the customer.

DRINK RESPONSIBLY. A century of expertise

Altia combines national traditions, changing consumer habits and modern, supranational operating model.

22–23 Publishing pictures of strong spirits in the internet is illegal according to the Finnish legislation.

National traditions live strongly in Altia’s market area. Traditional brands carry expertise through decades.

DRINK RESPONSIBLY. Growing and responsible Altia

Growing and responsible Altia Growing Altia aims to become the leading player in terms of responsibility in its operating area by the end of the strategy period reaching to the year 2015. Objectives and measures regarding social, environmental and financial responsibility will be defined during 2011.

2010 was a period of growth for Altia as the legislation of other operating countries with excep- Company acquired, in addition to many Swedish tional care. The State owner emphasises the status of and Danish brands, an alcoholic beverage plant in personnel, respecting the rights of employees, and Svendborg, Denmark, and logistics centres in Årsta, environmentally responsible operations as particularly Sweden and in Odense, Denmark. important matters. Through the acquisition, Altia became the leading Climate change and societal phenomena – such as actor in its operating area. The acquisition increased consumers’ and alcohol monopolies’ growing interest the Company’s employee base by approximately 280 in the transparency of the production chain, the people, of which most work in Denmark. In terms origin of raw materials, product safety and the envi- of responsibility, the acquisition initiated efforts to ronmental impacts of production and transport – are harmonise the environmental targets of the produc- the underlying factors affecting responsibility. These tion plants and strengthened personnel administra- will be reflected in consumer behaviour in the future, tion in Sweden and Denmark. and also in Altia’s production, use of energy, transport, packaging and choices related to purchasing. The objectives, measures and accomplishments related to responsibility will be on the agenda of the Societal phenomena also include potential risks. The Executive Management Team especially at the first hardening political atmosphere strains the operational Executive Management Meeting of each year. The prerequisites of the alcohol industry, which has been Corporate Responsibility team will conduct the reflected, for example, in increases in taxation and necessary preparatory work. tightening of advertising regulation in many of Altia’s Monopolies’ Code of Conduct in purchasing operating countries. During 2011, Altia is preparing for the implementa- On the other hand, the alcohol industry is also ready tion of the Nordic Alcohol Monopolies’ Code of for its own, voluntary-based regulation. Alcoholic Conduct in purchasing. The Finnish and Swedish beverages are marketed in a responsible and alcohol monopolies joined the Business Social appropriate manner only to adults. The Common Compliance Initiative (BSCI) in 2011, and the Standards on Commercial Communications of EFRD Norwegian alcohol monopoly will also adopt corre- (European Forum for Responsible Drinking) and the sponding ethical principles. In addition to environ- Roadmap 2015 published by CEPS (European Spirits mental issues, the principles cover issues relating to Organisation) at the end of 2010 pave the way in a work force and human rights as well as work against manner commonly agreed by the participants within corruption. Customers’ and consumers’ growing the industry. demand for responsible operation in the whole supply Framework and definition of reporting chain is the underlying reason for these measures. This is the third responsibility report of Altia, During the reporting period, Altia published a digital prepared in accordance with the Global Reporting Corporate Responsibility application and calculated Initiative (GRI) G3 reporting framework C-level. the carbon footprint of its own unflavoured spirits Responsibility is described at Group level, with the products. The quality, safety and environmental exception of environmental liabilities that focus on policy was revised. the environmental impacts of Altia’s own production. Responding to stakeholders’ expectations Regarding Svendborg, which was transferred into Altia’s ownership during 2010, reporting employs the The basis of Altia’s responsibility is the Council of figures available on the plant. State decision-in-principle on ownership policy, which requires that State-owned companies attend to The previous responsibility report was published online, the obligations enforced by domestic legislation and as an Internet publication. Corporate responsibility is

24 Altia Annual Report 2010 Framework for sustainable development

CORPORATE RESPONSIBILITY R O U S T G P S R E FINANCIAL RESPONSIBILITY T E N l Profitable, competitive and efficient business operations I ’S l Creating financial value for the owners A I T l L Creating well-being near the plants A

G ENVIRONMENTAL RESPONSIBILITY

VALUES N I

T l Continuous decrease of the load caused by the

BUSINESS PRINCIPLES R O operations and continuous improvement of the

P condition of the environment E

VISION, MISSION, R l Ensuring the quality of raw materials used, the quality OBJECTIVES D N of groundwater in particular A T l Environmentally sound and economical use of natural C O EN resources NT EM INU OV OUS IMPR SOCIAL RESPONSIBILITY l Well-being and personnel development l Work safety l Product safety l Responsible marketing reported in this third report with the corresponding Certificates indicators as in the previous reports. Altia’s management system has been approved by Lloyd’s Register Quality Assurance to the following Altia’s opportunities to monitor and affect the Quality, Environmental and Safety Management environmental impacts of the production chain System Standards: OHSAS 18001:2007, “from field to bottle” are essential and significant ISO 14001:2004 and ISO 9001:2008. for Altia’s own production in proportion to the products imported from partners from all over the The scope of this approval is applicable to Altia’s world. Societal phenomena related to own produc- alcohol beverage, grain spirits, barley starch, tion, as well as risks and opportunities related to technical ethanol and animal feed business operations, are also in other respects remarkable processes in Finland including the related technical compared to those of imported products. and administrative support functions. Altia will publish its responsibility report in future In Denmark, the Svendborg plant has been in the context of annual reporting. Customers, approved by Lloyd’s Register Quality Assurance partners, employees, the representative of the owner to the following Quality and Environmental and authorities are the probable stakeholders using Management Standards: ISO 14001:2004 and the report. ISO 9001:2008. Altia’s key stakeholders that interact with The scope of this approval is applicable to wine and the Group or parts of the Group include: alcohol beverage bottling and distribution. Bottling l owner and political decision-makers takes place in accordance with Good Manufac- l the distribution route turing Practices (GMP) to the appropriate extent. l partners (in respect of imported In addition, the plant has International Food Safety alcoholic beverages) product safety certificate which has been approved l consumers by SAI Global. l competitors l subcontractors l employees l authorities l barley supply chain l material suppliers l international and national organisations in the alcohol industry l media

25 Altia Annual Report 2010 Financial responsibility

Financial responsibility For Altia, financial responsibility stands for creating added value to the shareholders. Sound financial performance enables persistent development of operations and investing in the well-being of employees. Profitable growth, good customer relationships, ongoing development of brands and cooperation with the partners, skilful personnel, development of practices and processes, as well as knowledge of consumers form the basis for creating added value. Added value to the stakeholders

Direct effect Altia 2010 (2009) Indirect effect

Customers: Customers:

Altia receives revenues from the EUR 487.9 million Altia offers unique and the most sales of alcoholic beverages as well (407.3 million) comprehensive product range of its as industrial services, feed, starch, operating area. technical ethanol and carbon dioxide.

Employees: Employees:

Altia pays salaries, commissions and EUR 63.7 million Altia builds for its personnel of more other indirect costs for employers. (53.2 million) than 1,100 persons a corporate culture which helps to support work- related well-being.

Suppliers: Suppliers:

Altia buys raw materials, goods and EUR 313.0 million Altia creates additional value for services from local and international (275.3 million) suppliers by the joint development suppliers. * work between varieties of grain, packaging solutions and flavor selections of the products.

Public sector: Public sector:

Altia pays excise and income taxes to EUR 475.5 million Altia takes financial responsibility society. Excise taxes are not included (390.8 million) by taking care of taxes and social in turnover. ** contributions and creating jobs in Altia and for suppliers.

EUR 0 million (0 million)

Dividends to shareholders

* Altia paid in total EUR 20.4 (12.4) million to its farmer partners for the barley used. ** Taxes paid in Finland amounted to EUR 254.6 (251.4) million.

Grants and donations: Altia does not give grants or donations with the exception of small-scale, EUR 0.1 (0.0) million, participation in events in the plant locations. Grants or donations are not distributed to any political parties or actors.

26 Altia Annual Report 2010 Environmental responsibility

Environmental responsibility Key environmental impacts of Altia are related to the Koskenkorva barley spirit plant and the operations at the the Rajamäki and Tabasalu alcoholic beverage plants. During 2010, Altia also acquired the Svendborg alcoholic beverage plant in Denmark. The preparation of common environmental targets covering the whole strategy period has commenced.

At the Koskenkorva, Rajamäki and Svendborg – reduction in the use of energy in relation to plants as well as in the support functions of production, the Helsinki headquarters, the environmental – reduction in the use of groundwater in relation to management system has been accredited with the production, ISO 14001 standard. The Tabasalu plant complies – reduction in chemical oxygen demand of waste with the applicable Estonian environmental water in relation to production, and standards and regulations issued by the authorities. – reduction in the value of disposable packaging Environmental systems are developed through material as of 2011. regular audits and common practises, such as Target levels have been defined for all environ- harmonisation of the assessment of environmental mental targets. Environmental targets for 2010 were aspects. Energy and environmental aspects are realised according to plan. Only the measurement taken into account in planning and execution result of the chemical oxygen demand (COD) of of production processes and investments in waste water in the Rajamäki plant was uncertain as production. a result of indicator breakage. The Quality, Safety and Environmental principles Progress in energy saving were updated and the main Group-wide environ- Energy saving measures are a central development mental targets were added to the principles. Envi- area for Altia both with regard to business profit- ronmental targets and environmental programmes ability and environment. The target level of reduc- were prepared for the operations in Finland for tion in the use of energy is based on the voluntary the time period of 2010–2012. The environmental energy efficiency agreement of the Confederation targets of the Finnish operations were: of Finnish Industries (EK) and the State of Finland,

Material flows and factors affecting the environment for the Koskenkorva and Rajamäki plants Electric energy Energy Peat Emissions into the air Alcoholic beverages, other raw materials and supplies Power station of Energy Transport Transport the Koskenkorva plant

Barley Grain spirit Alcoholic beverages

Water KOSKENKORVA RAJAMÄKI PLANT Technical ethanol PLANT Technical ethanol Other raw materials

Land ll Waste Waste Waste material Barley Starch Feed Carbon waste water energy utilisation peel dioxide utilisation Water Screw-cap bottle

27 Altia Annual Report 2010 Altia key environmental figures for production 2008–2010 installation of a pre-distilment condenser saved 1,200 megawatt-hours. The cauldron of the power 20081 20091 20101,2 plant was cleaned during shut-downs to improve Use of barley (million kg) 160 116 164 efficiency. Compressed air from the waste water Natural gas (GWh) 0.9 0.9 5,582 plant was utilised in the power plant. Steam consumption (GWh) 171 150 165 Renewable and burnable fractions, such as barley Use of electricity (GWh) 49 45 51 Water consumption (1000 m3) 1,312 1,076 1,292 peel and distillation fractions, are utilised in the Amount of waste water (1000 m3) 596 479 533 energy production of the Koskenkorva plant, which CO2emissions / fossil (t) 44,772 39,039 48,475 takes part in emissions trading. CO2 emissions / renewable (t) 14,498 8,354 9,501 In the Svendborg plant, the heat recovery system SO2 emissions into the air (t) 78 23 23 of the natural gas boiler was renewed and lighting NOX emissions into the air (t) 56 41 48 equipped with light dark sensors to save energy. VOC emissions (t) 10 6 6 Particle emissions into the air (1000 t) 5 3 3 Work to protect groundwater and soil Waste amounts (t) Protection of groundwater and soil in the plant – hazardous waste 53 12 35 localities is particularly important to Altia. The – landfill waste 112 138 1,255 Company owns approximately 1,300 hectares of – utilised waste land around the Rajamäki plant. Through land – energy utilisation 7,184 4,879 5,857 ownership, it can monitor building and other – other utilisation 7,910 7,016 6,698 activities in the area and protect groundwater. Environmental costs (EUR million) – investments in environmental protection 0 0.1 0.9 During 2010, the internal waste water pipelines – costs of environmental protection 1.8 1.6 2.2 of the Rajamäki alcoholic beverage plant were – profits from environmental protection 0.6 0.6 0.9 pictured. Pipeline repairs continued by renovating Environmental liabilities (provisions) the sewer system. Monitoring the groundwater was simplified by installing distance reading indicators 1 Figures for 2008 ja 2009 include Rajamäki, Koskenkorva and Tabasalu. 2 Figures for 2010 include Svendborg in addition to the above-mentioned. in the groundwater monitoring pipes. In addition, one of the wells used for pumping groundwater was renovated in order to ensure better water quality. which Altia joined in 2008. In accordance with All plant areas are prepared for soil protection the energy efficiency program, Altia is committed in case of potential chemical accidents. In the to reduce its use of energy by 9% from the level of Koskenkorva plant, environmental investments of 2005. around EUR 800,000 were completed, of which By the end of the year 2010, the use of energy in the the most important were repairs of waste water Koskenkorva plant was reduced by 8.7%, and in the pools and dismantling areas of dangerous chemicals. Rajamäki plant by 8.2% from the level of 2005. In the Svendborg plant, monitoring of the chemical Further information on the energy efficiency oxygen demand (COD) of waste water commenced agreement is available at: www.ek.fi > energy- and measures to reduce the chemical oxygen and-climate > energy-efficiency demand will be sought in Svendborg in the future. In 2010, an energy efficiency survey required in the Environmental commitments materialised agreement was carried out in the Rajamäki plant. An environmental aspect survey was conducted in Use of steam and electricity has slightly decreased the Koskenkorva and Rajamäki plants. The survey in Rajamäki compared to the level of 2009. The focused, for example, on departmental use of utilisation of steam was rationalised by a valve reno- energy and water, as well as on formation of waste vation in the steam network, which enhanced the water and waste. The survey helped in determining recovery of condensate. In Rajamäki, the heating of areas that should be paid special attention in the unused premises was also discontinued. future. Process development in the Koskenkorva plant Environmental commitments materialised during continued to focus on improving energy efficiency. 2010 in both the Rajamäki and Koskenkorva plants. Of the measures to increase energy efficiency, the In the Koskenkorva plant, the amount of waste

28 Altia Annual Report 2010 water and chemical oxygen demand were reduced Carbon footprint of the by approximately 30% compared to 2009. Reduc- tion of over 90% in vaporisable organic compounds unflavoured spirits (VOC) in accordance with the environmental permit was achieved. No vaporisable organic During 2010, Altia conducted a survey of the carbon compounds were found in measurements in 2010. footprint of its unflavoured spirits produced from Environmental accidents and deviations are domestic barley. According to the study, the carbon recorded in deviation reports and repairing footprint of, for example, a 38 percent unflavoured measures are regularly monitored. During 2010, no significant environmental damages took place and alcoholic beverage is 880 grams of CO2 equivalent stakeholders did not present any environmental in one litre of the drink. concerns. No penalties were paid during the period under review from overrunning the permit Grain spirit production constitutes over 95% of provisions or neglecting environmental laws or the carbon footprint of unflavoured alcoholic regulations. beverages. In grain spirit production, approximately In Petkelsuo in Hyvinkää, Altia has a 7.5 hectares two thirds of the carbon footprint is formed in wide conservation area that is part of the national the production chain of barley and approximately swamp protection programme. Altia’s operations do one third in the steam production of the distillery. not affect the nature of the protected area. The portion of transport in the carbon footprint is minor as approximately 80% of the barley used in Altia Group Company A-Pullo Ltd centrally the Koskenkorva plant is delivered from less than manages the bottle return system for refillable 100 kilometres from the plant, and the produced alcoholic beverage bottles in Finland. grain spirit is further transported by train from the Koskenkorva plant to be bottled in the Rajamäki plant. The calculation of the carbon footprint included production of seeds, fertilisers and lime, cultivation of barley and transportation to the Koskenkorva plant, production of grain spirit in the material- efficient process of Koskenkorva, transportation of grain spirit to Altia’s Rajamäki plant, production of sugar and transportation to the Rajamäki plant, water production in Rajamäki, mixing of the beverages and bottling in the Rajamäki plant, as well as production of the main process chemicals. Particulars of the most significant greenhouse gas emissions from production were defined in the study. The Sustainable Bioeconomy research group of the Biotechnology and Food Research unit of MTT was responsible for the practical execution of the study.

29 Altia Annual Report 2010 Social responsibility

Social responsibility The key areas of Altia’s social responsibility are its own personnel, marketing responsibility and product safety. In the future, social responsibility will expand to include the whole production chain as the Finnish, Swedish and Norwegian alcohol monopolies incorporate a Code of Conduct based on the principles of labour organisation ILO (International Labour Organisation) in their contracts.

New operational culture at Denmark, in addition to wine and spirits brands. the centre of strategy This initiated strengthening of personnel functions Looking ahead, the focus in Altia will be on devel- in these countries. oping a new way to operate in a target-orientated The acquisition of brands and production and culture. Given its vital role in achieving our strategy, logistics operations resulted in the transfer of remu- the ability to undertake renewal has been elevated neration systems and the move of the personnel to sit at the core of our strategy. Renewal ability is transferred to Altia in Stockholm. The diversity of strongly linked to companies’ sustainable success, personnel increased along with the acquisition. In and is divided into two sectors, strategic know-how the logistics centre of Årsta in Sweden alone, 23 and dynamics. different nationalities are represented. The core of strategic know-how is that employees The actions started during 2009 to rationalise are familiar with the strategy. It is also essential to operations continued at the beginning of 2010 appreciate the current situation in relation to the and lay-offs initiated in the previous year were overall strategy and understand our challenges and completed in the Finnish business units during the areas for development. Questioning and active first half of the year. The Group-wide implementa- discussion are extremely important, because strategy tion of HR system Haltia was prepared. evolves constantly resulting in each unit having its own way of realising the strategy. Work satisfaction in focus Personnel survey, Altia Spirit, was conducted in Dynamics enables reaching goals and succeeding November 2010 across the whole Group. The in competition. The work culture and atmosphere survey encompasses work satisfaction, employer should encourage the commitment, co-operation image, comprehension of strategy and application and courage to express opinions and ideas of every into one’s own work. According to the results of person in Altia. the survey, work satisfaction weakened from 2008. Strengthening of personnel function Actions to improve the current situation will be in Sweden and Denmark planned, through discussion with our employees, Altia’s personnel grew by approximately 280 during 2011. The progress of these development professionals during 2010 as the Company acquired plans is closely followed at the Executive Manage- production and logistics operations in Sweden and ment level.

Personnel by country (on average) Development of the Results of the personnel survey number of personnel (survey was not conducted in 2009)

1,135 1,122 Finland 578 1,103 1,108 Sweden 165 908 Denmark 140 Norway 77 Latvia 90 Estonia 70 06 07 08 09 10 Total 1,122 2007 2008 2010

Altia Group’s satisfaction index General satisfaction index

30 Altia Annual Report 2010 The application of an early intervention model effects of alcohol enshrined in the Roadmap 2015 was continued in the Finnish business units. The published by the European Confederation of Spirits objective of the model is to promote well-being Producers (CEPS), as well as to follow EFRD’s at work by supporting coping with work and by (European Forum for Responsible Drinking) reducing sickness absence. Sickness absence levels, Common Standards on Commercial Communica- which declined along with the implementation of tions. The main principle is that alcoholic beverages the model in 2008, remained at the same level in may be marketed in a responsible and appropriate 2009 and 2010. manner only to adults. Employment in Altia is mainly contract-based at Further information: www.efrd.org and for the time being. The turnover of personnel varies www.europeanspirits.org by country and is relatively low, especially in the Our products are traceable plant locations. Corresponding benefits are offered Consumers should always ensure the safety and to full-time and temporary employees regarding origin of acquired alcoholic beverages. Altia central functions. Regular development discussions analyses its own production for free if a consumer are organised with all employees; twice a year with has any reason to question the authenticity of the clerical employees and once a year with other product. Consumers should contact the nearest employees. police authority if fraud or methanol is suspected. Well established development discussions, goal Altia’s products are, with the exception of refillable setting and development plans based on the bottles, continuously traceable to the specific personnel survey are a key focus of our personnel production lots of the packaging and raw material work during 2011, as are decreasing sick leave and producers. Continuous quality control is part of the accidents at work. Company’s risk management process. The Group We are committed to responsible marketing has product liability insurance covering all business Marketing alcoholic beverages is highly regulated units for unexpected accidents. in many of Altia’s operating countries. In addition Methanol analyses documented on a daily basis are to legal regulations, Altia Group is voluntarily taken from the certified production process of the committed to execute in its alcoholic beverage Koskenkorva plant. In addition, ethanol samples marketing the actions to reduce the harmful are analysed in the official alcohol inspection

Type of employment Group of personnel

Permanent 96% Clerical employees 58% Temporary 4% Workers 42%

31 Altia Annual Report 2010 laboratory of the EU, Alcohol Control Laboratory (ACL). Besides the analyses in the distillery, the Rajamäki plant examines every received raw material lot. The Svendborg bottling facility and the Tabasalu plant also have their own quality control laboratories. During 2010, the Rajamäki alcoholic beverage plant produced a total volume of 54.9 (58.9) million litres of spirits and wines. Total production of the Tabasalu alcoholic beverage plant in Estonia was 3.2 (3.1) million litres. The Svendborg alcoholic beverage plant produced 23.0 million litres of alcoholic beverages during the eight last months of 2010, during which time Altia owned the plant. During the period under review, Altia made one product recall on its own production and four product recalls on partner brands. The Koskenkorva plant operated on average with 86% capacity for the whole period under review, mainly as a result of demand increase for starch delivered to the wood processing industry. A new record was also achieved in the production of grain spirit. The Koskenkorva plant used 164 (116) million kilos of domestic barley to produce 23.9 (18.5) million kilos of grain spirit, 39.2 (24.3) million kilos of starch and 56.8 (40.6) million kilos of feed.

32 Altia Annual Report 2010 Comparing the report to the recommendation by Global Reporting Initiative

INDICATOR Page INDICATOR Page PROFILE ECONOMIC PERFORMANCE INDICATORS 1. Strategy and analysis Aspect: Economic performance 1.1 Statement from the most senior decision maker 20–21 EC1 Direct economic value generated and distributed, including 26 revenues, operating expenses, personnel expenses, donations and other investments for the public good, retained earnings 2. Background description of the organisation and payments to the investors and government. 2.1 Name of the organisation 36 EC3 Coverage of the organisation’s defined benefit plan obligations fs 7 2.2 Primary brands, products and/or services 8–9 EC9 Significant indirect economic impacts 26 2.3 Operative structure of the organisation, such as the most 7, fs 40 important business units, operative companies, subsidiaries and joint ventures ENVIRONMENTAL INDICATORS 2.4 Location of the organisation’s headquarters fs 14 Aspect: Materials 2.5 Number and names of countries where the organisation 1 EN1 Materials used, by weight and quantity 28 operates or which are significant with regard to the themes Aspect: Energy described in the report EN3 Main sources’ direct energy consumption 28 2.6 Nature of ownership and legal form fs 57–59 Aspect: Water 2.7 Market areas (including geographical distribution, business fs 14 areas and customer and beneficiary groups) EN8 Source-specific overall consumption of water 28 2.8 Scale of the reporting organisation: number of personnel, 1 Aspect: Biodiversity turnover, capital structure, equity and liabilities, number of EN11 The location and size of owned, leased and controlled land in 29 products or services conserved areas or their vicinity as well as in high 2.9 Significant changes in the organisation’s size, structure or fs 8–9 biodiversity areas outside conserved areas ownership structure during the reporting period EN12 The key impacts of the organisation’s operations, products and 29 services on conserved areas and high biodiversity areas outside the conserved areas 3. Report parameters EN13 Conserved or restored habitats 29 REPORT DESCRIPTION Aspect: Emissions into air, wastewater and garbage 3.1 Reporting period 24 EN16 Direct and indirect overall greenhouse gas emissions by weight 28 3.2 Date of most recent previous report 24 EN20 Nitrogen and sulphur dioxide emissions (NO and SO emissions) 28 3.3 Reporting cycle 25 and other significant emissions into air, by type and weight 3.4 Contact point for ordering the report and making related 36 EN22 Overall weight of waste by type and disposal method 28 questions EN24 As regards waste that has been classified as hazardous in 28 Scope and limitations of the report Appendices I, II, III and VIII of the Basel Convention Annex, 3.5 Report content specification 24–25 the weight of transported, imported, exported or treated waste and the relative proportion of waste shipped 3.6 Boundary of the report 24–25 internationally 3.7 Any specific limitations on the scope or boundary of the report 24–25 Aspect: Products and services 3.8 Basis for reporting themes that have a substantial impact 24–25 EN28 Regarding the neglect of environmental legislation and 29 on joint ventures, subsidiaries, leased facilities, outsourced regulations, the monetary value of the significant operations and other reporting periods and/or the fines imposed and the overall number of other penalties comparability between organisations Aspect: Overall 3.12 Table which shows the location of basic content in the report 33 EN30 Environment protection’s overall expenses and investments by 28 type 4. Governance, commitments and engagement GOVERNANCE LABOUR PRACTICES AND DECENT WORK PERFORMANCE 4.1 Governance structure of the organisation, including fs 57–59 INDICATORS committees working under the Board, LA1 Total workforce by employment type, employment contract 30–31 which are responsible for specific tasks, such as setting the and region strategy or monitoring the organisation LA3 Benefits provided for full-time employees that have not been 31 4.2 Indicate whether the Chair of the highest governance body is 34 provided temporary or part-time employees also an executive officer LA12 The percentage of employees with whom regular performance 31 4.3 Number of members of the Board who are independent and/or 34–35 and career development reviews are carried out non-executive members 4.4 Mechanisms for shareholders and employees to provide 35 recommendations or direction to the highest governance body 4.8 The organisation’s mission or values, operating rules and 24–25 principles which are essential for the organisation’s financial, social and environmental operations, and the procedures for enforcing them 4.14 List of the organisation's interest groups 25 4.15 Interest group determination and selection basis 25 fs = financial statements

33 Altia Annual Report 2010 Board of Directors

Board of Directors

top line: Jarmo Leppiniemi, Catarina Fagerholm, Mikael Aro and Ainomaija Haarla bottom line: Annikka Hurme, Ilkka Puro and Markku Rönkkö

Jarmo Leppiniemi b. 1948 Catarina Fagerholm b. 1963 Mikael Aro b. 1965 Ainomaija Haarla b. 1953 D.Sc. (Econ.) M.Sc. (Econ.) eMBA D.Sc. (Tech.), MBA Professor, the Aalto University CEO, Instru optiikka Oy CEO, VR-Group Ltd President and CEO, Technology School of Economics Academy Foundation Independent Member of the Independent Member of the Independent Member of the Board of Altia since 2008, Vice Board of Altia as of 25 August Independent Member of Board of Altia since 2004, Chairman of the Board as of 2010 the Board of Altia since Chairman of the Board 28 April 2010, Chairman of the 2008, Member of the Audit Varma Mutual Pension Insurance since 2006, Chairman of the Audit Committee Committee Company, Member of the Board Nomination and Remuneration Luottokunta, Member of the of Directors Korona Invest Oy, Chairman of Committee, Member of the Supervisory Board Finnish-Russian Chamber of the Board of Directors Audit Committee Commerce, Member of the Neste Oil Corporation, Member Main work experience: CEO, Mortgage Society of Finland and Board of Directors of the Board of Directors and Bosch and Siemens Home AsuntoHypoPankki, Chairman Corenet Oy, Chairman of the Member of the Personnel and Appliances Oy (1998–2005) of the Board of Directors Board of Directors Remuneration Committee Country Manager of Finland, Auditing Board of the State, VR-Track Ltd, Chairman of the Biohit Oyj, Member of the Russia, Estonia, Latvia and Member of the Board Board of Directors Board of Directors Lithuania, AEG Home Appli- The Parish Union of Helsinki, Avecra Oy, Chairman of the ances (1996–1998) Main work experience: CEO, Joint Parish Council and Joint Board of Directors ProConsilium Ltd (2007–2009) Parish Board, Vice Chairman Main work experience: Senior different management positions, Main work experience: Different Vice President, Northern UMP-Kymmene Oyj positions within the Helsinki Europe, Carlsberg breweries AS, (in Germany 2002–2005) School of Economics (currently (2007–2009) Marketing Director, Metso Oyj the Aalto University School of CEO, Oy Sinebrychoff Ab Economics) since 1972, Professor (2005–2007) since 1990 Commercial Director, Oy Sinebrychoff Ab (2003–2005)

34 Altia Annual Report 2010 Executive Management Team

Executive Management Team

Annikka Hurme b. 1964 M.Sc. (Food Sciences) Director, Nordic Sales and Distribution, Valio Ltd Independent Member of the Board of Altia as of 28 April 2010 Main work experience: Director, Perishable Goods and Domestic Sales and Marketing, Valio Ltd (2007–2010) Director, Marketing,Valio Ltd (2000–2007) Ilkka Puro b. 1946, M.Sc. (Pol.) Senior Financial Counsellor, Prime Minister’s Office Independent Member of the Board of Altia since 2006, Member of the Nomination and Remuneration Committee top line: Antti Pankakoski, Main work experience: Industrial Joacim Hultin and Kari Lampinen Counsellor, Ministry of Trade bottom line: Tomi Tanninen and and Industry (1998–2007) Hannu Tuominen Director, Finnish Export Credit Ltd (Leonia Corporate Finance) (1988–1998) Advisor to Executive Director, Antti Pankakoski Joacim Hultin Tomi Tanninen Washington, International b. 1954 b.1967 b. 1967 Monetary Fund (IMF) M.Sc. (Laws) Bachelor of Arts in Economy M.Sc. (Econ.) (1985–1988) CEO Senior Vice President, Trading CFO Head of Office, Bank of Finland Main work experience: Main work experience: (1975–1985) Finnish Food and Drink Brand Industries’ Federation, Member Manager, Purchasing Manager, Finance Director, Gustav Paulig Markku Rönkkö b. 1951 of the Board of Directors Commercial Manager and Ltd (1999–2008) M.Sc. (Econ.) Finnlines Oyj, Member of the Managing Director, Bibendum Business Controller, Gustav

CEO, Järvi-Suomen Portti Oy Board of Directors AB (1996–2007) Paulig Ltd (1996–1998) HOK-Elanto, Member of the Product and Store Consultant, Finance Manager, Paulig Export Independent Member of Board of Directors Systembolaget, (1995–1996) Ltd (1995–1996) the Board of Altia since Main work experience: 2006, Member of the Audit CEO, Silja Line Oy (2003–2006) Committee Kari Lampinen b. 1961 Hannu Tuominen b. 1958 Director, Nordea Corporate M.Sc. (Econ.) M.Sc. (Eng.) Digital Foodie Oy, Member of Finance (2000–2002) the Board of Directors Director, Kvärner A/S Senior Vice President, Brands Senior Vice President, Industrial Osuuskunta KPY, Vice (1998–2000) Services and Supply Chain Main work experience: Country Chairman of the Board of CEO, Cunard Line Ltd Director, Fresh Bakery Products, Main work experience: Directors (1996–1997) Profile Vehicles Oy, Chairman of Marketing and Sales Director, Production Director and the Board of Directors Vaasan Oy (1999–2009) Division Director, Vaisala Oyj Tulikivi Oyj, Member of the Marketing Director, HK (1992–2007)

Board of Directors and Member Ruokatalo Oyj (1994–1999) Business Controller, Marketing of the Audit Committee Director, Marketing, Sales Manager and Production Voimatel Oy, Chairman of the and Product Development, Director, Fiskars Power Systems Board of Directors Broilertalo Oy/Kariniemi Oy Oyj, (1986–1992) (1989–1994) Main work experience: CEO, Product Manager and Key Järvi-Suomen Portti Osuuskunta Account Manager, Vaasanmylly (2008–2010) Oy (Cultor Oyj) (1985–1989) CEO, Karelia-Upofloor Oy (2006–2007) CEO, Savon Voima Oyj (2004–2006) CEO, Olvi Plc (1985–2004) Part-time auditor (APA) (1984–2003) 35 Altia Annual Report 2010 Contact details

Contact details

Finland Sweden Norway Denmark

Altia Plc Altia Sweden Ab Altia Norway Services AS Altia Denmark A/S Porkkalankatu 22 A Visiting address: Harbitzalléen 2a, 5th floor Ragnagade 7, 3-floor FI-00180 Helsinki Sandhamnsgatan 63 C N-0275 Oslo DK-2100 Copenhagen P.O. Box 350, 00101 Helsinki Shipping address: Tel. +47 21 50 18 00 Tel. +45 4 588 4020 Tel. +358 207 013 013 Sandhamnsgatan 73 firstname.lastname [email protected] firstname.lastname@ Postal address: P.O. Box 27144 @altiacorporation.com www.altiadenmark.com altiacorporation.com SE-11528 Stockholm www.altiacorporation.com www.altiacorporation.com Tel. +46 8 557 790 00 Altia Denmark firstname.lastname@ Best Buys International AS Logistics Center Altia Plc altiacorporation.com Harbitzalléen 2a, 5th floor Gl. Højmevej 30 Koskenkorva Plant N-0275 Oslo Altia Sweden DK-5250 Odense SV FI-61330 Koskenkorva P.O. Box 473, Skøyen Tel. +45 4 8880 3600 Tel. +358 207 013 013 Logistics Center N-0213 Oslo firstname.lastname Visiting address: Transportvägen 7 Tel. +47 21 50 18 00 @altiacorporation.com Altia Plc SE-11743 Stockholm [email protected] Rajamäki Plant Postal address: P.O. Box 27144 Altia Denmark Bibendum AS Valta-akseli SE-11528 Stockholm Svendborg Plant FI-05200 Rajamäki Invoicing address: Altia Sweden AB Harbitzalléen 2a, 5th floor Rødeledsvej 70 Tel. +358 207 013 013 Fack 880187 N-0275 Oslo DK-5700 Svendborg R088 P.O. Box 476, Skøyen Tel. +45 4 8880 3600 10637 Stockholm N-0213 Oslo firstname.lastname Altia Finland Tel. +46 8 450 47 00 Tel. +47 21 50 18 00 @altiacorporation.com (sales and marketing unit) firstname.lastname@ firstname.lastname altiacorporation.com @bibendum.no Porkkalankatu 22 A Viro FI-00180 Helsinki www.bibendum.no Altia Sweden Services AB Tel. +358 207 013 013 Altia Eesti AS [email protected] Sandhamnsgatan 63 A InterBev AS www.viinimaa.fi P.O. Box 27084 Harbitzalléen 2a, 5th floor Tammi tee 30 SE-10251 Stockholm N-0275 Oslo Laabi küla, Tabasalu sjsk A-Pullo Ltd Tel. +46 8 598 110 00 P.O. Box 422, Skøyen EE-76901 Harjumaa Tel. +372 671 2000 Valta-akseli firstname.lastname@ N-0213 Oslo [email protected] FI-05200 Rajamäki altiacorporation.com Tel. +47 21 50 18 00 www.altia.ee Tel. +358 207 013 018 [email protected] [email protected] BevCo AB www.a-pullo.fi Sandhamnsgatan 63 C Strøm AS P.O. Box 27084 Harbitzalléen 2a, 5th floor Latvia SkyCellar Ltd SE-10251 Stockholm N-0275 Oslo SIA Mobil Plus Porkkalankatu 22 A Puh. +46 8 557 790 09 P.O. Box 459, Skøyen FI-00180 Helsinki N-0213 Oslo Kuldigas iela 36a Tel. +358 207 013 011 Bibendum AB Tel. +47 21 50 18 00 LV-1083, Riga [email protected] Sandhamnsgatan 63 A [email protected] Tel. +371 67 62 8884 www.skycellar.fi P.O. Box 27084 www.strom.no [email protected] SE-10251 Stockholm Roal Ltd Tel. +46 8 598 111 00 VSD Logistics AS Tykkimäentie 15 [email protected] P.O. Box 6423, Etterstad FI-05200 Rajamäki N-0605 Oslo Tel. +358 9 290 420 Philipson Söderberg AB [email protected] [email protected] Sandhamnsgatan 63 C www.vsdlogistics.com P.O. Box 29163 Oy Wennerco Ab SE-10052 Stockholm Porkkalankatu 22 A Tel. +46 8 598 112 00 FI-00180 Helsinki firstname.lastname@ Tel. +358 207 013 012 philipsonsöderberg.se [email protected] www.philipsonsoderberg.se www.mikaviini.fi VSD Logistics AB Sandhamnsgatan 63 C P.O. Box 27158 SE-10252 Stockholm Tel. +46 8 522 804 10 [email protected] www.vsdlogistics.com

36 altia Annual Report 2010 Graphic design and production: Kreab Gavin Anderson Photo production: Photo Agency Keksi Paper: cover MultiArt 300 g/m2, pages MultiArt 130 g/m2 Starch from Koskenkorva was used in coating the paper in the Annual Report and Financial Statements. Printing: Erweko 2011