Annual Report Annual 2011

www.altiacorporation.com 2 | 3 Altia annual report 2011

3 | 3 _Contents 04 32 Altia’s year Framework for sustainable 08 development CEO’s review 33 Framework and definition 10 of reporting Value in three 35 waves Financial 14 responsibility Never-ending passion 36 for brands Environmental WE THINK responsibility AHEAD 16 Brands are the core of 39 our growth IN Altia’s quality, safety GOOD and environmental COMPANY principles FAST TRACK 18 TO THE Selection of Altia’s MARKETS own brands 44 Social responsibility SHARING THE BEST 20 Fast track to the Nordic 49 MOMENTS and Baltic markets We follow responsible THIRST 22 business principles FOR Selection of Altia’s 51 GROWTH partner brands Comparing the report to the recommendation by Global 24 Reporting Initiative PASSION Industrial Services to customers 52 FOR Board of Directors BRANDS 26 Competitiveness through 54 BORN production, logistics and Executive Management sourcing Team RESPONSIBLE 30 56 Responsibility report Contact details 4 | 5 Altia annual report 2011 5 | 5 _ Leading in the Nordics and Baltics

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, Renault, Grönstedts, Koskenkorva, Jaloviina, O.P. Anderson, Xanté and Key Ratios for Altia Group 2011 2010 2009 Skåne Akvavit have a strong market position and many of them a long heritage to cherish. Net sales, EUR million 524.8 487.9 407.3 Operating profit, EUR million 34.4 32.6 15.6 ( % of net sales ) 6.6 6.7 3.8 Altia’s partner brands represent both local and international Profit before taxes,EUR million 31.1 29.6 9.4 ( % of net sales) 5.9 6.1 2.3 brands from all over the world, such as Codorníu, Drostdy-Hof, Profit for the period,EUR million 21.3 25.7 5.3 Hardy’s, Jack Daniel’s, Bowmore, Nederburg, Ravenswood ( % of net sales) 4.1 5.3 1.3 Statement of financial position, and Robert Mondavi. EUR million 586.8 581.1 398.4 Return on equity, % 11.6 17.2 4.3 Return on invested capital, % 8.4 10.0 4.2 Altia serves its customers, partners and consumers close to markets Equity Ratio, % 32.5 29.6 34.3 with its wide production, sales and logistics set-up. Gearing, % 51.8 76.3 55.5 Capital expenditure, EUR million 6.1 106.4 6.7 Average number of personnel 1 178 1 122 1 042 6 | 7 Altia annual report 2011

Total market volumes (mill. litres) & Altia Spirit market forecast Altia has market shares 2011, spirits (%) 2011–2016, mill. litres 1 distillery, 3 bottling plants, warehouses and 2011 offices in 6 countries. 2012 35 2013 DISTILLERY 2014 30 2015 26 PRODUCTION 55 % 2016 25 24 WAREHOUSE

20 18 18 17 OFFICE 30 % 15 15 (million litres) (million 5 % 18 % 7 % 5 % 10

0 Finland Sweden Norway Denmark Estonia Latvia Finland Sweden Estonia Latvia Denmark Norway

Total market volumes (mill. litres) & Altia Wine market forecast market shares 2011, wines (%) 2011–2016, mill. litres

2011 250 2012 2013 200 220 2014 2015 2016 14 % 170 150 Koskenkorva

100 78 71

(million litres) (million 2 % Rajamäki 50 8 % 24 27 % 17 5 % 12 % Helsinki (headquarters) 0 Finland Sweden Norway Denmark Estonia Latvia Sweden Denmark Norway Finland Latvia Estonia Tabasalu Oslo Stockholm

Market shares 2011, % Source: IWSR In the case of Finland, Sweden and Norway Riga sales of alcoholic beverages from the State monopolies have been taken into account as retail sales. The figures are based on the sales Copenhagen volumes (litre) published by the monopolies Odense (Alko, Systembolaget and Vinmonopolet). The Svendborg information relating to Denmark, Estonia and Latvia is based on estimates.

Sources: The Nordic Alcohol Monopolies and Altia 8 | 9 Altia annual report 2011

_ CEO’s review

e have reached the financial goals set for the a consequence, operations in Altia’s associated company year 2011. For this, I would like to thank A-Pullo Ltd had to be discontinued and operations in the everyone in Altia, as well as our customers, Rajamäki alcoholic beverage plant significantly altered. partners and cooperation partners. This massive change project was completed with desired results thanks to well-functioning internal cooperation. Our gross margin improved from the previous year totalling EUR 64.8 (51.0) million and our operating profit Good operational results were achieved through the was EUR 34.4 (32.6) million. We have also been able to development actions carried out within the Swedish improve the key financial position ratios important to our partner operations, which reinforced our belief in growth growth strategy; the ratio of net debt and gross margin to opportunities. In Norway, we have partially achieved 1.5 (2.6) and gearing to 51.8 % (76.3 %). our development goals, but we will still launch some new development projects to strengthen our position. Sound In 2010, we executed a business acquisition through results were also achieved in the spirits segments across which we bought leading wine and spirits trademarks the whole core market area. The Koskenkorva production in Sweden and Denmark, the Svendborg alcoholic plant operated with good utilisation rate mainly beverage plant in Denmark as well as the logistics attributable to contract production of ethanol and strong centres in Odense, Denmark and Årsta, Sweden. The demand for starch and feed products. integration of the business acquisition has met the set expectations, thus strengthening our opportunities to In 2012, we will continue to execute our strategy. Based execute further business acquisitions. Together with on the achieved results, we believe that we are capable of organic development, it has made Altia the leading actor making remarkable operative and financial improvements in our core markets in the Nordic and Baltic countries. during the coming years. We will be investing in Our portfolio of own and partner products is the most developing knowhow and preparedness throughout Altia extensive in these markets. to reach these goals.

During the reporting period, we started a production development project resulting in the Svendborg alcoholic beverage plant in Denmark mainly specialising in packing wines and the Rajamäki alcoholic beverage plant in Finland mainly specialising in bottling spirits. Bottles made of recyclable glass and plastic have been taken Antti Pankakoski into use instead of refillable glass bottles in Finland. As CEO 10 | 11 Altia annual report 2011

THIRST FOR _Value GROWTH in three

We aim to increase the value of Altia through a growth strategy implemented in three waves waves. The themes of the waves are efficiency improvement, growth and expansion. uring the first wave, we develop our Business units and trademarks not fitting in the operating model and improve our operating model according to the strategy have been sold competitiveness. Efficiency improvements or discontinued. As a result of these actions, we have are sought from rationalization of the improved our operating profit by approximately EUR 10 Waves of execution operating model structure, our processes and Supply million from 2009. Our operating profit as a whole has Expand Chain. tripled from 2009. to new geographies and extend service scope Our goal is to create efficient and scalable operating model Penetrate We strengthen our position in the Nordic for Altia, solid basis of knowhow, as well as sufficient cash and Baltic countries the home market to flow and strong financial position, which together will increase market share enable further development and expansion projects. This In the second wave, we strengthen our position as the is made possible by emphasising more the development of leading alcoholic beverage company in our core markets Restructure the personnel’s knowhow and our operating culture. The in the Nordic and Baltic countries by aiming to grow incomplete operating model solutions in accordance with faster than the overall growth of markets. Growth the business and 2013– the first wave will be completed during 2012. is pursued both organically and through business operating model to - Expand into growing acquisitions. improve profitability markets Efficiency from integrated operating model 2011–2014 - Grow selected During the past two years, we have executed one business international product Our current integrated operating model was created in acquisition and three supplementary acquisitions of - Grow faster than market segments 2009. It enables the efficient use of production capacity trademarks, which together have increased our net sales average - Continue developing and creation of remarkable economies of scale in by approximately EUR 100 million, or 25 %, and our 2009–2012 - Acquire businesses and profitability procurement and logistics. We are also able to offer our operating profit with synergetic effects by over EUR 10 - Increase efficiency of brands customers the most extensive product portfolio of own million. supply chain and processes and partner products. - Review the business After the business acquisition executed in 2010, we have portfolio renewed our production structure so that we focus on - Develop performance bottling spirits in Finland and on packing wines in culture and competencies Denmark. The operating models of unprofitable business units have been developed and their operating profits have been turned to positive. 12 | 13 Altia annual report 2011

Our aim is to expand to the growing markets in Eastern Europe

In the third wave, our aim is to expand to the growing markets in Eastern Europe where there are opportunities for business acquisitions generating benefits of synergy. We have started to review these markets and potential acquisition targets.

During 2012, we will continue to develop our operations in accordance with the strategy. All business areas will sharpen their operations and focus on actions creating growth. Support functions for their part will continue to improve operational efficiency. We will continue to execute such business and trademark acquisitions that generate A synergy benefits and growth. Increasing the value of Altia

remains the most important factor steering our operations. Our financial goals ”

Our goal is to reach operating profit of 10 % from net sales (EBIT) and return on capital employed (ROCE) of The priorities for the next three to five 15 % with the current operating structure. In addition, our goal is to retain our strong financial position so that it years are growth in the Nordic and in the allows for executing business acquisitions. Baltic countries as well as in Eastern Europe, and rationalization of the supply chain and development of personnel’s expertise.”

> Antti Pankakoski CEO Value through a unique business model

Capacity optimization Logistics Own Brands

Sourcing B-B Partner Services Brands Brands 40,5% Trading 27,7% Industrial Services 31,8%

Logistics Bottling services 14 | 15 Altia annual report 2011 16 | 17 Altia annual report 2011 _Strong brands are the PASSION core of our growth BRANDSFOR We combine brand knowledge and local consumer insight.

Altia is proud of its brands. We cherish, onsumer preferences vary broadly by social gatherings. The second best-selling bitter in Growth through existing and acquired countries. We are able to take advantage Denmark, 1-Enkelt, has a modern touch in its packing brands utilise and grow their value with of both our first-class local experience and taste. care. The roots of our many well- and international brand knowledge with Regulation on marketing varies greatly between countries known brands lie deep in the national the operating model developed for our market area. We We develop taste profiles of wines for the local consumers in Altia’s key markets. Restrictions on marketing will steer the Brands business across the whole operating area and bring brand concepts suitable for the Nordic lifestyle further tighten in the future. This makes launching new drinking cultures of our operating through product categories. Local sales and marketing to the markets – this is grounded on our profound products challenging and the significance of the already area. We grow our business operations companies are responsible for the sales and marketing consumer insight. Opal Springs bag-in-box wine is an well-known brands in the markets grows. Therefore, by renewing these brands with work in practice based on product category strategies. example of such product. We also develop new consumer we will take advantage of our strong brands even more friendly packing designs. profoundly and extensively in the future. consideration as well as developing and We are the market leader of grain spirit based alcoholic acquiring new brands. Our goal is to beverages in both Finland and Sweden and we have We know the consumer We execute our growth strategy also by acquiring brands grow to become the leading company in strong knowhow on these products. Brands business and businesses that complement our existing product manages the whole value chain of our grain spirit based The best consumer insight in the markets is the key selection. We can increase the value of acquired brands our key markets and we also want to be trademarks. Many of our grain spirit based products to our success. We invest strongly in consumer and already existing in the markets through our expertise and strongly involved in the international are traditional leading brands, such as Koskenkorva in market research. Consumers for example participate benefits of synergy. The latest example is the premium trade of alcoholic beverages. Finland, the most popular vodka in Sweden, Explorer, in developing novelty products and concepts. Creating liqueur brand Xanté, well-known in the Nordic countries and Saarenmaa Vodka in Estonia. profound consumer insight means more to us than even and in travel trade, which Altia acquired in the beginning the best of market research. of 2012. Xanté will strengthen our position in the Nordic Altia is also a growing cognac house. In addition to the alcoholic beverage trade and simultaneously contribute to premium cognac Renault, we have local cognac brands, We work together with our customers to produce our international product portfolio. such as the best-selling cognac in Sweden, Grönstedts, experiences to consumers. The goal of new flavours, Monopol in Finland and Amundsen in Norway. Our packages and concepts is to generate innovations that expertise is guaranteed by two own Master Blenders. bring joy and respond to the consumers’ wishes. Altia aims to apply trends, and also create them as a forerunner. The strongest brands amongst our traditional aquavits are This is how both our customers and consumers benefit the Swedish national treasures O.P. Anderson and Skåne from our expertise. Akvavit that both suit dining tables and accompany 18 | 19 Altia annual report 2011

Selection of Altia’s own brands

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

Blossa Chill Out Santa Christina

Opal Springs

El Tiempo Drop In Ballet Aussie 20 | 21 Altia annual report 2011

A strong community of partners Growth driven by knowledge and engagement

ltia’s partners cover leading global wine Altia employees have an excellent knowledge of wines and _Fast track and spirit companies as well as local spirits through their experience in the business. They are producers from all main regions around experts in the local markets with a deep devotion to sell the world. With this network, Altia’s and develop partner brands in close co-operation with the sales and marketing companies across the Nordic and partners. Baltic countries aim to offer customers and consumers to the Nordic an appealing range of high-quality products in every Growth and customer satisfaction are achieved by segment. Regional partners include companies like working systematically with local retail monopolies and Distell, Grupo Codorníu, Brown-Forman, Accolade, on-trade customers in order to obtain new listings and Constellation and Morrison-Bowmore to name a few. revitalise existing ones. Sales and marketing companies Viña Tarapaca, Masi Agricola, Pasqua Vigneti i Cantine, in Altia communicate actively with customers, journalists and Baltic Bodegas Faustino and Casa Vinicola Zonin are examples and consumers through various trade fairs, exhibitions of other major partners. and events. We are constantly seeking new ways of reaching consumers and key customers, including wine The business operates through our leading network of clubs and digital communication tools. local sales and marketing companies: Philipson Söderberg and Bibendum in Sweden, Wennerco and SkyCellar in markets First choice in the Nordics and Baltics Finland, and Strøm, Bibendum and Best Buys in Norway. Other Altia companies also sell and market partner Altia’s goal is to become the 1st choice partner in the brands across our operating area. Nordic and Baltic region. Our strong regional presence and market knowledge provides us with a competitive Altia offers it partners a fast track to the Nordic and Baltic markets. Our unique sales Adding value for partners advantage that we aim to further develop and utilise in and distribution model combines best-in-class market insight and focus with local market cooperation with our partners. services. Altia’s partner platform is the market leader in terms of sales volume and market Altia offers its partners the fast track to the Nordic and Baltic markets. Our aim is to add value to our partner’s share and our aim is to be the 1st choice Nordic distributor. businesses through:

- Solutions that are tailor-made for every partner’s specific expectations - Deep insight into Nordic consumers and strong market knowledge - Market leadership in both on-trade and off-trade channels - Bottling and packaging services close to the markets - Efficient logistics, benefiting from Altia’s scale FAST TRACK - Innovative solutions and applications TO THE for consumer marketing - Customer and consumer education by MARKETS Altia Academy - A strong presence in Nordic travel retail 22 | 23 Altia annual report 2011 Selection of Altia’s partner brands

Tarapaca Bollinger Robert Mondavi Dos Cortados Ravenswood Palo Cortado

Hardy’s Midori Codorniu Raimat

Viña Pomal Amarula Pongracz

Drostdy-Hof Fleur du Cap Fresita Nederburg Zonnebloem Two Oceans

Publishing pictures of strong spirits in the internet is illegal according to the Finnish legislation. 24 | 25 Altia annual report 2011

_Industrial Services Alcohol beverage production and packaging services at Altia plants to leading customers

The Industrial Services consist of production, packaging and logistic services regarding alcoholic beverages as well as starch and feed and technical ethanol business, which are aimed at Altia’s partners and external customers. By increasing the number of customers of these services we are aiming at the full utilisation of our industrial capacity.

Effectiveness to bottling and logistics We utilise our valuable raw material barley effectively through contract services in the plant’s process. Animal feed for agriculture is generated as a by-product from the process. We work in Altia creates cost-effectiveness by providing contract close co-operation with our starch and feed customers services in bottling and logistics to its partners and and we are constantly striving for generation of new external customers. Our most significant contract applications in the food industry. customer is Finlandia Vodka Worldwide. Altia produces Finlandia Vodka from Finnish barley and Rajamäki The growth of geothermal applications groundwater to be delivered around the world. Other continues significant contract service customers are among others Pernod Ricard Denmark and Pernod Ricard Sweden, Altia has a significant market share in technical ethanol Grupo Codorníu and Belvedere. and ethanol-based product applications used in the industry. Growth continues to be strong, particularly in We offer an easy, cost-effective and reliable logistics the geothermal applications. Altia is the largest producer solution to the customers in the Nordic and Baltic of organic ethanol for geothermal applications in Finland. markets. Cost advantage is ensured by combined and punctual deliveries. We are also able to identify and predict demand and respond to it by providing the right amount of products at the right time in the right place. Transportation costs are lower and durability of the Altia’s starch and feed customers products is better in the supply chain by packaging our customers’ wines to bag-in-boxes in Svendborg, which is located close to the consumers. WE THINK Starch and feed business AHEAD At the Koskenkorva plant, we use Finnish barley to 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 brewing and food industry. Altia has a non-controlling interest in the Chemigate company, which undertakes both the basic starch production and the downstream operations. 26 | 27 Altia annual report 2011

Production, logistics and sourcing have a significant impact on the competitiveness of _Competitiveness through Altia’s business operations. Our goal is to achieve cost leadership of these sectors within our operating area. Altia’s Koskenkorva, Rajamäki, Svendborg and Tabasalu plants, logistics centres located in different countries in our operating area, as well as sourcing and production, logistics development activities, serve this target. and sourcing

ltia manages transportation of raw High-quality purchasing materials and products, as well as sourcing, manufacturing and logistics, efficiently Altia has concentrated on the development of its own predicting at the same time precisely the competence regarding purchasing activities. The goal is cyclical demand for alcoholic beverages. Customer that the professionals working with purchasing know the receives just the right amount of products at the right sourcing market of their own category as good as possible. time – our competitive advantages are delivery reliability, The consistent quality of sourcing is pursued with accuracy and fast response. ensuring the quality requirements relating to purchasing contracts and with the continuous auditing of suppliers. We utilise the economies of scale in sourcing and logistics. We can produce the necessary products, either in our Altia is the largest actor in its market area. The purchased own production plants, or have them produced through volumes make us an attractive customer to suppliers, subcontracting, whichever is the most effective way create cost advantages and ensure access directly to the to operate. Close co-operation with the business areas source of raw materials. We do not operate through ensures a good outcome. intermediaries; we buy services and raw materials directly from the producers. Specialising our plants We focus on energy and material efficiency To achieve cost leadership, we have launched several development projects, which are aimed at utilising We develop energy and material efficiency of our plants. economies of scale as well as simplifying and unifying The Koskenkorva plant utilises already the whole barley structure and practices. A major ongoing development grain material effectively. Material efficiency can be project is the specialisation of the bottling facilities. The further improved through the continuous development Svendborg plant near the largest wine markets in our of the plant. An example of this is the implemented operating area will specialise in wine and the Rajamäki dehusking system which enables the separation of starch Altia’s logistics operates plant in spirits packaging, Koskenkorva will process grain from barley grain more effectively than before. transparently in the Nordic spirit from barley and the Tabasalu plant will serve the and Baltic countries: Baltic markets. The shift from refillable bottles to lighter, returnable bottles means that instead of bottles the glass cullet will - supply chain management The next phase of the project aims at improving the cost- be recycled. At the same time it is possible to stop using - sales and operations planning effectiveness through specialisation. Production of spirits the detergents that increases the load of the environment, - procurement Rajamäki requires different skills than the processing and packaging and thus save the energy required in the washing activity. - incoming transportation of wine. Our specialised plants are able to focus on their A larger number of beverages will be packed in lighter, Tabasalu - inventory management Oslo core competence, which creates an opportunity to develop materially recyclable PET plastic bottles instead of glass - outgoing transportation Stockholm quality in addition to efficiency. bottles. - customer service Riga In addition to the specialisation of the plants, cost- Odense effectiveness will also be sought by combining operations. An example of this is the transfer of logistics operations Svendborg located in Odense close to the Svendborg bottling facility in the beginning of 2013. 28 | 29 Altia annual report 2011

SHARING THE BEST MOMENTS 30 | 31 Altia responsibility report 2011

_Strong economy creates BORN conditions for social and RESPONSIBLE environmental responsibility

ltia’s goal is to be the leading actor in We can be very proud of the development of material The societal climate, economic situation and We further develop our reporting its operating area. As a leading and efficiency in our Koskenkorva plant. We use our valuable restructuration of agriculture towards larger production responsible actor, our starting point is to raw material barley effectively utilising all the fractions units create risks, but also opportunities for the business. Our development as a responsible actor is directed achieve compliance with the industry’s to produce grain alcohol, starch and feed. We further A number of our operating countries tighten constantly by the Council of State decision-in-principle made in best practices and adapt standards relating to the key enhance material efficiency at all our plants. taxation of alcohol, which means that traveller imports November 3, 2011 on Finnish state ownership policy. The competitors at the minimum. and cross-border trade will increase. In addition, the underlying factors of the ownership policy are socially The environmental objectives for the year 2011 were restrictions relating to the country-specific advertising and economically sustainable business result as well as We have set ambitious long-term objectives for Altia realised as we planned; we managed to reduce the regulations will expand, although alcoholic beverages are increasing the shareholder value in a sustainable and concerning financial responsibility. It provides a solid chemical oxygen demand (COD) of waste water and the marketed across borders on the internet. responsible way, which manages to take into account basis for future development and creates conditions value of disposable packaging material. Considering the different stakeholders. also for social and environmental responsibility. The reduction of water and energy consumption, the overall Significant growth is not expected in the Nordic markets economy is the foundation of everything, but the creation objectives were achieved, although in some units we did of alcoholic beverages with the exception of a slight The owner also emphasises transparency, which should of real added value relates essentially to the solidarity, not achieve the objectives set for each facility. increase in wine sales. According to our strategy, we be reflected in the company’s reporting, remuneration cooperation with all the people working towards our are looking for growth in our operating area through and activities in general. According to this goal, we common goals. Protection of groundwater and soil is important to us, company and brand acquisitions. We aim to achieve have released a detailed salary and remuneration report due to the fact that clean groundwater is a central raw geographical growth in the growing market of Eastern relating to the year 2011. The priorities for the next three to five years are growth material for producing alcoholic beverages. Thus we Europe in the coming years. in the Nordic and in the Baltic countries as well as in applied conservation for the Kurkisuo area located close The indicators considering the reporting of responsibility Eastern Europe, and rationalization of the supply chain to the water pumping area at the Rajamäki plant during REsponsibility for the whole supply chain issues were determined in the decision-in-principle. and development of personnel’s expertise. 2011. Altia has protected other swamp areas for the same Our reporting does not yet correspond to all new reason in the past. The Nordic Alcohol Monopolies, Alko in Finland, requirements of the owner, but we will seek our THE year of development – 2011 Systembolaget in Sweden and Vinmonopolet in possibilities to further develop our reporting. Taxation of alcohol increases Norway, have been working for years together to ensure Year 2011 was time of development for Altia. We created responsibility of the purchasing activity. The ethical plans for our HR activities in the coming years and Climate change affecting to grain and grape harvests principles adopted by the Monopolies highlight working the close cooperation with our personnel paid off, and prices, consumers’ growing interest in the products’ conditions, human rights and environmental issues as when we agreed to harmonise the wage structure. The country of origin, ecological factors and product safety well as measures against corruption. harmonisation ensures that everybody has an equal and as well as the environmental impacts of production fair salary in the production plants in Finland. In Sweden and transportation are the underlying factors affecting During 2011, we started a pilot project with Alko in and Denmark, Altia’s 280 new employees worked a full responsibility. These will be reflected in consumer Chile, through which we are looking for experiences in first year as part of our organisation. behavior in the future, and also in Altia’s production, use evaluating responsibility issues relating to supply chain of energy, transportation, packaging and choices related with multiple stages. We have also implemented a system, to purchasing. which is used to collect information on responsibility Antti Pankakoski issues of our partners who deliver alcoholic beverages. CEO 32 | 33 Altia responsibility report 2011 Framework for sustainable development _Framework and FINANCIAL RESPONSIBILITY - profitable, competitive and efficient business operations - creating economic value for the owners definition of reporting - creating well-being near the plants

ENVIRONMENTAL RESPONSIBILITY - continuous decrease of the load caused by the This is the fourth responsibility report of Altia and The owner expects Altia to: operations and continuous improvement of the it has been prepared in accordance with sustainable condition of the environment development recommendations in the Global - create economic value added to the owner taking into - ensuring the quality of raw materials used, the Reporting Initiative (GRI, G3) reporting framework. consideration stakeholders quality of groundwater in particular Recommendations have been taken into account in - pay special attention to personnel and environment - environmentally sound and economical use of natural the best possible way. Responsibility is described from - manage administrative, social and environmental risks resources the view point of the whole Group, with the exception - fulfill international agreements and regulations of environmental obligations which focus on the SOCIAL RESPONSIBILITY environmental impacts of Altia’s own production. Our key interaction channels towards the owner and - well-being and personnel development political decision-makers are: - work safety The previous responsibility report was published as a - product safety part of the annual report 2010. Altia will publish its - reporting - responsible marketing responsibility report in the context of annual reporting - interaction between the entity and the owner also in the future. Corporate responsibility is reported with the corresponding indicators as in the previous Authorities reports. In addition, the indicators required by the owner will be added to the report if the information is available Altia’s activities are monitored by regulatory authorities. concerning the year 2011. The key regulatory authorities are authorities who monitor sales and distribution of alcoholic beverages, food Altia’s opportunities to monitor and affect the authorities as well as environmental and safety authorities, environmental impacts of the production chain “from who require compliance with legislative and other field to bottle” are essential and significant for Altia’s own regulatory requirements as well as product safety from the production in proportion to the products imported from Altia Group. partners from all over the world. Risks and opportunities related to own production are also in other respects Our key interaction channels towards the authorities are significant compared to those of imported products. auditing processes and reports.

Stakeholders Customers Growth strategy The probable stakeholders using the report are Altia’s Our customers are retail sales monopolies in Finland, Continuous improvement improvement Continuous key stakeholders: owner and political decision-makers, Sweden and Norway, wholesalers of alcoholic beverages, authorities, customers, personnel, partners, farmers as restaurants, grocery stores, travel sales and importers in and reporting and Corporate well as material and raw material suppliers. export market. Altia also produces and packages alcoholic beverages to other alcoholic beverage companies. In responsi- Owner and political decision-makers addition to alcoholic beverage customers, our customers are customers of starch and feed products, and customers

Interest groups bility The State of Finland owns 100 percent of Altia. The of chemical and pharmaceutical industry concerning Ownership Steering Department of the Prime Minister’s technical ethanol. Office is responsible for the company’s corporate Business principles governance. In addition to the instructions and orders given by the state-owner, the company complies with the Finnish Corporate Governance Code 2010 with the exception mentioned at the end of Altia’s corporate governance and control statement 2011 (financial statement page 86). 34 | 35 Altia responsibility report 2011

The expectations of our customers relate to profitable Our key interaction channels towards our partners, growth of the business, long-term and mutually beneficial farmers as well as material and raw material suppliers are: business relationships, high-quality products which customers are interested in as well as trustworthiness and - meetings, events and other personal interaction delivery reliability. - reporting and newsletters _Financial responsibility - requests for proposals and contracts Our key interaction channels towards our customers are: - fairs and other events - farmer extranet For Altia, financial responsibility stands for creating added value to the shareholders. Sound financial - customer meetings and other personal interaction performance enables persistent development of operations and investing in the well-being of employees. - customer magazines, electronic channels Certificates Profitable growth, good customer relationships, ongoing development of brands and cooperation with the - customer training Altia’s management system has been approved by partners, skilful personnel, development of practices and processes, as well as knowledge of consumers form the basis for creating added value. Personnel Lloyd’s Register Quality Assurance to the following Quality, Environmental and Safety Management System Our own personnel expects Altia as an employer to take Standards: OHSAS 18001:2007, ISO 14001:2004 and actions that maintain and develop job satisfaction and ISO 9001:2008. safety, as well as to perform high-quality leadership and Added value to the stakeholders offer development and career possibilities. Employees are The scope of this approval is applicable to Altia’s alcoholic also interested in the company’s future plans and their beverages, grain spirits, barley starch, technical ethanol DIRECT EFFECT: ALTIA 2011 (2010) INDIRECT EFFECT impact on employment. and feed business processes in Finland including the related technical and administrative support functions. Customers: Customers: Our key interaction channels towards our personnel are: Altia receives revenues from the sales of alcoholic EUR 524,8 million Altia offers to its customers unique and In Denmark, the Svendborg plant has been approved beverages as well as industrial services, feed, (EUR 4 87,9 million) the most comprehensive product range - leadership communication by Lloyd’s Register Quality Assurance to the following starch, technical ethanol and carbon dioxide. of its operating area. - internal communication Quality and Environmental Management Standards: - training ISO 14001:2004 and ISO 9001:2008. Employees: EUR 73,1 million Employees: - development discussions Altia pays salaries, commissions and other Altia builds for its personnel of more than - cooperation and health and safety issues at work The scope of this approval is applicable to wine and indirect costs for employers.* 1,100 persons a corporate culture which (EUR 63,7 million) helps to support work-related well-being. - HR presence in executive management teams of the alcoholic beverage bottling and distribution. Bottling businesses takes place in accordance with Good Manufacturing - cooperation groups especially relating to the Practices (GMP) to the appropriate extent. In addition, Suppliers: EUR 324,1 million Suppliers: Altia buys raw material, goods and services Altia creates additional value for suppliers by development of culture and knowhow the plant has International Food Standard, version 5 from local and international suppliers. EUR 313,0 million the joint development work between varieties - team practices product safety certificate which has been approved by SAI ( ) of grain, packaging solutions and flavor - personnel information Global. selections of the products.

Partners, farmers as well as material and Public sector: EUR 534,1 million Public sector: raw material suppliers Altia pays excise and income taxes to society. Altia takes financial responsibility by taking Excise taxes are not included in turnover. ** (EUR 475,5 million) care of taxes and social contributions and Alcoholic beverages supplying partners, barley farmers, creating jobs in Altia and for suppliers. and material and raw material suppliers are waiting for profitable business growth, mutually beneficial, Investments EUR 6,1 million developing and long-term business relationships, as well as good liquidity from Altia. (EUR 106,4 million)

Dividends to shareholders *** EUR 7,192 million (EUR 0 million)

* Altia paid in total EUR 33,2 (20.4) million to its farmer partners for the barley used. **Taxes paid in Finland amounted to EUR 249,5 (254.6) million. *** The Board of Directors proposes to the General Meeting that it pays EUR 7,192 million as dividends from the net income in 2011.

Grants and donations: Altia does not give grants or donations with the exception of small-scale, EUR 0,1 (0.1) million, participation in events in the plant locations. Grants and donations are not distributed to any political parties or actors.

36 | 37 Altia responsibility report 2011

In accordance with the energy efficiency program, Altia Optimisation of the use of waste water pools completed is committed to reduce its use of energy by 9% from the during the previous year was continued in the level of 2005 by the year 2016. By the end of the year 2011, Koskenkorva plant. In addition, water and waste pipelines _Environmental energy saving amounted to 2,554 MWh or 5.5 % compared were improved as well as internal water circulation of to the level of 2010 and 6,852 MWh or 13.1 % compared to processes were made more efficient, which reduced the use the level of 2005. of water and the amount of waste water. The heat recovery responsibility was made more efficient by installing condensers to the Environmental investments and operations process. To the water separation of the fibre, a new system development was installed, which made it possible to reduce the energy used in drying and at the same time the plant’s hygiene In 2011, the environmental investments made in the level was enhanced. The stone peeling project of barley Key environmental impacts of Altia are related to the Koskenkorva grain spirit plant as well Rajamäki plant amounted to EUR 1.25 million. The was launched and through the project it will be possible as the operations at the alcoholic beverage plants in Rajamäki and Svendborg in Denmark, most important targets of the investments were a partial to attain more barley peels in the future for burning renewal of clean water pipelines, the separation of the purposes in the power plant. Renewable and burnable which was acquired in 2010. The Tabasalu alcoholic beverage plant, which serves the rainwater from the waste water in the plant area through fractions, such as barley peel and distillation fractions, Baltic markets, has significantly lower production volume than the other plants, thus its changes in the sewer system, the utilisation of the waste are utilised in the energy production of the Koskenkorva environmental impacts are also smaller. energy from compressed air and steam network for plant, which takes part in emissions trading. heating the water, survey of the leakage points in the compressed air network, constructing a new waste station FURTHER INFORMATION ON THE ENERGY in the plant area and dismantling redundant buildings or EFFICIENCY AGREEMENT: The Koskenkorva plant, which is Finland’s largest user of In addition, the environmental targets for sales and discontinuation of their heating. www.ek.fi/ek/en/energy_and_climate/energy_efficiency.php barley, used 180.2 million kilos of barley for production in marketing in Finland was to reduce the value (EUR) of 2011. This amount was used to produce 22.3 (23.9) million disposable packaging material. kilos of grain spirit, 49.6 (39.2) million kilos of starch and 63.4 (56.8) million kilos of feed. The Rajamäki, Svendborg Target levels have been defined for all environmental and Tabasalu plants produced 53.9, 34.3 and 4.3 million targets. Environmental targets for 2011 were realised Environment, Quality and Safety Organization litres of alcoholic beverages. according to the plan concerning the reduction in chemical oxygen demand of waste water as well as At the Koskenkorva, Rajamäki and Svendborg plants reduction in the value of disposable packaging material. Operational Executive Management Team as well as relating to the support functions, sales Development and marketing of the Helsinki headquarters, the Concerning the usage of energy, the Koskenkorva plant Manager environmental management systems have been accredited performed better than the target level and respectively with the ISO 14001 standard. The Tabasalu plant the Rajamäki and Svendborg plants were slightly below complies with the applicable Estonian environmental the target level. The Koskenkorva plant succeeded in Technical Supply Chain Brands Trading Support standards and regulations issued by the authorities. achieving better usage level of groundwater than the ethanol Functions Environmental systems are developed through regular target level, the Svendborg plant was almost consistent audits and common practises, such as harmonisation of with the target whereas Rajamäki did not reach the target Svendborg Rajamäki Kosken- Tabasalu the assessment of environmental aspects. Energy and level. Part of the reason for this was the changes in the plant plant korva plant plant environmental aspects are taken into account in planning waste water amounts which were included to the target. and execution of production processes and investments in For the year 2012, the method of determining the usage of production. water will be defined more precisely for Rajamäki. Management review twice Specialist for environmental issues a year The Quality, Safety and Environmental principles were Progress in energy saving updated during the reporting period in 2011 to coincide better with the Group’s operations. The environmental The energy costs for the Altia’s plants (excluding logistics targets and environmental programmes for the operations centres and office space) amounted to approximately EUR in Finland and Denmark were also updated for the time 7 million in 2011. Energy saving measures are a central period of 2010–2012. The environmental targets were as development area for Altia both with regard to business follows: profitability and environment.

- reduction in the usage of energy in relation to The target level of reduction in the use of energy is based production, on the voluntary energy efficiency agreement of the - reduction in the usage of groundwater in relation to Confederation of Finnish Industries (EK) and the State of production, and Finland, which Altia joined in 2008. - reduction in chemical oxygen demand (COD) of waste water in relation to production. 38 | 39 Altia responsibility report 2011

Altia’s quality, The sewer system in the Svendborg plant was also renewed Environmental commitments materialised to separate rainwater from waste water. The quality of safety and the waste water was enhanced for example by removing Environmental commitments as well as the target levels environmental principles the amount of the sediment through filtering. Energy adjusted by the municipality realized in the Rajamäki, saving was improved by making a survey of the optimal Koskenkorva, Svendborg and Tabasalu plants during 2011. use of the air conditioning as well as of the temperature • In developing our operations and products, we pay attention to the reduction potentials of the natural gas boiler. Environmental accidents and deviations are recorded in wishes and needs of our clients and partners. We produce added value deviation reports and repairing measures are regularly by providing profitable, high-quality products and services while Altia Group Company A-Pullo Oy centrally managed monitored. During 2011, no significant environmental taking into consideration the safety of the environment and our the bottle return system for refillable alcoholic beverage damages took place and stakeholders did not present employees. bottles in Finland. At the same time, Altia prepared to any environmental concerns. No penalties were paid • We ensure the safety of our own products and products marketed by implement a return system for recyclable glass bottles, during the period under review from overrunning the us, when used in moderation. We use first-class groundwater and which means for example finishing the washing of the permit provisions or neglecting environmental laws or other high-grade raw materials in our production process. bottles and thus reducing the amounts of energy usage, regulations. • We particularly invest in: detergents, water and waste water in the Rajamäki plant. - the effectiveness of our business processes Emissions trading - efficient use and recycling of energy, natural resources and Work to protect groundwater and soil materials Distilling is energy intensive activity, which emphasizes - preventing environmental degradation Protection of groundwater and soil is important to Altia the importance of emissions trading for Altia. - improving work safety, preventive occupational health care due to the fact that the clean groundwater is a central raw Approximately 90 % of the energy used in Altia’s and reporting close calls material for producing alcoholic beverages. Altia protects production is used in the Koskenkorva plant, where grain • Our marketing strategies comply with the CEPS Charter on water pumping plants in Finland with land ownerships spirit is distilled from barley. Responsible Alcohol Consumption and the EFRD Common at the groundwater areas of the pumping plants as well Standards for Commercial Communications. as with the construction limits relating to these areas, Altia’s emission allowances received in 2011 amounted to • We value an honest and open relationship with our stakeholders. the environmental protection areas, making statements 54,632 CO2 tonnes, and the actual emissions amounted • Complying with relevant laws, decrees and authority regulations are at relating to the construction works or the use of land at the to 38,863 CO2 tonnes. The total quantity of emission the core of our operations. neighboring areas as well as with the help of monitoring allowances at the end of 2011 was 80,413 CO2 tonnes, • Each one of us promotes activities in accordance with quality, safety, the land-use of the areas. At the Svendborg plant in including unused emission allowances worth of EUR 1.17 and environmental policies in our work and at our workplace. Denmark, Altia uses tap water from the municipality, million from the prior years. which meets the standards of drinking water as well as the regulatory requirements.

The Company applied conservation during the reporting period for the Kurkisuo area which is located nearby of the Rajamäki plant’s water pumping area. The area designated as a nature conservation area would be 144.1 hectares.

Kurkisuo is important area for the threatened plant species and for the types of swamp nature in Uusimaa. Despite surrounding drainages, many types of swamp nature have survived in natural state. Kurkisuo is a part of the raise bogs in the coastal areas of Finland and is one of the ten nationally important swamps.

In Petkelsuo in Hyvinkää, Altia has a 7.5 hectares wide conservation area that is part of the national swamp protection programme. Altia’s operations do not affect the nature of the protected area. 40 | 41 Altia responsibility report 2011

High waste recycling rate process stage with separate operations. Indicators and their utilisation in business operations will be further Key environmental figures for Key environmental figures for The waste recycling rate for Altia’s plants was high. The developed. production 2009 - 2010 production 2011 average waste recycling rate was 89.2 % in Rajamäki, Koskenkorva and Svendborg. The target of reducing the Material efficiency is at its peak regarding the utilisation 2009 2010 2011 amount of waste in Finland is carried out by reducing the of our valuable raw material, barley seed in the amount of disposable packaging material. In addition, Koskenkorva plant. It is utilised 100 percently to produce Use of barley (million kg) 116 164 Use of barley (million kg) 180 the unqualified quality requirements, for example the grain spirit, starch and feed. The remaining peels are Natural gas (GWh) 1 5 482 Natural gas (GWh)(1) 4 607 unpacked products from the incorrect packaging are burned in the power station of the Koskenkorva plant. Steam consumption (GWh) 150 165 Steam consumption (GWh) direct (3) 0 distilled in order to be applicable for technical use. Use of electricity (GWh) 45 51 Steam consumption (GWh) indirect (4) 161 The environmental awareness of the personnel Water consumption (1000 m3) 1 076 1292 Electricity consumption (GWh) direct 4,3 3 Products packed near consumers is developed and maintained through intranet, Amount of waste water (1000 m ) 479 533 Electricity consumption (GWh) indirect 41,5 (2) environmental objectives and their follow-up meetings, CO2 emissions / fossil (t) 39 039 48 475 Light Fuel Oil consumption (GWh) 0 3 Many of the Altia’s own wine products are transported bulletin boards of the plants and through environmental CO2 emissions / renewable (t) 8 354 9 501 Water consumption (1000 m ) 1 210 3 as large batches to the bottling plants, where they are audits. SO2 emission into the air (t) 23 23 Amount of waste water (1000 m ) 456 NO emissions into the air (t) 41 48 packed by Altia and which are also located close to the X CO2 emissions / fossil (t) direct 44 977 VOC emissions (t) 6 6 CO emissions / fossil (t) indirect 2 327 consumers. By operating like this, we will be able to 2 Particle emissions into the air (1000 t) 3 3 CO emissions / renewable (t) direct 9 279 rationalise transports, since the bottles do not have to be 2 Waste amounts (t) CO emissions / renewable (t) indirect 0 transported from the country of origin. 2 – hazardous waste 12 35 SO2 emissions into air (t) direct 22,6

– landfill waste 138 1 255 SO2 emissions into air (t) indirect 0,2

We enhance material efficiency – utilised waste NOx emissions into air (t) direct 45

– energy utilisation 4 879 5 857 NOz emissions into air (t) indirect 2 Altia measures the production efficiency and hence also – other utilisation 7 016 6 698 VOC emission (t) direct 0 the material efficiency. The main indicators are cents/ Environmental costs (EUR million) VOC emission (t) indirect 8 litre and in the Koskenkorva plant cents/ton of grain – investments in environmental protection 0,1 0,9 Particle emissions into air (1,000 t) direct 0,003 spirit. The rationalisation work is carried out in every – costs of environmental protection 1,6 2,2 Particle emissions into air (1,000 t) indirect 0,004 – profits from environmental protection 0,6 0,9 Waste amounts (t) Hazardous waste 4 6,5 Energy Figures for 2009 do not include the Svenborg plant. Landfill waste 1 629 Alcoholic beverages, Recycled waste other raw materials Utilized as energy 5 486 and supplies Other utilization 7 407 Material flows and factors affecting the Environmental expenses (EUR million) Environment investments 1,3 environment for the Koskenkorva, Rajamäki Environment costs 1,5 and Svendborg plants in 2011 Transport Environment income 1,2 Environment responsibilities Transport Svendborg plant AlkoholijuomatAlcoholicAlkoholijuomat beverages Electric Grain spirit Emissions energy Energy into the air Peat Alcoholic beverages, other raw materials and supplies Power station Energy of the Kosken- Transport korva plant

Barley Transport Alcoholic beverages Water Koskenkorva Rajamäki plant plant Technical ethanol Other raw materials Grain spirit So far, there is no consistent information available concerning Altia’s measures to reduce greenhouse gas emissions, consumption of important materials relating to the operations (by weight or volume), transportation of products and materials Barley Starch Feed Car- Landfill Sewage Waste Waste and significant environmental impacts resulting from the peels bon waste energy material Water commutes. diox- utilisa- utilisa- ide tion tion 42 | 43 Altia responsibility report 2011 44 | 45 Altia responsibility report 2011

IN GOOD _Social responsibility COMPANY

The key areas of Altia’s social responsibility are its own personnel, responsible marketing as well as product safety. Our social responsibility is expanded to include the whole production chain of products, since the Finnish, Swedish and Norwegian alcohol monopolies have incorporated a Code of Conduct based on the principles of the labor organization ILO in their contracts.

Altia has approximately 1,200 employees in six different Performance Culture Optimal organization We promote equality countries. The operating principles of our personnel policy include fairness, openness, internationality and In the end of 2011, Altia prepared to commence Group- The optimal organization we pursue takes advantage of We ensure that equality is realized in our daily operations equality. Internationality means equality between wide Performance Culture work as part of its human collective knowhow and is flexible and low in hierarchy. It with several different actions. We develop the working countries, which increases the diversity of management. resource operations. The topic was chosen as one of Altia’s is essential to have the persons with the right knowledge conditions to be suitable for both men and women. Tasks Improvement of managerial work and leadership is our strategic focus areas in 2012 and the work will continue in the right roles. We utilize strategic projects and change are not intentionally classified as either women’s or men’s current development undertaking. until the year 2015. support as tools towards optimal organization. work. Open positions can be applied by both women and men. Job advertising is conducted in a way that it promotes Right people in the right positions Performance Culture includes among others the story Uniform procedures throughout the the gravitation of both women and men to open positions. of Altia and the basic pillars of corporate culture, good operating area The employer promotes women’s and men’s equal placing Our personnel target is to enable the best possible leadership, human resources promise, remuneration in different tasks as well as creates uniform opportunities performance of our personnel as well as a corporate policies, clear indication of direction and an organization The key processes of human resource work, among others for all for further education and advancing career. culture promoting success. Altia follows labor market enabling this. Special attention is paid to desired behavior. compensation, orientation, recruitment and development contracts and develops its personnel policy continuously A survey covering all operating countries was conducted discussions, will be uniformed, which will facilitate The employer executes the principle of equal and with initiative. to outline the operational plan for the Performance managerial work in the future. Providing equivalent level remuneration, which means that equal remuneration Culture work. Based on the survey, Altia’s personnel are of professional support for all supervisors and the whole is paid to women and men for the same work. Diverse During 2011, our key human resources procedures willing to build a common Altia and they expect their personnel, transparency, uniform tools and compliance with work skills are developed fairly. Benefit and remuneration included the integration of 280 professionals into work community to be professional, cooperative and the legislation are central in human resources processes. The practice is equal to everyone. Well-being at work, worker Altia’s organization after the company acquired, in flexible. same principles are followed throughout the operating area, protection and occupational health care are developed addition to wine and spirits trademarks, production and applying the principles locally when necessary. evenly for both women and men. The employer ensures logistics operations in Sweden and Denmark. Another Knowledge development that no one becomes a target for sexual harassment or major accomplishment was the harmonization of wage Open communication and dialogue bullying at the workplace. structure, which ensures equal and fair salaries in the As a responsible employer, Altia wants to offer its production facilities in Finland. personnel opportunities to develop. Seven new internal We want to emphasize open human resources There were seven members in Altia’s Board of Directors, trainings are being prepared as part of the first stage of communication to ensure the prerequisites of work and of which three were women. (In 2012, there are four Promoting the achievement of business goals by assuring knowledge development. We are also simultaneously availability of information. At the same time, we are women in the Board of Directors.) Of the six members in the recruitment of the right persons and by ensuring the drafting the grand lines of knowledge development to building corporate culture and Altia’s employer image. the Executive Management Team, one is a woman. commitment, motivation and continuous development of ensure sufficient knowhow of the personnel and its ability The development of a new and more interactive intranet personnel forms the core of our personnel strategy. Year to change. was started in 2011. In Altia, employment relationships are mainly based on 2011 was a year of reorganization for our human resources contracts of indefinite duration. The turnover of personnel function. Performance Culture, knowledge development, Development discussions are held with all members of The shop steward meeting between Altia’s senior varies by countries and is relatively low especially in the optimal organization, uniform procedures throughout the the personnel during the year. Development discussions management and shop stewards is arranged at least twice plant locations. Corresponding benefits are offered to operating area and communication were defined as the related to setting and achievements of goals for the entire a year. The topics discussed in the meetings include, e.g. full-time and temporary employers regarding the central focus areas for 2012 - 2014. year are held in the spring. Development discussions Altia’s performance, future prospects, business operations, functions. held with the personnel in the fall relate to knowledge matters related to the position of the personnel and development. common plans. 46 | 47 Altia responsibility report 2011

A A A A A A

Average number of DEVELOPMENT Personnel by business area TYPE OF The percentage of Personnel by group 2011 personnel by country OF THE NUMBER 2011 EMPLOYMENT 2011 full-time and part-time 2011 OF PERSONNEL employees 2011 Total 1178 2007-2011 Total 1178 07 08 09 10 11

162 1178 Brands 1122 1135 1108 Trading 99 908 Industrial Services 71 Supply Chain and Permanent 93,4% Workers 456 Finland 566 Support Functions 847 FULL-TIME 87,5% Temporary 6,6% PART-TIME 12,5% Clerical employees 722 Denmark 198 Total 1178 Sweden 193 Baltic Countries 152 Norway 70

industry. Sick leaves are tried to be reduced by e.g. the Performance and production bonus Altia Group’s Executive Management Team and the key Well-being at work application of the early support model. In the Svendborg programs personnel of business operations are part of a long-term plant, the sick leave rate is higher than in Finland. Altia’s incentive plan executed in accordance with the guidance Due to the circumstances no personnel survey was plants in Finland have a plant specific accident frequency Altia’s entire personnel are part of either annual on management remuneration and retirement benefits exceptionally carried out during 2011 but it is planned to and sick leave rate targets. The targets were not reached performance bonus or production bonus programs. Altia’s in a State-owned company. The profit for 2011 included be conducted again in 2012. during 2011. clerical and managerial employees and management are a provision of EUR 2.5 (1.1) million with social expenses part of annual performance bonus program applied in relating to the plan in question. The personnel’s ability to work and well-being were The number of accidents at work and near-miss Altia Group. The potential annual performance bonus is supported with early support model as well as a health situations is regularly monitored in Altia. There were no based on budgeted operative performance targets at the Reorganization and layoffs campaign and work ability day in Finland. Common employment related fatalities during 2011. Group level. events for the personnel are also arranged in other Terminations of employment are aimed to be avoided. operating countries on a yearly basis. Altia has arranged its personnel a comprehensive Other working employees are part of production bonus In potential employment termination situations, the occupational health care exceeding the requirements program. The profit for the period 2011 included a discharged are supported when applicable by using a Occupational health and safety stipulated by legislation in the whole operating area. performance bonus provision of EUR 5.4 (4.0) million replacement service. The occupational health care also In Finland, the benefits also include extensive medical with social expenses. Based on the profit for the provides special support if needed. There were no layoffs Absence from work due to illness in Koskenkorva and expense insurance. comparable period, annual performance bonuses of EUR during 2011. Rajamäki plants were below the average in the food 4.1 million including social expenses were paid in 2011. 48 | 49 Altia responsibility report 2011

Our marketing is responsible Koskenkorva plant used 180.2 (164) million kilos of _We follow responsible domestic barley to produce 22.3 (23.9) million kilos of Marketing alcoholic beverages is highly regulated in grain spirits, 49.6 (39.2) million kilos of starch and 63.4 many of our countries of operation. In addition to legal (56.8) million kilos of forage. business principles regulation, Altia Group has voluntarily committed to execute in its alcoholic beverage marketing the actions Cognacs and wines were subcontracted for 3.0 (0.5) to reduce the harmful effects of alcohol enshrined in the million liters. Roadmap 2015 published by the European Confederation of Spirits Producers (CEPS), as well as to follow EFRD’s Ethical principles of monopolies’ (European Forum for Responsible Drinking) Common procurement Standards on Commercial Communication. The main As an international company, Altia wants to ensure that the guidance on business principle is that alcohol beverages can be marketed in a Alko and other Nordic alcohol monopolies have created principles is explicit. Our business operations must be honest, incorruptible and fair. responsible and appropriate manner only to adults. common ethical principles for responsible procurement. The goal of the alcohol monopolies’ responsible Further information: procurement is to ensure that the products sold by www.efrd.org and www.europeanspirits.org the monopolies are produced in socially acceptable production conditions. Business Principles the regulations in the Charter on Responsible Alcohol Our products are traceable Consumption published by the European Confederation In accordance with the goals of the Inter-Nordic Standard of Conduct of Spirits Producers CEPS, as well as EFRD’s (European Consumer should always ensure the safety and origin of project, the alcohol monopolies incorporated the ethical We operate honestly, with integrity and openly. Forum for Responsible Drinking) Common Standards on acquired alcoholic beverage. Altia’s products are safe when principles (The Business Social Compliance Initiative Commercial Communications. consumed with reason. We analyze a product we have Code of Conduct) as part of the contracts with alcohol Legality produced or imported for free if a consumer has a reason beverage suppliers from beginning of 2012. Altia’s sales We comply with the laws, regulations and industry codes Shareholders to doubt the authenticity of the product. One should and marketing companies have signed an assertion, of the countries in which we operate. We operate according to the accepted principles of contact the nearest police authority if fraud or methanol based on which they are committed to the social and corporate governance. is suspected. environmental regulation of the Code of Conduct. Employees We respect and promote basic human rights and Business Partners Altia’s own products are continuously traceable to the The companies need to ensure that the Code of Conduct international labour standards in accordance with the Altia maintains mutually beneficial relationships with specific production lots of the packaging and raw material is followed throughout their supply chain. In Altia, United Nation’s Universal Declaration of Human Rights its suppliers, customers and business partners. Our producers. Continuous quality control is part of the this is executed by the sales and marketing companies and the most central agreements of the International business relationships are based on honesty and trust. company’s risk management process. The Group has a collecting an electronic questionnaire from their partners Labour Organization. We respect diversity and promote We guarantee the confidentiality of ours and our product liability insurance covering all business units for with information on how they have taken care of the equal treatment and equal possibilities in recruitment, business partners’ business secrets, as well as preserve any unexpected accidents. focus areas of the Code of Conduct, mainly the labor employment, personnel development and career all confidential information that we acquire in our and human rights based on ILO’s principles, in their advancement independent of race, religion, political operations. We expect our business partners to observe Methanol analyses documented on a daily basis are taken own operations. If deficiencies are detected, the partners opinion, gender, age, nationality, sexual orientation, principles consistent with our own. from the certified production process of Koskenkorva are supported in the development work of responsibility marital status and disabilities. We do not employ child plant. In addition, ethanol samples are analyzed in the where necessary. labour or forced labour. Environment official alcohol inspection laboratory of the EU, Alcohol We take care of the environmental impacts of our Control Laboratory (ACL). Besides the analyses in the Altia launched a pilot program with Alko in Chile in We hire, employ and promote employees based solely on operations and strive to reduce the environmental impacts grain spirits production plant, Rajamäki plant examines the fall of 2011, in which Alko audits our significant the competence and skills required to handle the tasks. of our operations as part of our sustainable business. every received raw material lot. Also Svendborg bottling wine producer and its suppliers of grapes. The pilot aims We strive to offer all our employees safe and healthy facility and Tabasalu plant have their own quality control at gaining knowledge and experience for responsible working conditions. We are committed to working with Competition laboratories. development of operations. employees to develop and enhance each individual’s We believe in tough but fair competition and support skills and capabilities. We respect individual privacy and the development of appropriate competition legislation. During 2011, the Rajamäki alcoholic beverage plant the confidentiality of private information, as well as our We observe the principles of fair competition and all produced spirits and wines in total of 53.9 (54.9) million employees’ freedom of association. applicable regulations in our operations. liters. Svendborg alcoholic beverage plant produced 34.3 (33.8) million liters of alcoholic beverages. The total We are committed to responsible alcohol consumption Business Integrity production of Tabasalu alcohol beverage plant in Estonia and behave accordingly. We acknowledge responsibility We do not offer or accept, whether directly or indirectly, was 4.3 (3.2) million liters. for the company’s success and reputation. bribes or other improper benefits for business or financial gain. Similarly, we may not offer or accept any gifts or Consumers payments, which can be perceived as bribing. We do not We offer products and services, the price and quality of support, whether directly or indirectly, political parties which generate value for consumers. The products are or organisations. We also do not participate in financing safe when used responsibly. All Altia companies observe individual candidates’ election campaigns. 50 | 5051 Altia responsibility report 2011

_Comparing the report to the recommendation by Conflicts of Interest Global Reporting Initiative We avoid tasks or financial interests which could conflict with our responsibilities to the company. We may not misuse our position to gain an advantage for ourselves or 1. Strategy and analysis Included Page Economic perfromance indicators Included Page others. 1.1 CEO’s statement yes 30 - 31 EC1 Direct economic value generated and distributed yes 35 1.2 Key impacts, risks and opportunities yes 30 - 31 EC3 Coverage of the organisation’s defined benefit plan yes 46, FS 12-13 Observance – Monitoring – Reporting oblications Altia’s Board of Directors has approved these Business 2. Background description of the Principles which are part of our corporate culture. organisation Environmental indicators Compliance with the business principles is an essential 2.1 Name of the organisation yes 56 EN1 Materials used, by weight and quantity partly 41 element in the success of our operations. It is the task of 2.2. Primary brands, products and/or services yes FS 4 EN3 Main sources’ direct energy consumption yes 41 Altia’s Executive Management Team to ensure that all 2.3 Operative structure of the organisation yes FS 10-11, 61 EN8 Source-specific overall consumption of water yes 41 employees know, understand and observe these principles. 2.4 Location of the organisation’s headquarters yes FS 22 EN11 The location and size of owned, leased and controlled yes 38 2.5 Number and names of countries where the yes FS 8-9 land in conserved areas or their vicinity as well as in Day to day responsibility is delegated to the management organisation operates high biodiversity areas outside conserved areas of the operating companies and functions. They are 2.6 Nature of ownership and legal form yes FS 84 EN12 The key impacts of the organisation’s operations, yes 38 responsible for implementing these principles, if necessary 2.7 Market areas yes FS 8-9, 22 products and services on conserved areas and high 2.8 Scale of the reporting organisation yes FS 5, 10 biodiversity areas outside the conserved areas through more detailed guidance tailored to local needs. 2.9 Significant changes in the organisation yes FS 4 EN16 Direct and indirect overall greenhouse gas emissions yes 41 If we consider that our operations may not be in line with 2.10* Awards received in the reporting period yes 51 by weight the Business Principles or if we suspect any irregularities, EN20 Nitrogen and sulphur dioxide emissions (NO and SO yes 41 we will consult our supervisor or his/her supervisor. 3. Report parameters emissions) and other significant emissions into air, by type and weight REPORT DESCRIPTION EN22* Overall weight of waste by type and disposal method yes 41 EN24 As regards waste that has been classified as hazardous partly 41 3.1 Reporting period yes 33 in Appendices I, II and VIII of the Basel Convention 3.2 Date of most recent previous report yes 33 Annex, the weight ot transported, imported, 3.3 Reporting cycle yes 33 exported or treated waste and the relative proportion 3.4 Contact point for ordering the report and yes 50 of waste shipped internationally making related questions EN28 Regarding the neglect of environmental legislation yes 38 and regulations, the monetary value of the significant SCOPE AND LIMITATIONS OF THE REPORT fines imposed and the overall number of other penalties 3.5 Report content specification yes 32- 33 EN30* Environment protection’s overall expenses and partly 41 3.6* Boundary of the report yes 33 investments by type 3.7 Any specific limitations on the scope or no boundary of the report Social indicators 3.10* Explanation of re-statements yes 51 3.11* Significant changes from previous reporting yes 51 LA1 Total workforce by employment type, employment yes 46 - 47 periods in the scope, boundary or measurement contract and region methods LA3 Benefits provided for full-time employees that have yes 45 not been provided temporary or part-time employees GRI CONTENT INDEX LA12 The percentage of employees with whom regular yes 44 performance and career development reviews are 3.12 GRI content index yes 51 carried out S6 Total value of financial and in-kind contributions yes 35, 49 4. Governance, commitments and engagement to political parties, politicians, and related institutions by country GOVERNANCE S7* Total number of legal actions for anti-competitive yes 51 behaviour, anti-trust, and monopoly practices and 4.1 Governance structure of the organisation yes FS 84-85 their outcomes 4.2* Indicate whether the Chair of the highest yes FS 88, 90 governance body is also an executive officer 4.3 Number of members of the Board who are yes FS 88 independent and/or non-executive members 2.10 The company did not receive any awards during the reporting period. 4.4* Mechanisms for shareholders and employees to yes 52, FS 88 3.6 Environmental indicators are reported regarding plants excluding separate provide recommendations or direction to the logistics centers. highest governance body 3.10 The report does not include diverging information compared to the previous reports. STAKEHOLDER ENGAGEMENT 3.11 The reporting for 2011 included in the table on page 63 is more extensive than previously. 4.14 List of the organisation’s interest groups yes 33 - 34 4.2 The Chairman of the Board is not part of the executive management. 4.15* Interest group determination and selection basis partly 33 - 34 4.4 A representative of the owner acts as a member of the Board. We welcome any feedback on this report. 4.16 Approaches to stakeholder engagement yes 33 - 34 4.15 The selection is based on an internal questionnaire. Please contact corporate communications at EN22 The reported plants do not include information regarding Estonia. [email protected]. EN30 The reported plants do not include information regarding Estonia. * Comments S7 No legal proceedings or other actions regarding restrictions on competition FS = Financial Statements took place. 52 | 53 Altia annual report 2011 53 | 53 _Board of Directors

1. 2. 3. 4. 1.

Matti Tikkakoski b. 1953 Catarina Fagerholm b. 1963 Mikael Aro b. 1965 Ainomaija Haarla b. 1953 B.Sc. (econ.) M.Sc. (econ.) eMBA D.Sc. (tech). Mba

Independent of the company and the CEO of Instru optiikka Oy CEO of VR Group CEO of the Technology Academy shareholder, Member of the Board of Independent of the company and the Independent of the company and the Foundation 3. Altia since 2011 shareholder, Member of the Board of shareholder, Member of the Board of Independent of the company and the Chairman of the Board Altia since 2008 Altia since 2010 shareholder, Member of the Board of Chairman of the Nomination and Vice Chairman of the Board since 2010 Member of the Nomination and Altia since 2008 Compensation Committee Chairman of the Audit Committee Compensation Committee Member of the Audit Committee Member of the Audit Committee Member of the Supervisory Board of Member of the Board of Varma Chairman of the Board of Korona Member of the Board of Luottokunta Mutual Pension Insurance Company Invest Oy Componenta Plc Member of the Board of Atasun Chairman of the Board of Finnkino Oy Chairman of the Board of Korona Optik, Turkey Invest II Oy Main work experience Main work experience Member of the Board of Euro-CASE CEO of Atria Oyj (2006-2010) Main work experience Senior Vice President of Carlsberg 6. 4. Senior Vice President of År-Carton CEO of Bosch and Siemens Home breweries AS, Northern Europe Main work experience Group AB (2003-2005) Appliances Oy (1998-2005) (2007-2009) CEO of Pro Consilium Ltd Different management positions in Country Manager of AEG Home CEO of Oy Sinebrychoff Ab (2005-2007) (2007 - 2009) Huhtamäki Oyj (1980-2002) Appliances of Finland, Russia, Commercial Director of Oy Executive management positions in Estonia, Latvia and Lithuania (1996-1998) Sinebrychoff Ab (2003-2005) United Paper Mills Ltd and UPM- Kymmene Corp. (1979 - 1999 and 2001 - 2007) in Finland and abroad (in Germany 2002 - 2005) 5. Marketing Director of Metso Corp. (1999 - 2000) 5. 6. 7. 7.

Annikka Hurme b. 1964 Jarmo Kilpelä b. 1957 Markku Rönkkö b. 1951 M.Sc. (Food sciences) M.Sc. (Econ.) M.Sc. (Econ) 2.

Director of Valio Oy, Nordic Sales Senior Financial Counsellor, Prime Independent of the company and the and Distribution Minister’s Office, Ownership Steering shareholder, Member of the Board of Independent of the company and the Department Altia since 2006 shareholder, Member of the Board of Independent of the company, Member of the Audit Committee Altia since 2010 Member of the Board of Member of the Board of Digital Altia since 2011 Foodie Oy Main work experience Member of the Nomination and Vice Chairman of the Board of Hotel Director of Valio Oy, Perishable Compensation Committee Artos Oy Goods and Domestic Sales and Chairman of the Board of Hansel Ltd Vice Chairman of the Board of Marketing (2007-2010) Member of the Board of HAUS Osuuskunta KPY Director of Valio Oy, Marketing Finnish Institute of Public Member of the Board and Member of (2000-2007) Management Ltd the Audit Committee of Tulikivi Oyj Chairman of the Board of Voimatel Oy Main work experience Deputy Member of the Auditing Senior Financial Counsellor, Ministry Board of Central Chamber of of Finance (1996-2007) Commerce Head of Administration and Finance, Shareholder/Partner of Boardman Oy Government Guarantee Fund (1993-1996) Member of the Board of the Analyst, Bank of Finland (1992-1993) Orthodox Church Museum Head of Department, Deputy Foundation of Finland Director of Department, Corporate Analyst, Skopbank of Finland Plc Main work experience (1981-1992) CEO of Järvi-Suomen Portti Oy (2008-2011) CEO of Karelia-Upofloor Oy (2006-2007) CEO of Savon Voima Oyj (2004-2006) CEO of Olvi Oyj (1985-2004) Part-time auditor (APA) (1984-2003) 54 | 55 Altia annual report 2011 _Executive Management Team

1. 2. 3. 1.

Antti Pankakoski b. 1954 Sanna Hokkanen b. 1974 Joacim Hultin b.1967 3. M.SC. (laws) M.Sc. in behavioural science Bachelor of Arts in Economy

CEO ( 2007 – ) Senior Vice President, HR ( 2011 – ) Senior Vice President, Trading ( 2009 – )

Member of the Board of Finnish Food and Main work experience Main work experience Drink Industries’ Federation HR Director of Fujitsu Oy (2008-2010) Senior Vice President, Sweden and Portfolio Member of the Board of HOK-Elanto Senior HR Manager of Nokia Oyj (2004-2008) Management, Altia Plc (2007-2009) Member of the Board of Kristina Cruises Oyj HRD Manager of Nokia Oyj (2001-2004) Brand Manager, Purchasing Manager, 6. HR Director of Done Oyj (2000-2001) Commercial Manager and Managing Director, Main work experience HR Specialist of Nokia Oyj (1997-2000) Bibendum AB (1996-2007) CEO of Silja Line Oy (2003-2006) Product and Store Consultant, Director of Nordea Corporate Finance (2000-2002) Systembolaget (1995-1996) 2. Director of Kvärner A/S (1998-2000) CEO of Cunard Line Ltd (1996-1997) 5.

4. 4. 5. 6.

Kari Lampinen b. 1961 Tomi Tanninen b. 1967 Hannu Tuominen b. 1958 M.Sc. (econ) m.sc. (econ) M.sc. (eng)

Senior Vice President, Brands ( 2009 – ) CFO ( 2008 – ) Senior Vice President, Industrial Services and Supply Chain ( 2009 – )

Main work experience Main work experience Main work experience Country Manager, Fresh bakery products, Finance Director, Gustav Paulig Ltd Senior Vice President, Industrial Services Commercial Director, Marketing and Sales ( 1999 – 2008 ) and Production, Altia Plc (2008-2009) Director, Vaasan Oy (1999-2009) Business Controller, Gustav Paulig Ltd Division Director of Vaisala Oyj (1994-2007) Marketing Director, HK Ruokatalo Oyj (1994-1999) ( 1996 – 1998 ) Production Director of Vaisala Oyj (1992-1994) Director, Marketing, Sales and Product Finance Manager, Paulig Export Ltd Production Director of Fiskars Power Development, Broilertalo Oy/ ( 1995 – 1996 ) Systems Oyj (1990-1992) Kariniemi Oy (1989-1994) Product Marketing Manager of Product Manager and Key Account Manager, Fiskars Power Systems Oyj (1988-1990) Vaasanmylly Oy (Cultor Oyj) (1985-1989) Business Controller of Fiskars Power Systems Oyj (1986-1988) 56 | 57 Altia annual report 2011 _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 SE-115 28 Stockholm Tel. +47 21 50 18 00 Tel. +45 4 588 4020 Tel. +358 207 013 013 Shipping address: firstname.lastname [email protected] firstname.lastname Sandhamnsgatan 73 @altiacorporation.com www.altiadenmark.com @altiacorporation.com SE-115 28 Stockholm www.altiacorporation.com www.altiacorporation.com Postal address: P.O. Box 27144 Altia Denmark Logistics Center SE-102 52 Stockholm Best Buys international AS Gl. Højmevej 30 Altia Plc Tel. +46 8 557 790 00 Harbitzalléen 2a, 5th floor DK-5250 Odense SV Koskenkorva Plant firstname.lastname N-0275 Oslo Tel. +45 4 8880 3600 FI-61330 Koskenkorva @altiacorporation.com P.O. Box 473, Skøyen firstname.lastname Tel. +358 207 013 013 N-0213 Oslo @altiacorporation.com Altia Sweden AB Tel. +47 21 50 18 00 Altia Plc Logistics Center [email protected] Altia Denmark Svendborg Plant Rajamäki Plant Visiting and shipping address: Rødeledsvej 70 Valta-akseli Transportvägen 7 Bibendum AS DK-5700 Svendborg FI-05200 Rajamäki SE-11743 Stockholm Harbitzalléen 2a, 5th floor Tel. +45 4 8880 3600 Tel. +358 207 013 013 Postal address: P.O. Box 27144 N-0275 Oslo firstname.lastname SE-102 52 Stockholm P.O. Box 476, Skøyen @altiacorporation.com Altia Finland Invoicing address: Altia Sweden N-0213 Oslo (sales and marketing unit) AB Fack 880187 R088 Tel. +47 21 50 18 00 ESTONIA Porkkalankatu 22 A SE-10637 Stockholm [email protected] FI-00180 Helsinki Tel. +46 8 450 47 00 www.bibendum.no Altia Eesti AS Tel. +358 207 013 013 firstname.lastname Tammi tee 30 [email protected] @altiacorporation.com InterBev AS Laabi küla, Tabasalu sjsk www.viinimaa.fi Harbitzalléen 2a, 5th floor EE-76901 Harjumaa Altia Sweden Services AB N-0275 Oslo P.O. Tel. +372 671 2000 SkyCellar ltd Sandhamnsgatan 63 A Box 422, Skøyen [email protected] Porkkalankatu 22 A P.O. Box 27084 N-0213 Oslo www.altia.ee FI-00180 Helsinki SE-10251 Stockholm Tel. +47 21 50 18 00 Tel. +358 207 013 011 Tel. +46 8 598 110 00 [email protected] Latvia [email protected] firstname.lastname www.skycellar.fi @altiacorporation.com Strøm AS SIA Mobil Plus Harbitzalléen 2a, 5th floor Kuldigas iela 36a Roal ltd BevCo AB N-0275 Oslo LV-1083, Riga Tykkimäentie 15 Sandhamnsgatan 63 C P.O. Box 459, Skøyen Tel. +371 67 62 8884 FI-05200 Rajamäki P.O. Box 27084 N-0213 Oslo [email protected] Tel. +358 9 290 420 SE-10251 Stockholm Tel. +47 21 50 18 00 [email protected] Tel. +46 8 557 790 09 [email protected] www.strom.no Oy Wennerco Ab Bibendum AB Porkkalankatu 22 A Sandhamnsgatan 63 A FI-00180 Helsinki P.O. Box 27084 Tel. +358 207 013 012 SE-10251 Stockholm [email protected] Tel. +46 8 598 111 00 www.mikaviini.fi [email protected] Altia Oyj Porkkalankatu 22 A Philipson Söderberg AB PL 350 Sandhamnsgatan 63 C 00101 Helsinki P.O. Box 29163 puh. 0207 013 013 SE-10052 Stockholm etunimi.sukunimi @ altiacorporation.com Tel. +46 8 598 112 00 firstname.lastname Graafinen suunnittelu: Kuudes kerros @philipsonsöderberg.se www.philipsonsoderberg.se Kuvatuotanto: Kuvasuunnittelu- & Agentuuritoimisto Keksi Painatus: Erweko Annual Report 2011

Altia Plc Porkkalankatu 22 A P.O. Box 350 FI-00101 Helsinki tel. +358 207 013 013 [email protected]