Investing in oats
Dec. 20, 2013
by Meyer Sosland
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As it has for over a century, the Fazer Group, a company with a deep history and wide reach across the Scandinavian region’s food industry, has recently been making investments in a growing health food trend — oat-based products. The Fazer Group was founded in 1891 when Karl Fazer opened his first café in Helsinki, Finland. Today the Fazer Group has two business segments — Fazer Brands and Fazer Food Services. The Fazer Group offers bakery, biscuit and confectionary products and catering, restaurants and café services.
Fazer’s business philosophy has been successful for over 100 years and four generations of the Fazer family’s leadership. A small confectioner’s business has grown into an international group of companies.
The Fazer Brands’ business segment accounts for the Fazer Group’s bakery, confectionery, and cafes & shops business operations. Fazer is a leading bakery company in Finland and among the leading companies in the Baltic Sea area and Russia, and its bakery products are exported to 20 countries. In addition to the Fazer brand, the bakery brands include Oululainen, Skogaholm, Hlebny Dom, Druva and Gardesis. Fazer has 19 bakeries located in Finland, Sweden, Estonia, Latvia, Lithuania and Russia.
Fazer Confectionery is the leading confectionery producer in Finland and a strong player in the Baltic area. Confectionery products are sold in more than 40 countries. Fazer Confectionery factories are located in Finland: Karkkila (chewing gum), Lappeenranta (sugar confectionery) and Vantaa (chocolate). Biscuits are manufactured in Vantaa. Among Fazer’s strong international confectionary brands are Karl Fazer, Geisha, Dumle, TuttiFrutti, Xylimax, Marianne, TyrkishPeber, Pantteri and Ässä.
The Fazer Food Services business segment provides contract catering services. In addition to lunch, it offers customer-specific solutions and tasty and nutritionally balanced food to take away. Fazer Food Services has about 1,100 restaurants located in Finland, Sweden, Norway and Denmark.
The Cafés & Shops business is mainly based on the Fazer and Gateau brands. Fazer has 47 in-store bakeries in Finland, 22 bakery shops in Sweden and one in Finland. Fazer has cafés in Finland, Sweden and Russia.
An Investment Grows
In 1971, the Fazer Group founded Fazer Mill & Mixes to secure an efficient supply of high quality flour to for its bakeries. The mill complex is located in Lahti, Finland. “With a staff of over 30, Fazer Mill’s objective is to be the most customer-oriented and cost-efficient mill in Scandinavia,” Jarkko Arrajoki, supply chain director, Fazer Mill & Mixes, told World Grain in a recent interview.
Fazer Mill & Mixes is one of the leading flour millers in the Nordic region of Europe.
“We have been recognized for our work. We have many times reached the high level of points in AIB audits, which emphasize sustainable development,” Arrajoki said.
Fazer Mill & Mixes uses mainly Finnish wheat and oats. Most of the milling rye is imported from the Baltic Sea region.
Today, approximately 70% of Fazer Mill & Mixes sales are sold outside other Fazer Group businesses, mainly to bakery channels.
“Our products are exported to more than 20 countries, for instance, Sweden, Russia, Ukraine, Poland, the Netherlands, United Kingdom, France, Estonia, Latvia, Lithuania, South Korea, Taiwan, Slovenia and the Czech Republic,” Arrajoki said. “We are currently producing rye and wheat flours, grain-based cereal fibers, mixes, improvers and now also oat flakes.”
Oat Trend Drives Addition
Fazer Mill & Mixes recently added a greenfield oat mill next to its existing milling facility in Lahti, Finland. The mill processes 60 tonnes of raw oats per day. The oat for the mill is sourced locally from Finland.
“The grain we purchase must meet the highest quality specifications for milling grain. We use only non-GMO grain,” Arrajoki said.
The Fazer Group contracted Uzwil, Switzerland-based Bühler AG to build and supply the oat mill. It took approximately 12 months to complete the project, which was finished in May 2013.
“The project was accomplished in planned time and budget. Fazer Mill & Mixes had a great team of milling professionals consisting of Fazer’s own people and people from Bühler,” Arrajoki said.
The oat mill is four stories tall and is integrated into the company’s existing end product storage facilities. A whole new oat mill production line was built in the facility. The oat mill consists of an oat cleaning and grading line, dehulling line, screenings handling, kilning line, steel cutting, flaking and packing.
“The Lahti oat mill’s process is totally automated and can be operated by one oat miller per shift. The mill has a heat recovery system from the process,” Arrajoki said.
“A very high emphasis was put on consumer safety, process hygiene and building sanitation. The state-of-the-art oat cleaning and dehulling section, including color sorter and heat-kilning, ensures good tasting and safe oat products. All products go through control sieving, metal detection and quality analysis before ending up with the customer.”
The Lahti oat mill produces mainly oat flakes, other oat-related products and various types of other grain flakes. After storage the oats are cleaned and prepared with the most modern equipment. The mill section is compact and the capacity could be doubled with a few additional machines.
“The use of oat-based products is growing strongly in the region. Oats have exceptional health benefits for consumers who are more and more aware and interested in what they are eating,” Arrajoki said. “Also, Fazer Group’s other businesses are already strong industrial oat-based product users.”
When determining the location of a production facility, Arrajoki noted the Fazer Group always takes into consideration a combination of existing production facilities, the business in question and future plans. However, determining the location of a grain milling facility is very much related to raw material and end product logistics.
“For example, it was rational to build a new oat mill in Lahti due to excellent Finnish milling oat quality, existing milling facilities and strong local market based on oat products,” he said.
The new oat mill fits in with Fazer Group’s strategy to develop new products and product categories to meet customers’ demands.
“After the oat mill project was finished, Fazer Mill & Mixes launched over 20 new products mainly related to oats. The new product assortment includes premium quality oat flakes and heat treated grains as well as wheat and rye flakes,” Arrajoki said. “Both traditional and organic are available. Oat flakes of different technical qualities as well as stabilized steel-cut oats are also available in big bags.”
The primary market is bakeries and musli producers in Northern Europe.
Baltic Sea Action Group
Fazer has made a commitment to the Baltic Sea Action Group (BSAG) and thus the environment and sustainability. BSAG collects commitments to revive the Baltic Sea. A commitment for the Baltic Sea is an act or a process with a positive impact on the ecological balance of the Baltic Sea.
Jarkko Arrajoki, supply chain director, Fazer Mill & Mixes, noted that Fazer has a long tradition in protecting the environment and operating in the Baltic Sea area. The founder of the company, Karl Fazer, took responsibility for quality, nature and the environment. Arrajoki noted that Fazer’s commitment to BSAG contains four areas and covers the company’s entire business operations. The areas are:
1. Fazer’s energy strategy.
2. The grain procurement vision of Fazer’s Bakery Business.
3. Fazer Mill & Mixes’ responsibility program.
4. Fazer Food Services’ offering and environmental objectives.
The commitment is divided into milestones and monitored by BSAG.
Arrajoki noted that by the end of 2013 Fazer will reach its first milestones, which include:
•Increasing the share of renewable sources of energy in electricity consumption to 30% in its bakeries in Sweden.
•Creating the grain procurement vision for Fazer’s bakery business
•Implementing the Fazer Mill and Mixes responsibility program.
•Piloting the food waste measuring system in selected Amica restaurants.