Anora Group Oyj (ANORA) Earnings Call Transcript & Summary

Hello, all, Anora partners and stakeholders. Today is all about Anora. Today is the start of our journey to build a success of the leading Nordic wines and spirits company. We are now at Anora office in Stockholm with out new management team and you will soon hear our leaders present the new company to you. I'm Tua Stenius-Örnhjelmin, and I'm from Anora Investor Relations. So glad that so many of you have joined us online today, a warm welcome to everyone. Before we kick off, a few practical remarks. Safety is a key priority for us. So it's worthwhile mentioning that we are keeping safety distances as much as possible. We have been vaccinated, and we don't have any live audience with us today. At the end of this session, we will have Q&As with the management. But I do encourage you to send in your comments and questions already during the presentations. You can do so by using the chat function. And a final note that we are recording this event, and the video recording will be available on Anora website later on. Now let's get started, and the best person to start our introductions today is Anora's CEO, Pekka Tennilä. I welcome Pekka to the stage.

Dear partners, customers, suppliers, thank you so much for joining. This is an exciting day for us, and we'll go through what this new Anora is all about. I will start with myself first, a short introduction. My name is Pekka Tennilä, I'm the CEO of Anora. I was the CEO of Altia since 2014. Before joining Altia, I was 13 years with brewery Carlsberg. So I know the alcohol industry since 20 years. I've been living in -- I live now in Helsinki. I used to live in Baltics and before that when working with Kellogg's, where they had their Nordic headquarters, I stayed in Copenhagen. So I have a very good idea of the region we operate in as well. So today, we are Anora. The merger of Arcus and Altia has created this market-leader start-up in Nordic wine and spirits with amazingly strong portfolio and strong professionals through the region. This is our look, Anora against the nice dark blue color. On the right-hand side, you will see the advertising that will go out during these days in Sweden and Norway and Finland. We have new website, anora.com. Please go and check it out. You'll see more about us. And obviously, the social media channels are now with Anora messages and Anora colors. This is our executive management team. All of them will be presenting to you very, very soon. So I'll just quickly go through their names and focus areas. So Sigmund Toth will be our CFO; Janne Halttunen is heading the integration of our wine business; Henrik Thomsen will be heading the integration of our spirits business; Kirsi Puntila will be heading the integration of the international business, which for us means all the countries and markets outside the monopolies, that will be Denmark and Germany and Baltics, travel, retail and exports markets; then we have Kirsi Lehtola, our HR; and Hannu Tuominen will be heading the integration of our industrial businesses and supply chain. So Anora will be the market leader in the Nordics. That's obviously a strong position to start from, especially when you're seeking for growth like we are. We have a strong growth appetite and also capacity to grow, be that in the Nordics or outside the Nordics, be that through organic growth or through inorganic growth, like mergers and acquisitions. We are global industry forerunners in sustainability, which is very, very important to us. And we work extremely hard on pushing ourselves to be better in that aspect as well. Obviously, a merger creates bigger volumes and that enables a higher productivity, which, especially in the supply chain means less waste, which is good for the business and good for the planet. So this is our map. Obviously, Nordics, Baltics, Germany that's our home base. We have strong operations in all of the countries. We have production sites and Hannu will talk more about those a bit later. We are #1 in wine. We're #1 in spirits. And we export to some 30 countries. In terms of numbers, we are EUR 640 million of net sales in 2020 numbers and then comparable EBITDA combined EUR 103 million. And we employ in total 1,100 specialists and experts within wine and spirits. A bit about our must-win battles. We'll start the actual strategy process a bit later towards the end of the year, so that probably towards the end of Q1 in '22, we'll be coming out with our finalized strategy. But these are the things that we'll focus on now. And it's all about creating faster growth. Again, we have an excellent position to do that. When you look at our must-win battles, obviously, we need to deliver on efficiencies, improve the productivity, that's very important. We'll be looking into our own brands, how we can grow fast than we've been doing now, whether that be through new launches or stronger marketing across more countries. Partner business is key. That's the biggest category for us. And we believe that we have an unparalleled platform for our partners to grow their business with us. We're looking into unlocking value in our industrial business. And then later on looking into mergers and acquisitions. But right now, it's all about integration and creating that growth in our home markets. Some of the enablers. We're definitely looking into flexible and agile operations. Competition is intense, and we need to be fast and smart and creative to win business like we intend to do. Innovation, I already talked about. It's key for us. I think, both Arcus and Altia were strong in innovation, and we plan to step up from that high level. We have an amazing portfolio of brands and products, both in spirits and in wine. That gives us unique opportunity to sell more per outlet to gain more customers. Like I said, we have an unparalleled route to market. We are covering the 4 markets, we're the market leaders in each, and this is something that nobody else can provide, and I'm sure this will be interesting definitely for our own brands but especially for our partners, again, speeding up the growth. Sustainability, I talked about. We plan to be leaders in sustainability for the future as well. A lot of good and important work there to do. And lastly, entrepreneurial mindset is key, taking ownership and making things happen with those 1,100 amazing professionals that we employ. With this, I want to thank you for your interest and give word back to Tua. Thank you.

So a market leader in the Nordics, strong growth ambitions and of industry forerunner in sustainability. Thank you, Pekka. Let's now continue to our next speaker, the CFO of Anora, Sigmund Toth.

Thank you very much, Tua. My name is Sigmund Toth. I'm the CFO of Anora, and I come from the same position in Arcus, where I've been since 2015. And prior to that, I worked as a consultant at McKinsey and for 10 years at Procter & Gamble in many different finance and accounting positions. And I'm going to take you through a few slides on our financials. So the first slide, it's about an overview of our business. And the key word here is balanced. So if you look at the graph in the middle, you will see that we have a good balance in the categories in which we are present. Wine, spirits, making up altogether, the beverage is almost 80% of the turnover of Anora, but we also have balancing that very strong industrial and logistics business. And that balance extends as well to the geographies. So if you look at the graph to the left, we all know that Altia brings -- has its origins and its strength in Finland and the same is true for Norway for Arcus. But what you can see is if you look at the sales for the beverages, actually, our biggest market is Sweden. So we are strong in Finland, in Sweden and in Norway. And in addition to that, we also have a combined strength that's much bigger in duty-free and in exports, and we have a solid position also in the Baltics, in Denmark and in Germany, from which to build. And this balance, it extends also then to what several people have mentioned around the partner and the own brands. So actually, what you can see is that now the business is bigger from the partner brands, which represent 55% of the total turnover. So altogether, a well-balanced business from all points of view, category, geography and the balance between the partner and the own brands. Now if we look at the financial position that Anora will have, I think that we can safely say that it's one that's very strong and a good platform from which to build. We were individually as companies already very strong from the point of view of the financials in terms of having a very stable business from the turnover. In a good year, bad year, we were able to generate strong sales. Coming together as companies, this will be even more the case. In addition to that, it's not enough to have strong sales. You -- obviously also in order to be able to build the business and reinvest in the brands, in the partners and in the people, you need to have sustainably strong margins, and we have that. And then, of course, it's not only enough to have margins that show up in your accounts, but those margins need to be turned into cash flow. And we are able to do that as well through low CapEx needs and high efficiency. And that cash flow is combined with very low levels of debt. So when you sum all that up, a stable business, strong margins, good cash flows and low debt. What it all adds up to is the capacity to continue to develop the current business, to continue to invest in new markets and also to take the opportunity when they present themselves to grow inorganically through M&As. And then moving on to the next slide. So that's the strong base that we have. But then coming together as Anora, we have also promised a step change in efficiencies across the value chain. So when we talk about synergies, I mean, obviously, we talk about becoming more productive, more efficient in the value chain, so in logistics, in production and in sourcing. So that's one aspect of it, obviously. But I think another aspect of it that is equally important, particularly to those of you who are partners of ours, be it in the government-run monopolies or be it in the agencies is that we are also building completely unique capabilities, and those capabilities on the slide we mentioned sustainability but it's also an increased capability to meet consumer needs. So regardless of which format the consumer is demanding or which trends are present in terms of becoming more sustainable, we will have an even greater capacity as a joint company to meet those needs and to work together with our partners to meet consumers' demands. So with that, I finished my part of the presentation, and I hand the word back to Tua.

So a stable and profitable business with possibilities to grow. Thank you, Sigmund. Now remember to send in your comments and questions through the chat function. Moving on, let me hand over to Janne Halttunen, who will be planning the combination of our wine business.

Thank you, Tua, and good afternoon to everybody. As said, my name is Janne Halttunen, and I am delighted to take over the integration planning of our wine businesses. I guess, for -- I hope for many of you, I'm already a familiar face. Just like Pekka, I'm coming into Anora from Altia, where most recently I held the position of SVP for Scandinavian business. Before that, during my 12 years in Altia, I've done several roles in Finland, Sweden, Norway, having to do with wine and having to do with partners. And this is then -- also then the aim to be build on for the future. Before joining the alcohol industry, I spent some 12 years in tobacco industry, then working in several different locations around Europe. Let me give you a very short introduction of Anora wine, introducing Anora wine, what is the structure and what is the thinking of us moving forward with our market-leading wine business. As Sigmund and Pekka both were mentioning, in Anora, wine is the largest business units in size, in turnover. And also in terms of market shares, our combined market shares in the Nordic is market leading. What that means in combined concrete terms, our highest market share in wine is in Finland, where we have more than 23% of the wine market, followed by Norway 21%, and then followed by Sweden, approximately 15%. But when we look at the volumes and the size of the business, Sweden for wine as well is the largest single market. And the way we are structured, again, for many of you -- most of you, all of you partners, it is important, and I'm sure that you already know us as many independent business units, altogether 19 across the 3 countries. So in Sweden, we are organized through Vingruppen i Norden through 5 independent companies. And then in Altia, we are having a similar structure, although with Altia Sweden structure, focusing 100% on partner wine. The structure is similar than in Norway, where Vingruppen again is structured through 4 independent wine units. And Altia is having similar unit under Altia umbrella today. And then last but not least, the market-leading market Finland, where, again, Vingruppen has 5 independent business units and then Altia currently operating as one entity but again with very similar structures as what Vingruppen has in Finland. And then on top of that, I'm sure that many of you are aware that we also are active in our own wine brands and again -- especially products like Glögg, which are sort of Nordic specialties where we then hold clearly the market leading positions across all Nordics. So that was shortly on the structures. And then in the next slide, I'm just wanting to give you a very sneak peak of the tip of the iceberg. These are all the fantastic producers that we currently work with. And this is just a tip of it. We are working with hundreds of producers. We are representing thousands of products and SKUs in our markets. And our thinking is to built on that for the future. Again, all of these then being split into 3 markets, into 19 units, and then all of those units then working in finding the customer occasions that are relevant for their product portfolios. And on the left-hand side -- on the right-hand side, you see a very top line summary of then the own wine brands that we work in the markets. And I think many of those, we then work in collaboration with many of your partners as well in terms of the liquids used in those products. Last but not least, yes, we are having market-leading positions, we are having market-leading structures, the products, you guys, producers, partners are really giving us the portfolio that is -- I would believe that it's the envy of the industry here in the Nordics. And we are so proud to take that further. But we have also some other areas where we are currently already strong, and we want to take that to the new mix of wine. And that is digital marketing. I guess many of you who have visited have been to our sites Folkofolk in Sweden, Viinimaa in Finland, those are market-leading digital sites for product information, for marketing campaigns, for engagement to all of our consumers in the countries. Those sites are market-leading, industry leading in both countries. And just to put things sort of in a scale, again, we are small countries. But in Sweden last month, we managed to get more than 0.5 million hits on Folkofolk and Vingruppen sites together. And out of a country of 10 million, that is a big number. So that's something we want to put in the mix as well moving forward with wine in the Nordics. And that was my short introduction today. Moving on back to you, Tua.

So a wide portfolio of wines from different regions, countries and producers. Thank you, Janne. Then I welcome to the stage, Henrik, who will be planning the combination of our spirits business in the monopoly markets.

Good afternoon, Anora stakeholders, good afternoon, Anora partners. My name is Henrik Thomsen. And as mentioned, I'll be leading the integration of the spirits business from Arcus and Altia into Anora, a task that I'm looking very much forward to. I'll start by a brief introduction of myself. I'm Danish. I'm 49 years old. And I'm coming into Anora from the Arcus side, having spent 3.5 years with Arcus initially as International Sales Director and most recently as Interim Managing Director for the spirits business. Prior to joining the company, I worked for more than 23 years with Danish brewer, Carlsberg, in a lot of different international roles, including postings in North America and the Middle East. So I'm very excited to take on this task, very humbled by the task. And I'll start by saying that the operating model that we will be working with has not been finally decided yet. But what I want to do today is to give you a quick flavor of the building blocks -- the major building blocks that we have in creating something really unique here with Anora, something that Pekka already initiated touched on a little bit. I'll do that along 3 areas: one being portfolio, another one being people and capabilities, and last but not least, presence and reach in the marketplace, something that takes us from where we are today as 2 separate companies into something truly unique and something great that we can offer. If we start with the portfolio, it is -- am I -- I think I'm having a little bit of an issue here with a -- bit of a technical issue. But I'll talk to the portfolio because, obviously, we have a myriad of very, very strong own brands that will -- as you see behind me here, here they are. So what we're doing now is we're moving to a different scale when it comes to both own brands and partner brands to the benefit of all. That's the whole purpose of Anora is to accelerate to a next level, whereby both own brands and partner brands can thrive and get to the next level and deliver growth. How we do that on the own portfolio is strengthening within main categories of, for example, aquavit, [indiscernible], et cetera, giving us the license to operate in the marketplace and to put together the backbone that is Anora and that can deliver results. And here, on top of that, and this is very, very important and pivotal for Anora is the partner business. You already saw it initially that partners make up more than 50% of Anora as it looks today. So the way we organize ourselves moving forward, it is very, very important that caters also to the partner business. So portfolio-wise, even stronger now on the own portfolio and even stronger now on the partner portfolio to the benefit of both, good. The flicking here is simply not working for me. I'm really sorry about that. Here we go, good. Next one is people and capabilities and presence. So what's important here is, again, we were good separately. We were good as Arcus, we were good as Altia. Together we'll be truly great. We will have superior consumer and market insights to offer [indiscernible] partners in the marketplace. Nobody understands the Nordic consumer better than the combined Anora will do. That goes across all markets whether you're in Finland, whether you're in Sweden, whether you're in Norway, that is a unique proposition that we offer up as our new company. Then it's feet on the street. Obviously, when we combine forces, we also have the opportunity now to rightsize our front-end work and our people working the on-trade. So in terms of sheer numbers, a step change is what we are looking for here. And then, of course, access, as we have more own brands and we have more partner brands that we can leverage together, that would give us access to all classes of trade, again, to the benefit of all. What's important here is that this is not going to be a matter of one-size-fits-all. So what we will do is to work in a creative way, whereby we create the platform for partners and our own brands to grow, both in the short, mid and long term. One thing that will be leading my efforts into to this is also the wish to have superior category, brand and product insights as part of everything that we do in the marketplace, something that we've been very good at separately, but something I think we can be excellent at together as a company. And then of course, there's all the additional benefits of more seamless route to market and more scale that can also benefit both our own business and partner business. So I'll just close with one last thing, and that's about our innovation agenda as well, which is very much, as Pekka mentioned, at the forefront of what we do. That's, of course, to a large extent, revolving around own brands, but it also has this added benefit of us being able to offer up sustainable offerings and convenient packagings, et cetera, that could also be moved forward into partner business as we move forward. So with those words, I hope you get the sense that I'm very excited about the task. I'm very excited about the future for Anora. And with that, I hand back to you, Tua.

Truly iconic spirits brands, a unique understanding of the Nordic market and consumer and a strong track record in innovations. Thank you, Henrik. We have already received a few questions, but I would like to remind you that if you have any comments or questions to the management, please send them through with the chat function. Now next, I welcome Kirsi to the stage. She will be planning the combination of our open market business.

Hello, all. My name is Kirsi Puntila, and I'm the other Kirsi in the management team. [indiscernible] has been my business over 15 years now. Before joining Anora now for a few hours ago, I used to work for Altia for 7 years, heading the marketing department and before that over 10 years with Pernod Ricard with some of the most well-known international spirits brands and before that with Maxxium. So together with that spirits -- international spirit experience, I have either studied or lived in Switzerland, in France, in the U.S., in the U.K. and in Sweden before moving back to Finland where I'm now based in. My educational background is masters in science and economics, and I majored in international marketing. Most of my working life, I've been in brand marketing, innovation and the past 2 years with Altia heading the product development as well. To me, consumer is the king and the Queen, and I believe that creating superior customer experiences and focusing on sustainability is something that we at Anora can build and create a competitive advantage with. When it then comes to sustainability, it's been mentioned a lot, and we really are the forerunner there. Mentioning a few highlights of the long-standing sustainability work that has been going on already is, first and foremost, Anora is driving for carbon neutral production. We have some beautiful production facilities, which are leading the way in this development. We have, for example, whopping 99.5% recycling rate already at the Koskenkorva distillery and Gjelleråsen runs on geothermal and renewable energy. Secondly, Anora is supporting a responsible drinking culture. And we are making smaller and bigger efforts on that topic. One of the example is that we have an ever-increasing portfolio of lower and non-alcohol products in our innovation pipeline. And we are supporting all the monopoly CSR initiatives. Thirdly, Anora is now a leading eco-friendly packaging company in the Nordics and in the world in general. And this is something we are very, very proud of. We are aiming for 100% recyclable packaging already by 2025 and where we're in a good speed to get there. We are also moving towards 100% recycled PET material. And we are already #1 in PET packaging as well as bag-in-boxes. And that, if anything, is a great opportunity for us, for the CO2 footprint reductions, and we are making the world better -- world a better place with that. And then finally, our people. Our people are by far the greatest resource that we have, and we are promoting an inclusive and fair, safe workplace. Equality, inclusion, diversity and 0 absence due to injuries is something that we are aiming at having. But then the pulsing heart. The pulsing heart of Anora is of course the world-class brands and innovation. We are -- we have leading positions with both partner brands and own brands, both wines and spirits and access to all major Nordic travel retail operators, whether that is airlines or ferries or border trade for that matter. We also have strong presence in Denmark and Baltics, and we really want to grow there. And finally, we are already exporting to over 30 markets. Nordic brands have a great reputation abroad. And our pure ingredients and high-quality products, they are a great place to build from. So with these words, I look forward to collaboration with all of you, our partners, suppliers and other stakeholders. I look forward to seeing you and wishing us all a successful future at Anora. Thank you, and back to Tua.

So sustainability truly at the core and interesting opportunities in travel, retail and exports. Thank you, Kirsi. I will then welcome to the stage Hannu, who will be planning the combination of our industrial business and supply chain.

Good afternoon, everybody. My is Hannu Tuominen. My expertise is with factories, with production, logistics, procurement, as well as the industrial business. I've now been -- I was 13 years with Altia. And prior to that, I had 2 long assignments with 2 other companies. Supply chain, industrial business and logistics business is very strong part of Anora. Together with our very competent personnel, partners as well as suppliers, I'm sure we will add a lot of value to Anora customers. As you saw on the map, we have distilleries, we have production sites, we have distribution centers in all markets. The most predominant ones are Gjelleråsen Koskenkorva, as well as Rajamäki. As next, I will show you a couple of examples. Let's start from Koskenkorva distillery. Here, you can see an illustration how the site streams are utilized to achieve circular economy of the distillery. As Kirsi already mentioned, the recycling rate is almost 100%. Besides grain spirit, also technical ethanols starch and animal feed components are produced in Koskenkorva to achieve maximum material efficiency. In fact, you can say that Koskenkorva circular economy creates the base of our efforts to achieve neutral -- carbon-neutral production in Anora. Another important raw material for Anora is the Norwegian potato spirit that is used in the distillation of Norwegian aquavit. It's produced from sorting potatoes and rest from the potato food industry. My next example is Vectura AS in Norway. Vectura is the leading wine and spirits service provider in Norwegian market, offering a whole range of services to all [ importance ] with a market share that exceeds 50%. As you can see from the pictures, Vectura operates a very modern large volume logistics facility and distribution center at Gjelleråsen. In addition, Anora will continue operating the high-volume distribution centers in Stockholm Brunna, as well as in Rajamäki, Finland, as well as in other countries. And then let's move on to the industrial part. In Anora, we continue offering contract production and logistic services to our partners, both in wines and spirits. Contract production contains many different sustainable packaging types. And as already mentioned, in Koskenkorva, we utilize the site stream of the barley distillation process and offer the byproducts to many different industrial applications at high volume. With this, I would like to conclude and give over to Tua.

Circular economy at Koskenkorva distillery and world-class industrial operations across the Nordics. Thank you, Hannu. And from me, the last reminder about the comments and questions, please use the chat function to send them to the management. And now I welcome Kirsi Lehtola from HR to the stage.

Good afternoon. Great to be here and talk to our customers, partners and stakeholders. So my name is Kirsi Lehtola. I'm leading the HR at Anora. And let me tell something about myself. So my education is the Master of Laws, and I have something like 20 years of experience in HR tasks from local level to global level. I have been working in Nordic companies and also in global companies and done a lot of different work within HR. My passion is really to develop the engagement for personnel, and my passion is also to develop the capabilities to really meet the ambition level that Anora sets to our personnel and leaders. I will work hard to make Anora one of the -- or the most attractive employer in the Nordics. My role will be supporting this integration, the people topics and also supporting -- developing the company culture, and the work is going to start. Let me then very shortly also summarize what is ongoing at the moment. We are now concentrating on the business as usual. So no interruptions to our work with you partners and customers. We keep on -- the business on right track and with our people. Now the mother companies have been merged. All invoicing and everything happens in our companies as today. So everything continues as today, normally. We will have new website, anora.com. And of course, at the same time now when the group of executives are in place, we have started to plan the operational model for Anora and also the organization for Anora. That will take some time. We will have the dialogue with the personnel and will be ready during quarter 4. And by that time -- yes, it was an honor for me to be here and join the Anora and start to work with our personnel. Wishing you a great day. Thank you, and now to Tua.

Thank you, Kirsi, for the next steps, and thank you to all speakers. We now move on to the Q&A. Our first question comes from [indiscernible], and I will direct it to Sigmund. It's about M&As. Are you willing to look at brands that trade at clearly higher multiples than yourself?

Yes. I think the short answer is, yes. We obviously are interested, as I mentioned, in M&A and, more important, I think then at what multiple given brand is trading compared to our own is the question of whether that brand will have a better home in our company than whoever is owning it now. So if it has a high multiple because it has high-growth potential and we can take it into Anora and give it better distribution in our core markets or even in export, then maybe we are willing to pay that high price because the value to the company is higher to us than whoever is currently owning it. So I mean I think that that's the way that we approach M&A is we have a look at what is the brand or the company selling for. And then we do the analysis and compare that value to what it's worth to us once it's integrated into our operations. And then the multiple that we end up paying, it is what it is, and it's generally reflective then of the value of the company or the asset.

Thank you. The next question, I will direct to Pekka. And it's about also opportunities in the Nordic market. So which countries outside the Nordic monopoly markets, do you see the best opportunities in? Is it -- is the main focus on M&A or in organic growth?

Right now, the focus is on organic growth, for sure. Integration is key. We see a lot of opportunities to grow organically, both in the Nordic markets, in Denmark, in Germany, in the Baltics, travel retail and in our exports markets. What comes to the M&A and where to expand next, that's something we'll come back to. That's one of the key items in our strategy work that will begin later this year and will come with -- during the Capital Markets Day next year, we'll come back to more details on the M&A strategy.

Thank you. And the following question is also about international expansion, and I will direct that to Kirsi Puntila. So with such a strong presence in the Nordics, will there be a push for business expansion in the international arena, particularly China and higher profile for the Anora brands, including Larsen?

Thank you. I think that is a really, really good question. And I hope that having seen the presentations today, you also saw that it's probably fair to say that Anora wants to accelerate its international expansion. And it's not only for our own open market, which is Estonia, Latvia, Denmark and Germany, but also the export markets. As mentioned, we already export to over 30 markets, but China is definitely there, and we already have some exciting operations there with Larsen, in particular. And Larsen is a fantastic super-premium brand that we continue investing in. So we're all very excited about the international opportunities.

Thank you, Kirsi. The following question, I will direct to Janne. It's about wine. Well, first of all, there's a nice comment. Congratulations and many thanks for this interesting presentation. Will wine sourcing teams remain the same, or will there only be one big Anora sourcing department for all Altia/Arcus brands?

Thank you Tua and thank you for the question, a very good one. And I think this question was already partly answered by Kirsi, staging, which I think is important to underline business as usual. So whoever were your contact people in wine buying or partner management yesterday, it is exactly the same people that are there tomorrow and next week. Should there be any changes, as Kirsi was explaining in reporting lines or company structures -- I mean this is day one, so it's all too early to take any stand. So business as usual, people, contact matrixes exactly like we used to have it yesterday.

Thank you, Janne. Then we have another question to Pekka. So what is your thoughts about local communication and PR? And this question comes from the Chief Editor, Anders Ström from Vin & Bar magazine.

Local communication and PR is important to us right now and will continue to be with Anora. I mean the success of our depends on how well we do in Sweden, in Norway, in Finland, in Denmark and is [ good local PR ] to reach the consumers that we want to reach.

Okay. Thank you, Pekka. And then we have a question for Hannu about Altia Industrial. Can you discuss the opportunities you have with Anora Industrial, especially in relation to grain spirits production for the whole Anora? Is there synergy here?

Definitely, there is a synergy. Now the old Arcus part doesn't run its own distillation, whereas we -- in Koskenkorva, we take care of the distillation. So in terms of grain spirit, we are looking at the opportunities, how to increase the share of grain spirit that is distilled at Koskenkorva.

Thank you, Hannu. Then we have a question about innovation. I will direct it to Pekka. But first, here is also a nice comment. Congrats, great brands, amazing people. We heard innovation is a key to defend the leading position in the Nordics. How much percentage of EBITDA is reinvested into innovation and into building consumer leads digital?

Innovation is key to us. I see it not so much as defending as rather attacking -- gaining more shares creating new exciting occasions, winning shares. In terms of how much we invest back, maybe we look at more on how big a share is innovations of our total sales. And I think that's ranging between maybe 3% to 5%, which I think is a good level for our type of company. So I think our main focus is now, I mean, as we said before, both Arcus and Altia were strong in innovation. Now when we're gathering our forces together, how can we make the step change. And I think that's what's most exciting right now.

Thank you, Pekka. Then we have a question about synergies, which I will direct to Sigmund. Could you open up EUR 8 million to EUR 10 million synergy target baseline? That is, should we look at 2019 cost base as a starting point?

Yes, well, I'm not sure that I fully understood what was meant by opening up, but definitely in terms of the baseline the EUR 8 million to EUR 10 million that we have said in net synergies, 80% of which we promised to deliver in the first 2 years after the completion of the merger, that is versus the baseline of 2019. So that's correct.

Thank you, Sigmund. And then I think we have a few more minutes to go. So let's take the 2 questions we have left. So it's about the dividend. So this goes to Sigmund as well. Will we see the extraordinary dividend soon?

I think that what's important to emphasize, first, as I mentioned in my presentation is that we have a very strong financial base, right, generating strong cash flow, that allows us to seize opportunities within M&A, but also to pay as has been the case in the past, both for Altia and for Arcus to pay a good dividend. I think the keyword there is also stable. So our policy, I think, on both sides, which obviously the new Board will look into depending on the plans and the strategy will be more to pay a regular, stable and hopefully increasing dividend as the business continues to grow rather than paying extraordinary dividends.

Thank you, Sigmund. And then the last question, I will direct it to Pekka. So who will be responsible for purchasing at Anora?

Well, purchasing goes under Hannu's team. So obviously, we see opportunities in purchasing as well. I think like we've said before in terms of finding synergies because of bigger volumes, create more opportunities. But in terms of organizing it, mainly it falls under Hannu Tuominen's function.

Thank you, Pekka. And then we have one more question, and I think we have time for that as well. And I will direct this question to Kirsi Puntila. So do you see opportunities in reusable packaging for reducing impact on environment?

Absolutely. We -- as mentioned, we are a forerunner now in the packaging and eco-friendly packaging. And we have various initiatives in the pipeline where we are aiming at reducing the CO2 emissions and using reusable materials, especially now in the PET, where we are #1 already at the moment.

All right. Thank you, Kirsi. And unfortunately, we are now coming to the end of our session. But if you have a question and you haven't received your answer today yet, so please stay in touch with us. You can send your e-mail to communications or you can contact your contact person at Anora. With this, I hand over to Pekka for the final words.

All right. Dear partners, now you've see in the presentation of the new Nordic market leader in wine and spirits. I want to, first of all, thank Tua for being an excellent moderator. I want to thank our amazing [ EMT ] for fantastic presentations. We are [indiscernible] partner so much looking forward to working with you and growing business together. Thank you for joining today. Have a great day, and see you soon. Bye-bye.