CEO’s report

An environment for growth

2018 was a demanding year for Norwegian farmers on account of the drought. Dairy farmers certainly experienced this. More extreme weather, in the form of more precipitation and long periods of dryness, is something that the industry must live with and learn to deal with. For TINE, growth and profitability through innovation and efficient, sustainable value chains are becoming crucial as a way of enhancing its competitiveness going forward.

The drought in the summer and the battle to make sure the animals got enough food affected us all. TINE implemented a range of measures. Meetings were held in the vulnerable areas in order to discuss the situation and give advice. There were a number of advisory visits to farms. Tankers transported water, and staff postponed their holidays. TINE cooperated closely and effectively with the other agricultural organisations in order to monitor the situation and implement the most effective measures possible.

But we broke a chilly record because of the summer weather!

Every cloud has a silver lining, as they say. We saw record sales of ice cream as a result of the hot summer weather. This means that the results for Diplom-Is were particularly good, which also has an impact on TINE’s overall results for 2018. This kind of increase in the production and sale of ice cream would not be possible without an efficient production and logistics apparatus. The entire organisation made a formidable effort to continue delivering throughout the hot summer.

Losing volume, facing a challenge

Besides good sales of ice cream, we have also seen a reasonable increase in sales of IsKaffe iced coffee, IsTe iced tea and flavoured milk. Nevertheless, the fact is that we are facing major volume challenges when it comes to our core products. Milk is undergoing weak growth in the market, and we are losing volume on consumer milk, cream, yoghurt and cheese because of a weak overall market and a loss of market share due to an increase in competition. This means a loss of revenues, but it also challenges our adaptation of capacity and costs in terms of both production and logistics.

Our Norwegian competitors now have better conditions, and our imports are on the increase. The cheese quota for duty-free import has increased, and many products have weak customs barriers. We must anticipate even stronger competition going forward, and so we have to improve our competitiveness.

Innovation together with customers to create growth

One of the most important aspects for TINE at present is growth. Innovation and growth together with our customers and increasing the pace of implementation are important factors when it comes to creating growth. Our work with efficient value chains is also becoming more important than ever.

A number of reorganisations have led to a clearer business orientation at TINE, with more market-oriented innovation efforts. I strongly believe that this will pay off, but we have to change constantly and adapt our corporate culture if we are to be able to handle the challenges of the future. In my mind, culture is all about the way in which we do things. TINE’s surroundings and challenges have changed extensively over the last 20 years, and we have to change with them if we are to continue enjoying success.

“We have to anticipate even stronger competition going forward, and so we have to go on constantly improving our competitiveness.”

New technology provides a foundation for improvements throughout the entire value chain

Digital transformation is in full swing and should provide a better foundation for improvements in respect of quality, flexibility and productivity throughout our entire value chain, from the grass on the ground to the milk on the table. We have to take on board the opportunities provided by technology throughout the entire value chain. MIMIRO is one example of a company that aims to use agricultural data to increase farmers’ productivity and profitability. This company was established in 2018 and is owned jointly by TINE and Felleskjøpet. The company recently won the 2019 Agricultural Award for Innovation. Its objective is to develop the world’s best management system for farmers, no less, and to turn Norway into a test laboratory for the milk producers of the world.

TINE must take responsibility for public health and the environment

As a major food producer, TINE is responsible for helping to improve public health in Norway. TINE must help to ensure that Norwegians have a healthy, varied and balanced diet, no matter their age.

2018 was a good year for TINE’s environmental work. Greenhouse gas emissions were reduced considerably. TINE’s objective is to use only renewable energy and fuel for production and transport by 2025. We are well on the way to achieving that aim, and our focus on #Kukraft™ and other initiatives may make a considerable contribution.

TINE appeared at the top of national reputation surveys in 2018 as well, and we were named Supplier of the Year by COOP. People trust us, and our customers are happy with us. This trust is something that we have to earn every day. When we must move more quickly and energetically in our innovation work, we have to take with us the very best of TINE’s many years of history.

Pave the way for successful staff and owners

For me personally, being back at TINE after 10 years in the power industry and banking is very special. A lot has happened at TINE since I left the company in 2008. There is a lot to get to grips with as the Group President, but I am keen to get going. I have already met skilled, talented, forward-thinking staff on my travels around TINE-land, and they have given me the knowledge and motivation to do my very best for one of the most important companies in Norway. My job will be to pave the way for success for TINE’s staff and owners in their work, ensuring that we create sustainable, profitable growth and maintain a good, productive work environment going forward.



Gunnar Hovland – President and CEO