News; Nov 19, 2004 CET

"We have much in common in our focus on brands"

He is CEO of the Nordic region's largest confectionery company and also a new member of Swedish Match's Board of Directors. With his long experience of working with fast-moving consumer goods, Karsten Slotte has much to bring to Swedish Match's Board work. But he personally thinks he also has a lot to learn and that the relationship will be mutually beneficial.

After six months on the Board of Swedish Match, I am surprised how much we have in common", says Karsten Slotte . "While Swedish Match is of course considerably larger than Cloetta Fazer and has a wider geographic spread and a far broader ownership structure, the two companies still have many issues in common in particular, the fact that they both have a strong focus on brand-building."

Since May 2002, Karsten Slotte has been CEO of the Nordic regions largest confectionery company. The company's main markets are Finland and Sweden, but it also has operations and sales in the other Nordic countries, Poland, the Baltic States and Russia, as well as the travel market, including airports and ferries for example.

In 1999, when the two long-established companies - Swedish Cloetta, with roots in Denmark, and Finnish Fazer - were negotiating a merger, Karsten Slotte was a division manager at Fazer Konfektyr. He also became deeply involved in the merger negotiations and the implementation of the merger in 2000.

"These were two very old companies that naturally had deeply ingrained corporate cultures. But the merger was highly successful, which I believe was largely because we managed to avoid the kind of resistance that can result from fear of change. We succeeded in creating an appreciation of the importance of being open and sensitive to what is happening in our markets and a realization that this openness also encourages personal development.

It's true that in the course of day-today work certain differences can be noted between the Finnish and Swedish cultures, but such differences also exist in many other areas, according to Karsten. There are differences between national cultures, different cultures within a company, and at the individual level.

"It was essential for us to define the merged Cloetta Fazer's own culture, and a joint mission and vision. Our core values - to be open, dynamic, competent and Nordic - are very important to us and should permeate everything we do."

At the same time, Karsten Slotte is careful to emphasize another success factor: that the merger was in no way the result of a crisis but was based on equal terms for both companies.

HE FEELS THAT THE Board work at Swedish Match resembles Cloetta Fazer's in many respects, but with one major difference. Swedish Match has a different, more diffuse ownership structure, while Cloetta Fazer's ownership is more concentrated and hence clearer. This means that the Board and management of Swedish Match have an even greater responsibility.

"This is exactly why I find the committee work on the Swedish Match Board so rewarding. I myself am in the audit committee, which is a valuable way to gain a deeper insight into the company. It is also important for us as Board members to visit operational units to see things for ourselves and meet employees in their workplaces," says Karsten Slotte, who is hoping he will soon have the opportunity to visit the new snus plant in Kungälv.

"It is demanding in every sense to sit on a company's Board of Directors today, and Board members have a heavy responsibility. For this reason, I have only one other Board assignment, since I want to be available and have time for what I have undertaken. At the same time, I gain a lot in return and learn many things from colleagues and from the insight into how another company functions."

WHEN ASKED WHAT HE THINKS he personally contributes to Swedish Match's Board work, Karsten Slotte returns to the central topic of brands.

"I feel secure in my knowledge of brands after working with fast-moving consumer goods for 25 years," he replies. "There are differences of course. All the brands in our sector, confectionery, are traditionally very long-established. Our newest brand is about 40 years old, and introducing new brands is not our primary concern. Instead, we constantly develop the existing brands."

By contrast, Swedish Match's product portfolio includes both traditional brands and new brands that are launched in a constant stream. But regardless of a brand's age, continuous renewal work is essential, as in the case of machine-made cigars in the US.

"The important thing is to observe and note new consumption patterns, be sensitive to changes in the market and meet such changes in an innovative manner and with perfect timing."

One such pattern that is currently significant for Cloetta Fazer relates to the changes in the population pyramid.

"While it is true that young people make up our largest target group, there are increasing numbers of older people who also want to enjoy the good things in life, but perhaps in the form of different products. Older people prefer chocolate, and specifically favor darker chocolate. This contributes to the growth of a distinct segment that could be called a premium segment. We have also begun to be active in this segment - to date only in Finland, but with great success," says Karsten Slotte, who sees philosophical similarities with Swedish Match's cigar operations in this respect also.

ALTHOUGH KARSTEN SLOTTE STILL SPENDS a lot of time in Finland - at least every second week - his position as CEO made it important to be near to Cloetta Fazer's corporate headquarters in Stockholm. So Stockholm is where he now lives, with his wife and one of his sons.

"But that's fine with us. It is agreeable to live in Stockholm, which is an incredibly beautiful international city, as well as being close to Finland. So there has been no reason to lose contact with our social network."