Haypp Group Ab · OMXSTO:HAYPP
Haypp Group Ab — Investor Day (November 2023)
106 slides from Haypp Group Ab's investor day presentation, Nov 28, 2023
Slide 1: Capital Markets Day
Capital Markets Day Stockholm, Sweden - 28 November 2023
Slide 2: Inspiring healthier enjoyment to millions
MISSION Inspiring healthier enjoyment to millions 2023-11-28 Capital Market Day 2023 2
Slide 3: Focused on healthier enjoyment products
Focused on healthier enjoyment products Significantly lower level of harm from modern alternatives to cigarettes Food retail and convenience stores Typical POS Food retail, convenience stores and online Pharmacies Conventional Other tobacco Heat not Burn Vapour products Low toxicant Low toxicant Lic
Slide 4: The impact of harm reduced products
The impact of harm reduced products Significantly lower smoking incidence in Sweden and Norway Share of population who are smokers (2020) 50% 40% 30% 20% 10% 0% NO NL PL UK SI HU SK HR PT SE EU28 MT BG RO DE CZ FR CY BE EL EE IT DK FI IE AT LU ES LT LV 2023-11-28 Capital Market Day 2023 4
Slide 5: Superior position in the value chain
Superior position in the value chain CONSUMERS SUPPLIERS E-commerce & Distribution centres Media outreach DATA Customer insights CUSTOMER INSIGHTS 2023-11-28 Capital Market Day 2023 5
Slide 6: Haypp Group at a glance
Haypp Group at a glance • Founded 14 years ago, with a focus on snus • Staff of 191 of which 41 are in our in Sweden. 6 years ago emphasis shifted warehouses. to Nicotine Pouches (NPs), and started to expand outside Sweden. • LTM: Revenue of SEK3Bn, EBITDA SEK126M (Core SEK188M, Growth -SEK62M) • HQ
Slide 7: Market transformation happening globally
Market transformation happening globally Strong market dynamics… …resulting in attractive growth for nicotine pouches Global market for nicotine pouches and snus, EUR bn1) CAGR 2023–28 Strong demand for less harmful products CAGR +27% Legislation favours modern nicotine products +35% 15 CAGR +18% Su
Slide 8: Nicotine pouches and snus – the perfect e-goods
Nicotine pouches and snus – the perfect e-goods Compelling category characteristics… Small and similarly High purchase Low return Non-cyclical Complex regulatory environment2) sized boxes1) frequency frequency Nicotine pouches and snus Pharmaceuticals Show several similarities to NP & snus Groceries
Slide 9: We continue to deliver on our successful strategy
We continue to deliver on our successful strategy Organic Benefits of growth scale Customers come Scale enables us to improve to us for: our advantages on: Good Price Price Wider Assortment Assortment Rapid Convenience Convenience Search Engine Optimisation (SEO) 2023-11-28 Capital Market Day 2023 9
Slide 10: Financial targets
Financial targets Increased targets in Original targets New ambition on top existing business Haypp Group targets to reach net sales of Haypp Group targets to reach net sales of Expansion into adjacent categories and Growth at least SEK 5bn by 2025, predominantly at least SEK 5bn by 2025, through or
Slide 11: Today's presenters
Today’s presenters Gavin O’Dowd Svante Andersson Peter Deli Gabriel De Prado CEO, Chief Executive Officer COO, Chief Operating Officer & Deputy CEO CFO, Chief Financial Officer CCO, Chief Commercial Officer Markus Lindblad Janne Kalian Hans Strömblad van Eijk Johan Hansson Head of Legal & External A
Slide 12: Agenda
Agenda 1 The changing world of nicotine and our position in it Gavin O’Dowd 1 2 Developing our relationship with Consumers Hans Strömblad van Eijk 13 3 Our relationship with Brand Owners, and the benefits to Consumers Johan Hansson 25 4 Building the infrastructure for accelerated Growth Janne Kalian
Slide 13: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 1 2 Developing our relationship with Consumers 13 3 Our relationship with Brand Owners, and the benefits to Consumers 25 4 Building the infrastructure for accelerated Growth 43 5 Our Markets’ performance and opportunities 55 Q&A
Slide 14: Setup for growth
Setup for growth Attract Generating traffic Convert Customer experience Retain CRM 2023-11-28 Capital Market Day 2023 14
Slide 15: Organic growth is the sustainable way to attract consumers
Organic growth is the sustainable way to attract consumers Controlling the digital AAA locations SEO performance reflected in marketing spend Marketing spend as % of Net sales 65%* 1,6% share of clicks 1,4% position 1-3 1,2% 1,0% 0,8% 0,6% 0,4% 2020 2021 2022 2023 L12M *Based on Click through rate d
Slide 16: Organic growth is the sustainable way to attract consumers
Organic growth is the sustainable way to attract consumers Controlling the digital AAA locations Organic traffic, the primary driver Haypp Group’s sources of consumer traffic Paid search 65%* share of clicks 3% position 1-3 3% Organic traffic: 11% 23% Direct Organic Search Email ~97% Other Organic 6
Slide 17: Fulfilling customer expectations. And Googles.
Fulfilling customer expectations. And Googles. Relevance User experience Content Widest & unique assortment Bespoke platform Global scale Top search engine ranking 2023-11-28 Capital Market Day 2023 17
Slide 18: SEO is a key strategic priority
SEO is a key strategic priority Content on site Assortment SEO Business decisions Tech development in management 2023-11-28 Capital Market Day 2023 18
Slide 19: Haypps SEO positions has created a wide moat
Haypps SEO positions has created a wide moat Dominating Organic visibility … …benefitting from best-in-class conversion rates Conversion rates of selected e-com players and e-com stores on Shopify ~6x (FY2022)1) 13,9% ~6x 3,4% ~5x 3,2% 2,4% 1,4% Closest Closest Closest Top 20% best performing stores
Slide 20: Loyalty fuels consumer base growth
Loyalty fuels consumer base growth Continuously growing consumer base… …increasing AOV and repurchase rates as our consumers retain Attract new customers Make them come back Number of consumers / quarter +48% +11% Number of quarterly active customers1), 2018 – Q3 2023 Increase in average Increase in
Slide 21: Reaching the right person at the right time with the right communication
Reaching the right person at the right time with the right communication Segmentation & Personalization Using Data and Machine Learning Explorers Product loyalist Convenience Inspiration & product 1 click seeker recommendations repurchase Subscription Timing On an individual level +83% % of net sale
Slide 22: Consumer satisfaction is key to long term growth
Consumer satisfaction is key to long term growth CRM Assortment Price Convenience 2023-11-28 Capital Market Day 2023 22
Slide 23: Consumer satisfaction is key to long term growth
Consumer satisfaction is key to long term growth Haypp global average NPS LTM: Almost 40% of new consumers get recommended from a friend NPS 70 NPS 72 ~90% NPS 61 NPS 58 Retention on second order and forward NPS: Asking our consumers if they are likely to recommend us to a friend or a colleague NPS
Slide 24: Setup for growth
Setup for growth Attract 5-6x more traffic than Generating traffic closest competitor Convert Consumer experience CVR 14% Retain CRM NPS 70 2023-11-28 Capital Market Day 2023 24
Slide 25: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 1 2 Developing our relationship with Consumers 13 3 Our relationship with Brand Owners, and the benefits to Consumers 25 4 Building the infrastructure for accelerated Growth 43 5 Our Markets’ performance and opportunities 55 Q&A
Slide 26: Our role is to help consumers navigate brands and brand owners navigate consumers
Our role is to help consumers navigate brands and to help brand owners navigate consumers. 2023-11-28 Capital Market Day 2023 26
Slide 27: Our role is to help consumers navigate brands and to help brand owners navigate
Our role is to help consumers navigate brands and to help brand owners navigate consumers. Brand owners The most attractive Unique launch and Ground-breaking Profitable partnership consumer base activation platform Insights capabilities Consumers Assortment Price 2023-11-28 Capital Market Day 2023 2
Slide 28: Haypp Group consumer base – not only large, but early adopters
Haypp Group consumer base – not only large, but early adopters Haypp Group Consumer base 1 000 000 YAP 900 000 800 000 700 000 • More urban • Digitally oriented 600 000 • Gender balanced 500 000 400 000 Majority of sales in +25 age due to bulk purchases 300 000 200 000 100 000 0 2019 2020 2021 2022
Slide 29: Haypp Group consumer base – not only large, but early adopters
Haypp Group consumer base – not only large, but early adopters Haypp Group Consumer base Sweden – NP share of market, Haypp vs Offline 1 000 000 45% 900 000 40% 800 000 35% 30% 700 000 25% 600 000 12-18 months avg 20% 500 000 15% 400 000 10% 300 000 5% 200 000 0% apr.-19 apr.-20 apr.-21 apr.-22 apr.
Slide 30: Opportunity to test and learn in an accelerating market
Opportunity to test and learn in an accelerating market Share of Market products launched #of New NP Launches Product life cycle – de-list rate of new launches in the last 12 months 200 100% 30% 90% 25% 80% 150 70% 20% 60% 10 months 15% 100 50% 40% 10% 30% 50 5% 20% 10% 0% 2 22 m 3 23 3 23 23 3 2 23
Slide 31: Haypp Group Media eco-system
Haypp Group Media eco-system Activation tools (examples) On-site activation with +3M sessions per month Awareness BRAND PAGES ON SITE COMMUNICATION Richest awareness offer with broad reach SEARCH BAR VISIBILITY SPONSORED LISTING MAIL COMMUNICATION CHECK-OUT Trial UPSELL Temporarily boost new One of
Slide 32: Haypp Group Media eco-system
Haypp Group Media eco-system Activation tools (examples) On-site activation with +3M sessions per month Awareness BRAND PAGES ON SITE COMMUNICATION Richest awareness offer with broad reach SEARCH BAR VISIBILITY SPONSORED ~65% LISTING of all NP trials in SE created by Haypp MAIL COMMUNICATION CHECK-O
Slide 33: Unique and wider assortment
Unique and wider assortment Consumer traction Brand building Concept trailing A. Showcase richer content around new launches and innovations B. Our consumers spend longer time engaging with brand content vs offline Brand owners create unique content for us Pre-launches Exclusive products Limited edi
Slide 34: Haypp Group is the most valuable partnership
Haypp Group is the most valuable partnership Benefits of working with Haypp Group • No returns • • No Field force No Fridges/Gantries ~15% • No printed point of sale material Aggregated cost saving by working with • 1 point of delivery – lower distribution cost Haypp Group • 100% contract compliance
Slide 35: Haypp Insights – helping brand owners understanding consumers
Haypp Insights – helping brand owners understanding consumers CONCEPT LAUNCH Multidisciplinary +4000 data points Direct access to Team AWARENESS on every customer each customer CONSIDERATION • Powered by our 4000+ data points per consumer, direct consumer feedback and AI/machine learning. TRIAL REPU
Slide 36: Haypp Insights – helping brand owners understanding consumers
Haypp Insights – helping brand owners understanding consumers CONCEPT M&A GOVERNMENTS LAUNCH AWARENESS ACTIONABLE INSIGHTS CONSIDERATION TRIAL RESEARCHERS REGULATORS REPURCHASE LOYAL World’s largest insights provider for Nicotine Pouches - Positive and meaningful profit contributor for Haypp Group 2
Slide 37: Wrap up
Wrap up Mutually beneficial (adding value) relationship with the brand owners The most Unique launch Ground- Most profitable attractive and activation breaking Insights partner consumer base platform capabilities 100% Youth access prevention Assortment Price 2023-11-28 Capital Market Day 2023 37
Slide 38: Haypp Group offers a wide and unique assortment
Haypp Group offers a wide and unique assortment +700 Nicotine Pouches SKUs globally… …with latest innovations 7-20x +40% More SKUs than average physical POS pre-launches in 2023 YTD 2023-11-28 Capital Market Day 2023 38
Slide 39: Wide and unique assortment drive consumer exploration
Wide and unique assortment drive consumer exploration 1.4 Brands 16 per Order 1.9 Different Cans SKUs per per Order Order 14 8.4 New SKUs Orders tried per per Year Year PRODUCT EXPLORATION Verified by Haypp First to launch Consumer opportunity to test new products Trusted products 2023-11-28 Capital
Slide 40: Sustainable lower price for consumers
Sustainable lower price for consumers Haypp Group offers more compelling prices vs physical POS Market model differ per geography Core Growth ~30% ~50% discount discount ~20% discount ~40% Offline retail Media & Insights Currently discount Market type margin NP contribution profitable Core Mid High
Slide 41: Sustainable lower price for consumers
Sustainable lower price for consumers 1. Sharing 15% savings with 2. Material revenue from 3. Economies of scale in Brand owners Media and Insights distribution and overheads Pricing advantage to the consumer 2023-11-28 Capital Market Day 2023 41
Slide 42: Flywheel – How it all comes together
Flywheel – How it all comes together Consumer benefit Brand owner benefit 2023-11-28 Capital Market Day 2023 42
Slide 43: Table of contents
Table of contents Speaker 1 The changing world of nicotine and our position in it 1 2 Developing our relationship with Consumers 13 3 Our relationship with Brand Owners, and the benefits to Consumers 25 4 Building the infrastructure for accelerated Growth 43 5 Our Markets’ performance and opportunit
Slide 44: Delivering Scalable Advantages through Infrastructure
Delivering Scalable Advantages through Infrastructure 2023-11-28 Capital Market Day 2023 44
Slide 45: Haypp Group Infrastructure
Haypp Group Infrastructure Efficient & agile Scalable Replicable Expandable Bespoke processes and systems combined with select top-class suppliers and products 2023-11-28 Capital Market Day 2023 45
Slide 46: Refining our Infrastructure for the Future
Refining our Infrastructure for the Future Haypp E-com V1 Haypp E-com V2 E-commerce UK SE DE DE UK US ERP WMS WMS The infrastructure that has successfully powered our growth and expansion to date. This contains all the pieces we need – but slightly scattered 2023-11-28 Capital Market Day 2023 46
Slide 47: Refining our Infrastructure for the Future
Refining our Infrastructure for the Future Haypp E-com V3 E-commerce UK SE DE DE UK US Integration layer Fulfilment & Finance WMS Global ERP, new modernized version of Parts of our existing business are The model refined. Building on our e-com platform, integration platform already powered by the ne
Slide 48: The power of Data
The power of Data • 1st party insights gathering through our platforms • Fuels both Haypp Insights, internal decisions and actions in storefronts • Part of the Haypp model, insights gathered from 1st unit sold • 10 years of unique data about consumer patterns, products and dynamics around our catego
Slide 49: Convenience
Convenience The key to loyal and satisified consumers 2023-11-28 Capital Market Day 2023 49
Slide 50: The Specifics of our Category
The Specifics of our Category Some of the unique logistics benefits of our category: • Low degrees of consumer returns (< 0,4%) • Low weight / mass to value – pick/pack/ship friendly product • Limited seasonality making demand forecasting accurate • Relatively limited number of SKU’s compared to oth
Slide 51: The Scalable Convenience Chain
The Scalable Convenience Chain 3P L Product sourcing 3PL Warehouse Haypp Warehouse Haypp Automated Central forecasting & Variable cost Higher fixed cost, low variable Warehouse replenishment cost/order Flexible for time to market Higher fixed cost, lower variable <1% average OOS Improved lead times
Slide 52: Shipping – taking it the last mile
Shipping – taking it the last mile Shipping has become a commodity available to everyone. The differentiator is how Haypp applies, Allows us: fine tunes and handles it at scale. • Quick and easy onboarding of new shipping providers. Haypp's new shipping logistics partner facilitates an • Dynamic pri
Slide 53: Youth Access Prevention is at our Core
Youth Access Prevention is at our Core Securing youth access prevention 18+ 21+ Depending on the specifics of the market and category, we work with: 100% • Age verification at point of sale through age verified transactions payment providers. • Online age verification with the top partners for the r
Slide 54: Wrap up
Wrap up Efficient & agile Scalable Replicable Expandable 2023-11-28 Capital Market Day 2023 54
Slide 55: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 1 2 Developing our relationship with Consumers 13 Our relationship with Brand Owners, and the benefits to 3 25 Consumers 4 Building the infrastructure for accelerated Growth 43 5 Our Markets’ performance and opportunities 55 Q&A
Slide 56: From a garage to 3.0bn SEK
From a garage to 3.0bn SEK 2023-11-28 Capital Market Day 2023 56
Slide 57: From Years Saved… …To Volumes Sold
From Years Saved… …To Volumes Sold 2023-11-28 Capital Market Day 2023 57
Slide 58: Sweden
Sweden SOM Share of Market 30% E-SOM Sweden means nicotine Ecom Share of Market 85% pouches, it is the most NP Volume competitive and toughest market. on Group sales 49% If we can win here, we can win NP YoY Volume growth 32% anywhere. And we are. Traffic Growth +30% Order Growth +15% 2023-11-28 Cap
Slide 59: Performing in the toughest competitive environment
Performing in the toughest competitive environment Product trial has been key for success… and we know how to do it! NP Volume 2+ mn cans 2 000 000 1 500 000 1 000 000 500 000 0 2018 2019 2020 2021 2022 2023 Deep consumer knowledge and appetite for Nicotine pouches are here to stay: 28% of our month
Slide 60: Norway
Norway SOM Share of Market 11% E-SOM Ecom Share of Market 80% NP Volume on Group sales 14% A showcase on how to thrive in highly regulated markets. NP YoY Volume growth 41% Traffic Growth +37% Order Growth +35% 2023-11-28 Capital Market Day 2023 Source: 2023 Company information and estimates 60
Slide 61: Traditional retailers
Traditional retailers • Closed doors • Plain packaging • No guidance • Limited trial • No brand building 2023-11-28 Capital Market Day 2023 61
Slide 62: Our stores
Our stores • Brand Visibility • Product explanation • Product guidance • Pack size options • Price awareness • Brand introduction 2023-11-28 Capital Market Day 2023 62
Slide 63: Guiding consumers in a "closed doors" dark market
Guiding consumers in a “closed doors” dark market Cans Sold Nicotine Poouches Tobacco Total COVID was decisive in our growth 16 trajectory. 14 Norwegian consumers where upfront 12 driving nicotine category before plain Millions 10 packaging and regulation now all they 8 have is us. 6 4 Our visibilit
Slide 64: USA
USA SOM Share of Market 2.5% E-SOM Ecom Share of Market 85% USA is the biggest market with biggest NP Volume 25% group growth. on Group sales Huge opportunity ahead boosted by NP YoY 47% Volume growth possible innovation Traffic Growth +55% Order Growth +39.9% 2023-11-28 Capital Market Day 2023 Sour
Slide 65: USA is not a country but a continent
USA is not a country but a continent NP in US is 5x Sweden and Norway together Fastest growing market +49% YoY +70% from October 5% | 4% Haypp overperforming à +57% YoY +0.5pp SOM 4% | 2% 3% | 6% 45% more purchasing customers 5% | 3% 4% | 2% Complexity à PMTA, Adult verification 6% | 15% 4% | 8% Ove
Slide 66: Texas – NY – Colorado
Texas – NY – Colorado Haypp SOM Texas New York Colorado 6.0% 4.0% 3.4% Convenience and Price are key Others Texas - NY – Colorado à Double consumer acquisition after new warehouses and -10pp churn rate 1.5% 2day nationwide shipping implemented 2023-11-28 Capital Market Day 2023 66
Slide 67: United Kingdom
United Kingdom SOM Share of Market 4.5% E-SOM Ecom Share of Market 65% UK is the epicenter of harm reduced NP Volume on Group sales 2% products for Europe. NP YoY Our timing couldn’t be better. Volume growth 94% Traffic Growth +84% Order Growth +77% 2023-11-28 Capital Market Day 2023 Source: 2023 Co
Slide 68: Perfect timing for a blooming category
Perfect timing for a blooming category Vape learnings so far: 100 Nicotine Pouches Volume • Fierce competition 90 • Fragmented suppliers Key for success: 80 +94% YoY • Incredible innovation pace 70 • Improved convenience • Agility is key • Category knowledge • Upcoming regulation 60 • Supplier relat
Slide 69: DACH
DACH SOM Share of Market 15% E-SOM Ecom Share of Market 35% DACH is where convenience will NP Volume on Group sales 11% make the difference since product NP YoY resonates well with consumers. Volume growth 39% Traffic Growth +5% Order Growth +15% 2023-11-28 Capital Market Day 2023 Source: 2023 Compa
Slide 70: Small steps in a category which gains relevance
Small steps in a category which gains relevance Nicotine Pouches Volume 500 450 400 Improved convenience 350 +40% +93% +28% 300 250 200 Covid 19 accelerates 150 online migration 100 NP banned from 50 Offline universe in DE 0 2019 2020 2021 2022 2023 2023-11-28 Capital Market Day 2023 70
Slide 71: 2023 – Another year of strong performance
2023 – Another year of strong performance Quarterly NP Volume 12 (Cans) 10 8 Attract Consumers 6 Enhance SEO Supplier Support 4 2 Improved Convenience Improved Assortmet 0 2020Q3 2023Q3 2020Q1 2023Q1 2019Q3 2018Q1 2019Q1 2018Q3 2022Q1 2021Q1 2022Q3 2021Q3 Price investment P A C S 2023-11-28 Capital
Slide 72: USA
USA Biggest nicotine market in the world Unique regulatory setting Well established relationship with suppliers Undisputed online market leader 2023-11-28 Capital Market Day 2023 72
Slide 73: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 1 2 Developing our relationship with Consumers 13 3 Our relationship with Brand Owners, and the benefits to Consumers 25 4 Building the infrastructure for accelerated Growth 43 5 Our Markets’ performance and opportunities 55 Q&A
Slide 74: Regulatory environment
Regulatory environment 2023-11-28 Capital Market Day 2023 74
Slide 75: Acting in line with the society's expectations
Acting in line with the society’s expectations • We are the credible player due to our history of responsible behavior • Our global leadership in setting product standards enhanced our credibility • We are always involved in relevant changes • Scientific & regulatory cooperation further supports HG’
Slide 76: The outlook for NP and Online
The outlook for NP and Online Regulation will continue to US market will improve with NP and the online evolve in the RRP category newer generation NPs channel for RRPs will – Haypp will benefit from satisfying PMTA requirements grow regulatory changes and receiving MGOs 2023-11-28 Capital Market Da
Slide 77: Notable Regulatory Changes
Notable Regulatory Changes California flavor Norwegian Public Swedish Excise Germany NP sales regulation offline Health Strategy Change restrictions retail 77
Slide 78: Harm reduction gaining momentum
Harm reduction gaining momentum − New law proposal allows NP and online sales with − Parliament voting against stricter ANDTS1) strategy. more liberal regulation online vs offline. − Excise change inline with harm. − Ruling established practise to embrace future harm reducing policies. − Increased e
Slide 79: NP category and online sales will remain viable beyond '28
NP category and online sales will remain viable beyond ‘28 2023-11-28 Capital Market Day 2023 79
Slide 80: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 1 2 Developing our relationship with Consumers 13 3 Our relationship with Brand Owners, and the benefits to Consumers 25 4 Building the infrastructure for accelerated Growth 43 5 Our Markets’ performance and opportunities 55 Q&A
Slide 81: Adjacent Opportunities
Adjacent Opportunities 2023-11-28 Capital Market Day 2023 81
Slide 82: Transition from smoking to risk reduced products has only begun
Transition from smoking to risk reduced products has only begun Conventional Other tobacco smoking Heat not Burn Vapour products Low toxicant Low toxicant Licensed medical cigarettes products (E-vapour) smokeless tobacco smokeless tobacco- products (e.g. cigars, pipes, (e.g. Swedish snus) free nicot
Slide 83: Risk reduced products logical next step for Haypp
Risk reduced products logical next step for Haypp Nicotine consumers in Sweden, Norway, US, UK and DACH (millions)1) 1% 100% 1%2% 1% 3% 4% 6% 1% 8% 11% 11% 13% 15% 15% 15% 16% 2% 16% 18% 3% 19% 20% • Nicotine Pouches fastest growing but 2% 2% 2% 21% 23% 4% 7% 2% 2% 23% 6% accounts for only 19 percen
Slide 84: Landscape set up for disruption
Landscape set up for disruption Share of Share of RRP Growth rate RRP Growth rate consumers consumers Snus 62% -8% Vape 57% 18% NP 29% 40% HnB 29% 36% Vape 5% 75% NP 12% 30% • RRP landscape different between Haypp HnB 5% 15% Snus 2% -16% markets • Space for more than one RRP to take Share of Share o
Slide 85: Product innovation accelerating
Product innovation accelerating NP Vape HnB 3-5 years ago • Large tobacco manufacturers active in all RRP • Emerging manufacturers outside large tobacco advancing their positions Now • Landscape for sustained innovation Cleaner pouches and improvements Disposable Vapes going from zero Technology adv
Slide 86: Regulatory imperatives similar between all RRP
Regulatory imperatives similar between all RRP Credible product and marketing standards key for long term sustainability Youth access prevention pivotal NP, Vape and HnB all fit under the regulatory harm reduction regime 2023-11-28 Capital Market Day 2023 86
Slide 87: Haypp very well positioned for RRP
Haypp very well positioned for RRP Consumer needs are the same Search Price Assortment Convenience Consumers demand better Consumers are going online to Consumers expect attractive Consumers want a convenient products and wants to explore explore RRP pricing in all RRP buying experience innovations
Slide 88: Long runway ahead in Haypp expansion plan
Long runway ahead in Haypp expansion plan Existing business delivering solid Existing operational templates can growth and profitability creating be utilized for adjacent oxygen for next phase opportunities opportunities Positioning ourselves for growth in decades to come 2023-11-28 Capital Market D
Slide 89: Encouraging traction from UK Vape pilot
Encouraging traction from UK Vape pilot Close to 5x higher accumulated volume 9 months from launch Acc vol Vape* Units sold 4.8x Acc vol NP** 0 1 Months from launch 9 2023-11-28 Capital Market Day 2023 89 * Month 1 is January 2013 ** Month 1 is January 2018
Slide 90: Future expansion priorities
Future expansion priorities 1 New RRP categories in existing European markets 2 Nicotine Pouches in new European markets 3 New RRP categories in new European markets 2023-11-28 Capital Market Day 2023 90
Slide 91: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 1 2 Developing our relationship with Consumers 13 3 Our relationship with Brand Owners, and the benefits to Consumers 25 4 Building the infrastructure for accelerated Growth 43 5 Our Markets’ performance and opportunities 55 Q&A
Slide 92: Sustained sales growth driven by increased consumer base
Sustained sales growth driven by increased consumer base A rapidly growing customer base… … drives top line growth Number of active customers (‘000s) Group Net Sales (mn SEK) 913 3.019 28% 794 39% 2.599 682 2.267 541 +576 1.729 337 802 2019 2020 2021 2022 L12M 2019 2020 2021 2022 L12M 2023-11-28 Cap
Slide 93: Key financial highlights
Key financial highlights Unparallel growth... …scale driving increased product margin… …driving increasing profitability SEKm SEKm SEKm 9.7% 13.0% 11.0% 12.6% 12.8% -0,8% 2,2% 1,8% 2,3% 2,4% 3.019 387 73,1 39% 42% 2.599 329 58,5 2.267 250 225 41,5 1.729 38,2 802 94 -6,7 2019 2020 2021 2022 L12M 2019
Slide 94: Core market – sustained growth
Core market – sustained growth Rapidly growing sales in Growth markets… …with improving profitability… …and high order frequency Net sales (mn SEK) Adj. EBITDA % Orders / consumer ‘22 9 8 8 +41% +36% 8 2.340 7 5,2 2.145 7 1.978 6 6 3,7 1.475 5 4 4 77% 3 694 83% 2 86% 87% 87% Contribution to Group sa
Slide 95: Growth market – improving profitability with further room to grow
Growth market – improving profitability with further room to grow …and further opportunities even in Rapidly growing sales in Growth markets… …with improving profitability… existing consumer base Net sales (mn SEK) Adj. EBITDA % Orders / consumer ‘22 680 0 +41% +57% -5 454 -10 -9 289 236 23% -15 112
Slide 96: Maintaining our current growth will bring us to the 5bn target
Maintaining our current growth will bring us to the 5bn target Rapid net sales growth in Growth markets …will bring us to the 5 bn target Net sales (mn SEK) Net sales (mn SEK) +21% 3,0 ~4,8-5,1 +26% 2,5 0,7 +68% Growth 0,4 ~3,8-4,1 ~3,0-3,1 +68% 2,6 +68% +12% 2,3 0,5 Core 2,3 1,7 0,3 2,1 +68% 0,3 +1
Slide 97: …and further improve adjusted EBITDA in our existing footprint
…and further improve adjusted EBITDA in our existing footprint Core markets Growth markets 9-11% 4,0 10 10 5-7% 4,0 8% 8% 3,0 8 3,0 0 2,0 6 -9% 2,0 -10 1,0 2,1 2,3 4 -16% 1,0 0,0 2 -20 0,5 0,7 0,0 2022 L12M 2025 2022 L12M 2025 Adj. EBITDA % Net sales Total current business 10 10,0 7-9% 8,0 8 6,0 6 4
Slide 98: …however, for further growth in new categories we are ready to invest
…however, for further growth in new categories we are ready to invest part of it Mid term profitability outlook 1-2% 1-2% 2025 7-9% 5-7% 4-6% Current business Depreciation Current business Investment into Reported Adj. EBITDA Adj. EBIT Emerging markets Adj. EBIT 2023-11-28 Capital Market Day 2023 98
Slide 99: Investing into new categories will improve profitability over time
Investing into new categories will improve profitability over time Retail margin 47% Retail margin 29% Retail margin 13% 2023-11-28 Capital Market Day 2023 *Leading offline retailers RSP & internal information, retail margin represents front margin only 99
Slide 100: Highly capital efficient business model
Highly capital efficient business model Favourable net working capital characteristics With low level of leverage SEKm SEKm 3.1% 8.8% 6.1%3) 0.6 1.8 1.05) 229 185 183 70 131 126 375 102 335 259 72 46 -189 -146 -151 2021 2022 2023 Q3 2021 2022 2023 Q3 Current assets1) Current liabilities2) NWC % of n
Slide 101: M&A s were an important part of our past journey
M&A M&A s were an important part of our past journey: Norway – Q2 2018 Future deals has to satisfy strict strategic criteria's: • Opening a market where we are not present yet • Opening a category where we do not have a USA / Europe – Q3 2019 strong footprint • Bringing new capabilities, we do not h
Slide 102: Capital allocation Principles
Capital allocation Principles 1 Continue to invest in our own infrastructure 3 Support strategic initiatives Remain opened towards acquisitions which will bring capabilities which we cannot deliver over the medium to long term ourselves. This could be 2 Invest into emerging opportunities established
Slide 103: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 1 2 Developing our relationship with Consumers 13 3 Our relationship with Brand Owners, and the benefits to Consumers 25 4 Building the infrastructure for accelerated Growth 43 5 Our Markets’ performance and opportunities 55 Q&A
Slide 104: On track to deliver 2025 targets, while investing for future
On track to deliver 2025 targets, while investing for future Beyond 2025… • Revenue of SEK5bn in 2025 • Substantial growth opportunities likely to remain, underpinned by sustained • High Single Digit adj EBIT margin for consumer demand and the shift to combined Core & Growth divisions in online. 202
Slide 105: Underpinning the success
Underpinning the success Performance Operating model Technology and processes People and culture Inspiring healthier enjoyment to millions 2023-11-28 Capital Market Day 2023 105
Slide 106: Inspiring healthier enjoyment to millions
Inspiring healthier enjoyment to millions 106