Haypp Group Ab · OMXSTO:HAYPP
Haypp Group Ab — Investor Day (November 2023)
116 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 for millions
MISSION Inspiring healthier enjoyment for millions 2023-11-28 Capital Market Day 2023 2
Slide 3: Focused on Healthier Enjoyment Products
Focused on Healthier Enjoyment Products Significantly lower levels of risk from modern alternatives to cigarettes Food retail and convenience stores Typical POS Food retail, convenience stores and online Pharmacies Conventional Other tobacco Hea t not Burn Va pour products Low toxi cant smokeless Lo
Slide 4: The Impact of Reduced Harm Products
The Impact of Reduced Harm Products Significantly lower smoking prevalence in Sweden and Norway Share of population who are smokers (2020) 50% 40% 30% 20% 10% 0% SK SE FI BE SI FR RO BG EU28 UK NL NO EE ES EL AT IE IT LU LV LT PT PL MT DK DE CY CZ HU HR 2023-11-28 Capital Market Day 2023 4
Slide 5: Human Years Saved
Human Years Saved 2023-11-28 Capital Market Day 2023 5
Slide 6: Over 5mn years saved
Over 5mn years saved 1960 1980 2000 2020 2040 2060 2080 HAYPP GROUP
Slide 7: 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 7
Slide 8: Haypp Group at a glance
Haypp Group at a glance • Founded 14 years ago, with a focus on snus in • Staff of 191, of whom 41 are in our warehouses Sweden. 6 years ago emphasis shifted to nicotine pouches (NPs), and started to expand outside • LTM: Revenue SEK3bn, EBITDA SEK126mn (Core Sweden SEK188mn, Growth -SEK62mn) • HQ i
Slide 9: 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 bn (1) CAGR 2023–28 Strong demand for less harmful products CAGR +27% Legislation favours modern nicotine products +35% 15 CAGR +18%
Slide 10: Nicotine Pouches and Snus – the Ideal E-Goods
Nicotine Pouches and Snus – the Ideal E-Goods Compelling category characteristics Sma ll a nd s imilarly Hi gh purchase Low return Non-cycl ical Compl ex regulatory environment2) s i zed boxes 1) frequency frequency Nicotine pouches and snus Pha rma ceuticals Show several similarities to NP & snus G
Slide 11: We Continue to Deliver on Our Successful Strategy
We Continue to Deliver on Our Successful Strategy Organic growth Benefits of scale Customers come Scale enables us to improve our to us for: advantages on: Good Price Price Wider Assortment Assortment Rapid Convenience Convenience Search Engine Optimisation (SEO) 2023-11-28 Capital Market Day 2023 1
Slide 12: Financial Targets
Financial Targets Increased targets in Original targets New ambition existing business Haypp Group targets to reach net sales of at Haypp Group targets to reach net sales of at Expansion into adjacent categories and new Growth least SEK 5bn by 2025, predominantly through least SEK 5bn by 2025, throu
Slide 13: 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 14: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 2 Developing our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to Consumers 4 Building the infrastructure for accelerated Growth 5 Our Markets’ performance and opportunities Q&A and break 6 Na
Slide 15: Setup for Growth
Setup for Growth Attract Generating traffic Convert Customer experience Retain CRM 2023-11-28 Capital Market Day 2023 16
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 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 *Ba s ed on Cl ick through ra
Slide 17: 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 18: Fulfilling Consumer Expectations. And Google's.
Fulfilling Consumer Expectations. And Google’s. Relevance User experience Content Widest & unique assortment Bespoke platform Global scale Top search engine ranking 2023-11-28 Capital Market Day 2023 19
Slide 19: 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 20
Slide 20: Haypp's SEO Positions have Created a Wide Moat
Haypp’s SEO Positions have 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 stor
Slide 21: Loyalty Fuels Consumer Base Growth
Loyalty Fuels Consumer Base Growth Continuously growing consumer base… …increasing AOV and repurchase rates as we retain consumers Attract new customers Make them come back Number of consumers / quarter +48% +11% Number of quarterly a ctive customers 1), 2018 – Q3 2023 500000 Increase in average Inc
Slide 22: Reaching the Right Person at the Right Time
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 23: 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 24
Slide 24: 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 NPS 61 NPS 58 ~90% 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 25: 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 26
Slide 26: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 2 Developing our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to Consumers 4 Building the infrastructure for accelerated Growth 5 Our Markets’ performance and opportunities Q&A and break 6 Na
Slide 27: Our role is to help consumers navigate brands
Our role is to help consumers navigate brands and to help brand owners navigate consumers. 2023-11-28 Capital Market Day 2023 28
Slide 28: Our role is to help consumers navigate brands
Our role is to help consumers navigate brands and to help brand owners navigate consumers. Brand owners The most attractive consumer Unique launch and activation Ground-breaking Profitable partnership base platform Insights capabilities Consumers Assortment Price 2023-11-28 Capital Market Day 2023 2
Slide 29: Haypp Group Consumer Base – not only Large, but Early Adopters
Haypp Group Consumer Base – not only Large, but Early Adopters Ha ypp Group Consumer base Sweden – NP s hare of market, Haypp vs Offline 1,000,000 45% YAP 900,000 40% 800,000 35% 700,000 30% • More urban 25% • Digitally oriented 600,000 • Gender balanced 12-18 months avg 20% 500,000 15% 400,000 Majo
Slide 30: Opportunity to Test and Learn in an Accelerating Market
Opportunity to Test and Learn in an Accelerating Market Sha re of Ma rket products launched #of New NP La unches Product l i fe cycl e – de-list ra te of new launches i n 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% 0 0% 2019 2020 202
Slide 31: Haypp Group Media Eco-system
Haypp Group Media Eco-system Activation tools (examples) On-site activation with +3M sessions per month Awa reness BRAND PAGES ON SITE COMMUNICATION SEARCH BAR VISIBILITY SPONSORED ~65% Richest awareness offer with broad reach LISTING of all NP trials in SE created by Haypp MAIL COMMUNICATION CHECK-
Slide 32: 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 33: 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 34: Haypp Insights – Helping Brand Owners Understand Consumers
Haypp Insights – Helping Brand Owners Understand Consumers CONCEPT LAUNCH Multidisciplinary +4000 data points on Direct access to each Team AWARENESS every customer customer CONSIDERATION • Powered by our 4000+ data points per consumer, direct TRIAL consumer feedback and AI/machine learning. REPURCH
Slide 35: Haypp Insights – Helping Brand Owners Understand Consumers
Haypp Insights – Helping Brand Owners Understand 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 2023
Slide 36: Wrap-up
Wrap-up Mutually beneficial (adding value) relationship with the brand owners Unique launch and The most attractive Most profitable Ground-breaking activation consumer base partner Insights capabilities platform 100% Youth access prevention 2023-11-28 Capital Market Day 2023 37
Slide 37: Wrap-up
Wrap-up Unique launch and The most attractive Most profitable Ground-breaking activation consumer base partner Insights capabilities platform 100% Youth access prevention Assortment Price 2023-11-28 Capital Market Day 2023 38
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 39
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 differs 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 42
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 43
Slide 43: Table of contents
Table of contents Speaker 1 The changing world of nicotine and our position in it 2 Our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to consumers 4 Building the infrastructure for accelerated Growth 5 Our Performance so far 6 Q&A – 10 min 7 Regulatory environmen
Slide 44: Delivering Scalable Advantages through Infrastructure
Delivering Scalable Advantages through Infrastructure 2023-11-28 Capital Market Day 2023 45
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 46
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 47
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 The model Parts ofrefined. Building onbusiness our existing our Global ERP,powered are already new modernized version by the newof our e-com platform, – infrastructure le
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 first unit sold • 10 years of unique data about consumer patterns, products and dynamics around our cate
Slide 49: Convenience
Convenience The key to loyal and satisified consumers 2023-11-28 Capital Market Day 2023 50
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 3PL 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 cost/order <1% average OOS Improved l
Slide 52: Stockholm Warehouse at Work
Stockholm Warehouse at Work 2023-12-22 HAYPP GROUP 53
Slide 53: 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, fine tunes and Allows us: handles it at scale. • Quick and easy onboarding of new Haypp's new shipping logistics partner facilitates an end-to- shipping providers. end i
Slide 54: 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 payment age verified transactions providers. • Online age verification with the top partners for the r
Slide 55: Wrap-up
Wrap-up Efficient & agile Scalable Replicable Expandable 2023-11-28 Capital Market Day 2023 56
Slide 56: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 2 Developing our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to Consumers 4 Building the infrastructure for accelerated Growth 5 Our Markets’ performance and opportunities Q&A and break 6 Na
Slide 57: From a garage to 3bn SEK
From a garage to 3bn SEK 2023-11-28 Capital Market Day 2023 58
Slide 58: From Years Saved… …To Volumes Sold
From Years Saved… …To Volumes Sold 5,227,371 2023-11-28 Capital Market Day 2023 59
Slide 59: Sweden
Sweden SOM Share of Market 30% E-SOM Sweden means nicotine pouches, it is Ecom Share of Market 85% the most competitive and toughest NP Volume 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 60: 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: experimentation
Slide 61: 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 62
Slide 62: Traditional offline retail
Traditional offline retail • Closed doors • Plain packaging • No guidance • Limited trial • No brand building 2023-11-28
Slide 63: Our Stores
Our Stores • Brand visibility • Product explanation • Product guidance • Pack size options • Price awareness • Brand introduction 2023-11-28 Capital Market Day 2023 64
Slide 64: 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 trajectory. 16 14 Norwegian consumers were upfront driving 12 nicotine category growth before plain packaging and regulation; now all they have is us. Millions 10 8 Our visibi
Slide 65: USA
USA SOM Share of Market 2.5% E-SOM Ecom Share of Market 85% USA is the biggest market with highest group NP Volume 25% growth. on Group sales Huge opportunity ahead boosted by possible NP YoY 47% Volume growth innovation Traffic Growth +55% Order Growth +39.9% 2023-11-28 Capital Market Day 2023 Sour
Slide 66: 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 → +57% YoY +0.5pp SOM 4% | 2% 3% | 6% 45% more purchasing customers 5% | 3% 4% | 2% Complexity → PMTA, Adult verification 6%|15% 4% | 8% Over
Slide 67: 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 → Double consumer acquisition after new 1.5% warehouses and -10pp churn rate 2day nationwide shipping implemented 2023-11-28 Capital Market Day 2023 68
Slide 68: United Kingdom
United Kingdom SOM Share of Market 4.5% E-SOM Ecom Share of Market 65% UK is the epicenter of harm reduced products NP Volume on Group sales 2% 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 69: Perfect Timing for a Blooming Category
Perfect Timing for a Blooming Category Vape learnings so far: 100,000 Nicotine Pouches Volume • Fierce competition 90,000 • Fragmented suppliers Key for success: 80,000 +94% YoY • Incredible innovation pace 70,000 • Improved convenience • Agility is key • Category knowledge • Upcoming regulation 60,
Slide 70: DACH
DACH SOM Share of Market 15% E-SOM Ecom Share of Market 35% NP Volume DACH is where convenience will make the on Group sales 11% difference since product resonates well NP YoY with consumers. Volume growth 39% Traffic Growth +5% Order Growth +15% 2023-11-28 Capital Market Day 2023 Source: 2023 Compa
Slide 71: Small Steps in a Category with Increasing Relevance
Small Steps in a Category with Increasing Relevance Nicotine Pouches Volume 500,000 450,000 400,000 Improved convenience 350,000 +40% +93% +28% 300,000 250,000 200,000 Covid 19 accelerates online 150,000 migration 100,000 NP banned from Offline 50,000 universe in DE 0 2019 2020 2021 2022 2023 2023-1
Slide 72: 2023 – Another Year of Strong Performance
2023 – Another Year of Strong Performance Quarterly NP Volume 12,000,000 (Ca ns ) 10,000,000 8,000,000 Attra ct Cons umers 6,000,000 Enha nce SEO Supplier Support 4,000,000 2,000,000 Improved Convenience Improved Assortmet 0 2018Q1 2018Q3 2019Q1 2019Q3 2020Q1 2020Q3 2021Q1 2021Q3 2022Q1 2022Q3 2023Q
Slide 73: Is There Still Room to Grow?
Is There Still Room to Grow? DE AT CH UK Haypp’s Cans in Austria Haypp’s Cans in Switzerland Haypp’s Cans in Germany Haypp’s Cans in UK Total NP Cans in Austria Total NP Cans in Switzerland Total NP Cans in Germany Total NP Cans in UK Source: Arthur D Little & company estimates
Slide 74: Room to Grow in NP
Room to Grow in NP SE NO US Haypp’s Cans in Austria Haypp’s Cans in Switzerland Haypp’s Cans in Germany Haypp’s Cans in UK Haypp’s Cans in Norway Haypp’s Cans in US Haypp’s Cans in Sweden Total NP Cans in Austria Total NP Cans in Switzerland Total NP Cans in Germany Total NP Cans in UK Total NP Cans
Slide 75: Vast Broader Addressable Market
Vast Broader Addressable Market CIGARETTES IN CURRENT MARKETS VAPE IN CURRENT MARKETS NP IN CURRENT MARKETS Haypp’s Cans in Current Markets Total NP Cans in Current Markets Total Vape devices/pods in Current Markets Total Cigarette packs in Current Markets Source: Arthur D Little & company estimates
Slide 76: 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 77
Slide 77: Agenda
Agenda 1 The changing world of nicotine and our position in it 2 Our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to consumers 4 Building the infrastructure for accelerated Growth / Customer 5 Our Performance so far 6 Q&A – 10 min 7 Regulatory environment 8 Emer
Slide 78: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 2 Developing our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to Consumers 4 Building the infrastructure for accelerated Growth 5 Our Markets’ performance and opportunities Q&A and break 6 Na
Slide 79: Regulatory Environment
Regulatory Environment 2023-11-28 Capital Market Day 2023 80
Slide 80: Acting Inline with Society's Expectations
Acting Inline with Society’s Expectations • We are a 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 Haypp Grou
Slide 81: The Outlook for NP and Online
The Outlook for NP and Online NP and the online channel US market will improve with newer Regulation will continue to for RRPs will grow generation NPs satisfying PMTA evolve in the RRP category – requirements and receiving MGOs Haypp will benefit from regulatory changes 2023-11-28 Capital Market Da
Slide 82: Notable Regulatory Changes
Notable Regulatory Changes Norwegian online sales California offline retail Germany NP sales Swedish excise change ban proposal flavour ban restrictions 2023-12-22 Capital Market Day 2023 83
Slide 83: Harm Reduction Gaining Momentum
Harm Reduction Gaining Momentum − Federal court decision in 2019 ruled the ban of snus as − Parliament voting against stricter ANDTS1) strategy. unconstitutional and allowed national sale of snus. − Excise change inline with harm. − Ruling established practise to embrace future harm reducing policie
Slide 84: NP category and online sales will remain viable in Europe through 2028
NP category and online sales will remain viable in Europe through 2028 2023-11-28 Capital Market Day 2023 85
Slide 85: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 2 Developing our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to Consumers 4 Building the infrastructure for accelerated Growth 5 Our Markets’ performance and opportunities Q&A and break 6 Na
Slide 86: Adjacent Opportunities
Adjacent Opportunities 2023-11-28 Capital Market Day 2023 87
Slide 87: Transition from Smoking to Reduced Risk Products has just Begun
Transition from Smoking to Reduced Risk Products has just Begun Conventi onal Other tobacco smoking Hea t not Burn Ni coti ne va ping Low toxi cant smokeless Low toxi cant smokeless Li censed medical ci ga rettes products products toba cco (e.g. Swedish toba cco-free nicotine products (e.g. ci gars,
Slide 88: Reduced Risk Products Logical Next Step for Haypp
Reduced Risk Products Logical Next Step for Haypp Nicotine consumers in Sweden, Norway, US, UK and DACH 1% 100% 1%2% 1% 3% 4% 6% 1% 8% 11% 11% 13% 15% 15% 15% 16% 2% 16% 18% 3% 19% 2% 20% 21% 4% 7% 2% 2% 2% 23% 23% 6% 2% • Nicotine pouches fastest growing but account for 7% 8% 8% 8% 2% 2% 22% 23% 7%
Slide 89: Landscape Ready for Disruption
Landscape Ready for Disruption Share of RRP Share of RRP Growth rate 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 significant Share
Slide 90: Product Innovation Accelerating
Product Innovation Accelerating NP Nicotine 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 in Disposable Vapes going from zero to
Slide 91: 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 harm reduction regulatory regime 2023-11-28 Capital Market Day 2023 92
Slide 92: Haypp Well Positioned for RRP
Haypp Well Positioned for RRP Consumer needs are the same Search Price Assortment Convenience Consumers are going online to explore Consumers expect attractive pricing in all Consumers demand better products and Consumers want a convenient buying RRP RRP want to explore innovations experience Our in
Slide 93: Long Runway Ahead for Haypp Expansion Plan
Long Runway Ahead for Haypp Expansion Plan Existing business delivering solid growth Existing operational templates can be and profitability creating oxygen for next utilized for adjacent opportunities phase opportunities Positioning ourselves for growth in decades to come 2023-11-28 Capital Market
Slide 94: 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 * Month 1 is January 2013 ** Month 1 is January 2018 2023-11-28 Capital Market Day 2023 95
Slide 95: 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 96
Slide 96: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 2 Developing our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to Consumers 4 Building the infrastructure for accelerated Growth 5 Our Markets’ performance and opportunities Q&A and break 6 Na
Slide 97: Sustained Sales Growth Driven by Growing Consumer Base
Sustained Sales Growth Driven by Growing Consumer Base A rapidly growing consumer base… … drives top line growth Number of active consumers (‘000s) Group Net Sales (SEK mn) 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 Capit
Slide 98: Key Financial Highlights
Key Financial Highlights Unparalleled growth... …scale driving increased product margin… …driving increasing profitability SEK mn SEK mn SEK mn 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 L
Slide 99: Core Markets – Sustained Growth
Core Markets – Sustained Growth Sustained sales growth in Core markets… …with improving profitability… …and high order frequency Net sales (SEK mn) Adj. EBITDA % Orders / consumer ‘22 9 8 8 +41% +36% 2.340 8 2.145 7 5,2 7 1.978 6 6 3,7 1.475 5 4 4 77% 3 694 83% 2 86% Contribution to 87% 87% Group sa
Slide 100: Growth Markets – Improving Profitability with Further Room to Grow
Growth Markets – 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 (SEK mn) Adj. EBITDA % Orders / consumer ‘22 680 0 +41% +57% -5 454 289 -10 -9 236 23% -15 11
Slide 101: 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 5bn target Net sales (SEK mn) Net sales (SEK mn) +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 Core 0,5 2,3 1,7 0,3 2,1 +68% +12% 0,
Slide 102: …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 103: …to Fund Growth in Emerging Markets
…to Fund Growth in Emerging Markets Mid term profitability outlook (margin) 1-2% 1-2% 2025 7-9% 5-7% 4-6% Current business Adj. Depreciation Current business Adj. Investment into Reported Adj. EBITDA EBIT Emerging Markets EBIT 2023-11-28 Capital Market Day 2023 104
Slide 104: 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 105
Slide 105: Highly Capital Efficient Business Model
Highly Capital Efficient Business Model Favourable net working capital characteristics With low level of leverage SEK mn SEK mn 3.1% 8.8% 6.1%3) 0.6 1.8 1.05) 185 229 183 70 131 126 375 102 259 335 72 46 -189 -146 -151 2021 2022 2023 Q3 2021 2022 2023 Q3 Current assets 1) Current liabilities 2) NWC
Slide 106: M&A
M&A M&A was an important part of our journey: Norway – Q2 2018 Future deals must satisfy strict strategic criteria: • Opening a market where we are not present yet • Opening a category where we do not have a strong USA / Europe – Q3 2019 footprint • Bringing new capabilities that we do not have inho
Slide 107: Capital Allocation Principles
Capital Allocation Principles 1 Continue to invest in our own infrastructure 3 Support strategic initiatives Remain open to acquisitions that bring capabilities which we cannot deliver over the medium to long term ourselves, such as established stores in emerging markets 2 Invest into adjacent categ
Slide 108: Agenda
Agenda Speaker 1 The changing world of nicotine and our position in it 2 Developing our relationship with Consumers 3 Our relationship with Brand Owners, and the benefits to Consumers 4 Building the infrastructure for accelerated Growth 5 Our Markets’ performance and opportunities Q&A and break 6 Na
Slide 109: On Track to Deliver 2025 Targets, while Investing for Future
On Track to Deliver 2025 Targets, while Investing for Future • Revenue of SEK5bn in 2025 • High single digit (5-7%) adj EBIT margin for combined Core & Growth divisions in 2025 • Investment of about 1-2ppt of adj EBIT margin into Emerging division through 2025 (new categories / countries) 2023-11-28
Slide 110: On track to deliver 2025 targets, and Beyond 2025
On track to deliver Beyond 2025… 2025 targets, while investing for future • Revenue of SEK5bn in 2025 • Substantial growth opportunities likely to remain, underpinned by sustained consumer • High single digit (5-7%) adj EBIT margin for demand and the shift to online. combined Core & Growth divisions
Slide 111: Underpinning our Success: Performance
Underpinning our Success Performance 2023-11-28 Capital Market Day 2023 112
Slide 112: Underpinning our Success: Operating model
Underpinning our Success Operating model 2023-11-28 Capital Market Day 2023 113
Slide 113: Underpinning our Success: Technology and processes
Underpinning our Success Technology and processes 2023-11-28 Capital Market Day 2023 114
Slide 114: Underpinning our Success: People and culture
Underpinning our Success Operating model People and culture 2023-11-28 Capital Market Day 2023 115
Slide 115: Underpinning our Success
Underpinning our Success Operating model Inspiring healthier enjoyment for millions 2023-11-28 Capital Market Day 2023 116
Slide 116: Inspiring healthier enjoyment for millions
Inspiring healthier enjoyment for millions 117