President’s Statement: Magdalena Gerger on the year gone by

2015 was a good year for Systembolaget. We’ve continued working to become a more sustainable company and to live up to the ambitious expectations of our customers, employees and owners. Our long-term efforts to be of greater benefit to society and to improve both our customer interactions and our product range are continuing to produce the desired results. There are many signs that things are moving in the right direction, for example in our Alcohol Index. Our Proof of Age Checks, Customer Satisfaction Index (CSI), and Opinion Index (OPI) are also continuing to perform strongly.

Systembolaget’s social mandate is based on the realisation that alcohol is not like other products. Our high OPI figures show that this realisation is shared by our customers, and by continuing our development work and achieving good results, we are making progress towards our goal of a society in which alcoholic drinks are enjoyed with due regard to health considerations so that no one is harmed.

Our mandate also includes educating people about the risks associated with alcohol, and one of the ways in which we do this is by holding seminars nationwide on particular themes. In March, for example, we organised a well-attended seminar on women and alcohol that included the presentation of a survey by TNS Sifo showing that one in every five Swedish women is worried about her partner’s alcohol consumption10.

Providing a high quality service is vital if we are to help ensure positive societal development. Offering a high quality customer interaction that includes qualitative advice – on combining food and drink and on alcohol and health – helps us maintain our customers’ confidence in us and in our monopoly. Which is why we were naturally delighted in April when Systembolaget, for the third year in succession, was declared “Best service provider in Sweden – all categories” in ServiceScore®. Just over 3,000 customers were asked about service as part of the survey, in which Systembolaget also won ”Best retail company”, again for the third year in succession 20.

By offering a forum for debate and dialogue on the latest findings of research in the field of alcohol, Systembolaget can help ensure that people are well-informed about the risks associated with alcohol. Our annual alcohol research conference, which takes place in May, brought together alcohol researchers from Sweden and other parts of the world. Our Alcohol Research Council has also, over the course of the year, awarded SEK 7 million in grants to 31 alcohol research projects. This was a more ambitious programme of grants than ever before and we have retained this ambition level for 2016.

In September, our Board of Directors and members of the Group management team visited Sicily. The aim of the trip was to further our knowledge of actual working conditions through study trips and dialogues with politicians, wine producers and other stakeholders. It also gave us the opportunity to talk about our social mandate, our goals, and our expectations of a sustainable supply chain, and to clarify what sustainability and Corporate Social Responsibility (CSR) work mean for us.

The autumn was busy with Systembolaget’s 60th birthday celebrations, both in stores and in the form of employee gatherings across the country. In October, Systembolaget organised a major conference entitled Agenda 2015 – a crossroads for sustainable health, and which addressed contemporary global public health challenges. The autumn also saw us organise two well-attended seminars on alcohol and children and alcohol advertising, respectively.

Alcohol consumption – more common in everyday situations

Although the long-term trend does seem to have levelled off slightly, the Swedish trend towards a reduction in alcohol consumption is continuing. Young people are making their alcohol debut later than they were8 and parents seem to have a less permissive attitude towards buying alcohol on behalf of their children. Alongside this, however, we are also seeing a change in alcohol norms, with attitudes towards alcohol consumption in everyday life becoming increasingly permissive. This is true, for example, with regard to alcohol consumption in the workplace. Our subsidiary company, IQ, presented a new Sifo survey in the autumn showing that almost 7 out of every 10 people say that they have attended work-related events where people drank too much alcohol 19.

According to the most recent survey by the Swedish Council for Information on Alcohol and Other Drugs (CAN), which applied to 2014, alcohol consumption fell by 4 per cent to 9.39 litres of alcohol per head of population aged 15 or above17. This means that consumption has stabilised.

The Alcohol Index, which is commissioned annually by our subsidiary company, IQ, and produced by Novus, is a combined measurement of people’s attitudes towards alcohol in various situations18. The Alcohol Index is one of Systembolaget’s strategic key ratios and has also, since 2014, been one of our Sustainability goals. The Alcohol Index for 2015 remained at 65, which is below our target figure of 66.

Satisfied customers and continued strong popular support

Systembolaget is the company in which Swedes have the greatest confidence22. The OPI, where TNS Sifo measures public support for Systembolaget’s monopoly on retail sales of beer, wine and spirits, has never been higher since measurements began in the early part of the millennium. The OPI in 2015 was 77 per cent, rising from 74 in 2014.

Our CSI, which is produced by CFI, achieved a record high level of 84 for the year, rising from the 2014 level of 83, which was also our target figure for 2015. The fact that we received the ServiceScore®20 awards in the categories of Best Service Company and Best Retail Company in Sweden for the third year in succession is proof that our employees’ hard work and commitment are appreciated.

Sales

Sales by volume remained stable during the year, totalling 470.7 million litres, and revenues increased to SEK 27.6 billion. Demand for alcohol-free and organic products continued to increase – 43.9 (26.2) million litres of organic products were sold during the year, corresponding to a year-on-year increase of 68 per cent. The majority of the organic sales volumes come from wines, but the rate of increase is now greater for organic beers. Organic products accounted for 9.3 per cent (5.6) of total sales volumes during the year – not far from our strategic goal of 10% of our sales by 2020, showing that our customers share our far-reaching ambitions in this area.

Sick leave and inclusiveness work

Ensuring the health of our 5,000 or so employees is an important and obvious part of our role as managers, so I am very concerned by the increase in sick leave rates, both within Systembolaget and in society as a whole. Getting to grips with this trend is a top priority for us and one that we will be addressing throughout the organisation.

Expanding our recruitment base so that we can employ more people with different skillsets and from different backgrounds is another priority area for our HR work. Success in this respect will ensure that our workforce more closely mirrors Sweden’s population, which is important if we are to continue to be able to interact professionally with our customers in a way that lives up to their expectations. It is also important, in terms of our future talent pool, that we are able to attract, recruit and develop people with different backgrounds and types of life experience.

Sustainability continues to be a high priority

As a major player, with substantial influence and a unique position in the market, Systembolaget has real potential for influencing developmental trends, which is why we view our efforts to promote the development of the global drinks industry towards sustainability as a natural and vital part of what we do. And which is why we take responsibility for working conditions, human rights, environmental issues and anti-corruption, both within our own operations and throughout our value chain.

In 2015, we continued to prioritise our efforts to boost sustainability throughout the value chain. Sustainability work must, in the long-term, be a fully integrated part of our day-to-day work, and we have taken a number of steps in the right direction in this respect during the year. This is absolutely in line with our purpose as a company – a company that exists to reduce harm must naturally work in a way that minimises harm and which is sustainable in every respect.

Our sustainability work is based on the ten principles of the UN’s Global Compact with regard to human rights, labour, the environment, and anti-corruption, and to which Systembolaget has been a signatory since 201323. We already reported in accordance with the Global Reporting Initiative (GRI) and in 2015, we reported for the second time in accordance with the new GRI guidelines, G4.

Reducing our climate impact is one of Systembolaget’s strategic sustainability goals and our climate goal for 2020 will entail a reduction in emissions of 14,000 tonnes of CO2 equivalents from the base year figure in 2014. Our own operations only account for 2% of our total climate impact and if we are to become a more sustainable business, we must involve our suppliers and producers in our work. We are seeing a real sense of commitment to this work across the industry and in 2015, we have engaged in a dialogue on the subject of more eco-friendly packaging. We intend to continue our work with climate-smarter packaging in 2016, because glass manufacturing generates substantial CO2 emissions.

Expectations are always rising

Our customers are demanding more and more of us in terms both of our range and our customer interaction. Digital accessibility, transparency, a sustainable offering, and a clear premiumisation trend – if our customers are to remain satisfied, we must never stop developing. Our employees are our primary resource and it is through training and the desire to learn that we can continue to deliver a world-class customer interaction. Generating the preconditions for this development poses a challenge, both in our everyday operations and in terms of our long-term strategic development work, as do achieving a reduction in sick leave rates and increasing our company’s diversity. But perhaps the biggest challenge we face is the worrying trend towards a more permissive attitude to alcohol in everyday situations. This trend is being reinforced by increasingly aggressive and expensive alcohol marketing, not least in social media, and this is an area in which clearer regulations are a must if this advertising is not to lead to an increased shift in norms. This normalisation trend is completely contrary to our vision – a vision of a society where alcoholic drinks are enjoyed with due regard to health considerations so that no one is harmed.

I look forward to the future with every confidence. It is by continuing to develop our offering that Systembolaget will continue to be a relevant and modern company – and a cornerstone of Sweden’s cohesive and unified alcohol policy.

Systembolaget in brief

  • 5,360 employees
  • 436 stores and approximately 500 agents
  • 650 active drinks suppliers
  • Approximately 16,000 items – 2,400 in the fixed range and 13,600 in the available for order range
  • Approximately 121 million customer visits to our stores
  • 37 million visits via digital channels
  • 30 million visits to systembolaget.se
  • The Search & Find app was used 7.5 million times
  • The Promillekoll app was downloaded 152,000 times (a total of 1.1 million times since its launch)
  • Customer services answered 41,000 emails, 79,000 phone calls, and provided 2,000 responses on Chat (new Q4 channel)
  • Net sales: SEK 27.6 billion
  • Net profit for the year: SEK 198 million
  • Return on shareholders’ equity: 11.6%
  • Equity/assets ratio: 28.3%