Anora: Viva Wine, the main competitor in wines, made strong progress in Q2

Viva Wine, the main competitor of Anora's Wine segment, announced its Q2 result today. Despite the weak market development, Viva continued to grow and gain market share. Its profitability improved significantly compared to both the comparison period and Q1, supported by growth and price increases. Viva also sees a positive margin trend going forward, which we see as slightly positive for Anora as well. Compared to Anora's Wine segment, Viva is performing better in terms of both growth and profitability. We wrote about Viva Wine's development and targets in this comment in the spring.

Viva Wine grew in a weak market and improved its profitability

Viva Wine's Nordics segment is very similar to Anora's Wine segment, although Anora has operations in Denmark while Viva does not. Viva was able to increase its volumes in the monopoly markets (Finland, Sweden, Norway) by 5% in Q2, while the market declined by almost 7%. Viva thus continued its long-standing upward trend in market share in all markets and is already the market leader in Sweden and Finland. Viva's revenue grew by 8% from the comparison period, while Anora's remained flat year-on-year.

In terms of profitability, Viva significantly improved its profitability, as expected, when the price increases took effect in the spring. Viva had already communicated this in connection with the Q1 results. Viva's adjusted EBITA margin in the Nordics segment was already 9.8% in Q2 (7.1% in the comparison period), compared to the company's target (for the group) of 10-12%. The company commented that it will continue to raise prices in the fall, and as a result the gross margin should continue its positive trend for the rest of the year. Anora had implemented some price increases before Viva, and Anora's gross margin was already at a good level in Q1, but it also increased significantly in Q2 year-on-year. Anora has not stated that it expects price increases to support margins in the future, so Viva's comments in this regard may also support Anora's margin development.

Viva's margin is better and more consistent than Anora's

As you can see from the charts below, Anora's Wine segment margin development has been much more volatile than Viva's. It also shows that Viva's margin jumped in Q2'24 after a long period of flatness to early 2022 levels, which we believe is the closest to "normal" of the periods reported by Viva, as the 2021 result was supported by the exceptionally high volumes of the COVID era, while the 2023 and also Q1'24 results were weighed down by weaker currencies and higher raw material costs and the delay in price increases to compensate for them. It is worth noting in the charts that the margin for Viva is EBITA, while for Anora it is EBITDA. The profitability of Anora's Wine segment is therefore still significantly lower than that of Viva.