Good afternoon and warm welcome to Tokmanni Press Conference. My name is Mika Rautiainen. I'm the CEO for Tokmanni Group. Today, together with me is Mr. Tobias Wasmuht, the CEO of SPAR International, giving the presentation. The press conference is all about the fact that this morning Tokmanni has signed a license agreement with SPAR International. The agenda for this press conference is as follows. I will first tell something about the partnership agreement and something about the grocery market in Finland, the SPAR rollout plan in Finland, and then I will invite Tobias to give a presentation and introduction of SPAR International. After a short summary, Tobias and myself, we will be answering questions if there are any. Let's start. The SPAR license gives Tokmanni the exclusive right to sell SPAR products and conduct SPAR business in Finland.
Now, the SPAR products will be the first thing that our customers will notice in Tokmanni stores, hopefully already this spring. From the customer's point of view, if we look at the whole agreement from the customer's point of view, it's more alternatives and, of course, better service to customers. First of all, it will be like a wider assortment of groceries. It will bring, or we will introduce, new products in Finland. Tokmanni is known for the low prices, so we'll also continue with the low price idea that we as a variety discount retailer have. The better service comes from the fact that we can, in future, offer our customers one-stop shopping, meaning that the customers can buy food and non-food products at the same time in the same store.
Of course, something which is very typical for Tokmanni is the delightful shopping experience, which we will continue also when we will be launching the SPAR products and SPAR departments in the Tokmanni stores. Now, Tokmanni will benefit from the SPAR retail network's purchasing power and proven operational concepts. We feel that with non-groceries, we are quite competitive, actually, in Finland, and we're able to give a very, very good price level for our customers. But when it comes to groceries, of course, the competition is hard, and in this case, it's SPAR International's retail network and the purchasing power, which we expect to improve our competitiveness with the groceries market. Of course, when we move towards the food stores also in Finland, SPAR has almost 14,000 stores all around the globe.
Obviously, there are a lot of good examples and a lot of good benchmarks for Tokmanni through this SPAR collaboration. Of course, in Finland, the grocery trade enables Tokmanni's growth. Tokmanni has a background with non-groceries, but during the last couple of years, due to the economic situation in Finland, the non-grocery sales have been quite stable. Groceries have been growing, actually, quite a lot. The percentage last year for the first nine months was already 53.3%. In this case, we really have to invest in the competitiveness with the groceries. Together with SPAR, we are able to improve the competitiveness a lot. At the moment, we have 20 fresh food stores out of 204 stores in Finland.
Obviously, 20 food stores is a very small volume, and since this is a little bit like volume business, so it's quite important to increase the fresh food offer in Tokmanni stores and otherwise as well. Together with SPAR, we are able to do that. And from the customer's point of view, together, groceries and fresh food will increase shopping frequency and improve customer loyalty together with the sales of non-groceries. Here you can see some stats from the Finnish grocery trade. It's been the CAGR for the last five years is plus 5.3%. Tokmanni's share has been quite stable. So obviously, we feel that there is a lot of potential to increase our share in the grocery market in Finland with the help of this SPAR cooperation. We've been several years looking for the right partner with the groceries business.
There might have been some candidates, but it hasn't been very clear for us whether we will be winning or whether there is like a profitable deal with some partners. Now, when we started the discussions with SPAR International, it was like crystal clear that SPAR is the best possible partner for Tokmanni. First of all, we're talking about the strong and internationally well-known brand for food retailing. If I remember correct, SPAR is present in 48 countries all around the world. It's world-class know-how and concepts for grocery retailing. That's something that Tokmanni needs to have while developing both groceries and non-groceries business, retail business in total. Now, SPAR's own labels available for each grocery category, this is, of course, something that I also already mentioned that our customers will see as the first thing out of this SPAR collaboration.
And obviously, Tokmanni will benefit from the enormous scale of SPAR International in purchasing, and that's especially something that we're looking forward to eagerly. And vast support and cooperation possibilities, I have to say that I was really impressed when I saw already last year in one of the SPAR events, let's say the cooperation level of the SPAR retailers, and I'm really looking forward to enjoying this kind of work together. So absolutely the best possible partner for Tokmanni. And as mentioned, this partnership will generate value, especially through better buying and leveraging scale in procurement. The cooperation starts this year, and the first thing the customers will see is SPAR products, which will be available all over Finland. We, of course, try to deliver SPAR products to every single Tokmanni store.
Obviously, we have some very small stores, but still, I think I'm very convinced that we're able to deliver these SPAR products to all Tokmanni stores already during the first half of this year. The first SPAR branded store will be open during summer. And then, of course, all the current Tokmanni 20 fresh food stores will be also converted to SPAR concept in the coming years. And by the end of the year, we will also have at least two additional SPAR stores already available. We will start looking for new store locations, and standalone SPAR stores also will be considered in the coming years. And, of course, synergies, whether it's procurement or any other areas, they will be on the priority list on a very high level. And then it's time to invite Tobias on the stage to tell a little bit more about SPAR International.
Thank you, Mika. Thank you very much. Thank you.
Thank you.
Thank you.
Good afternoon also from myself. It's a delightful pleasure to be here back in Helsinki at this very important occasion, which signifies the beginning of a strong new partnership between the Tokmanni Group and SPAR International. Tokmanni are leaders in retail. They are extremely close to the consumer here in Finland. They have great market insight. They have strength in non-food. SPAR is a leading international food retail brand. We have a strength in grocery and in food retail. And I think together, this partnership is signified by what we call in SPAR better together, real synergies of working together. Now, I'd like to introduce to you how that works in SPAR because it originates back in 1932 with a singular idea, which was that through working together, that all shall benefit. In Dutch: door samen te werken profiteren allen regelmatig. Working together all shall benefit.
That collaboration is a partnership between retailers who choose to remain independent, yet work together across borders as one, as a voluntary chain, sharing resources, sharing economies of scale, being able to invest back into growing their businesses and together growing the scale to provide greater access to resources for all. That is the SPAR partnership model. What I'd like to do is show you how that works in a brief trip around the world to give you an impression of the success of the SPAR worldwide model. So as we say at SPAR, together, we are better together. And that has been our strength in how we deliver that proposition each and every day to 14.5 billion customers in over 13,984 stores in 48 countries worldwide.
A global food retail brand with a local focus, a focus which has seen us grow our sales in 2023 by 8.3% with global sales and scale of 47.1 billion EUR in sales. That has been sustained over a long period of over the last five years, growing our business by 10 billion EUR in terms of value, adding 1,000 new stores and a strong compound annual growth over that five-year period. SPAR has been growing and developing dynamically over and through the pandemic and through the recent years. Today, the powerhouse very much is that of Europe. We have 28 countries. SPAR has a turnover of 38.1 billion EUR in Europe. That's over 12,000 stores. We operate with a multi-format strategy, which I'll outline a bit more in detail shortly.
I want to also emphasize it is maybe a surprise to some that SPAR has a presence in over 15 countries in Sub-Saharan Africa and the Middle East. We have over EUR 7.6 billion in terms of scale there, and that we have a growing presence also in Asia and markets as far as Australia, Asia, India, and those fast-growing economies. As I pointed out at the outset of the beginning, our focus is to be the local food store of choice by meeting the communities that we serve. We do that by really adapting our formats and our proposition to each individual market to best serve the customers in that space.
That is delivered through this international network and through the support from the global SPAR support office at SPAR International, which has the core focus really on the purpose of adding to the competitiveness, the productivity, and the profitability of our retail and wholesale partners worldwide. As I outlined in doing so through their success, everyone grows, everyone develops, and the brand presence and the brand value continues to rise. Now, our goals in that is to ensure that SPAR continues to be the number one brand of choice for retail partners that are looking to fast-track their development, often in the face of national and also international competition. We are at the center of an extremely strong network of over 48 countries. Therefore, we can take the advantages and the insights and also then share latest practice earlier by innovating those trends and innovations.
We can use that to provide insight and resources to our local countries to allow them to develop rapidly. In doing so, we train and develop into the capacity of our people in those markets. These are the focus areas. Mika has already outlined the key areas of support service that we at SPAR provide to our international partners across the world in the areas of helping them expand their business, develop for retail development and innovation for retail formats, utilize our wealth and our depth of information and digital and data to provide better business insights and business decision-making, utilizing our scale to generate better buying in product, but also in procurement of goods and services, and investing together to continue to grow our brand and our presence.
That's all delivered through a global supply chain with very much a local focus and for building the capacity of our people and growing our people by sharing all of this knowledge in an open organizational structure, which allows the transfer of that information from market to market and to one organization. Our multi-format strategy allows us to serve from convenience to the very large hypermarkets at INTERSPAR. It's maybe also important to note that today, nearly over 38% of our global sales actually come from larger format stores, that being EUROSPAR and INTERSPAR.
We have a strong presence also in neighborhood retailing as well as in Europe, but we have a fast and growing development in the larger formats, such stores as the EUROSPAR supermarkets, which are over 1,000 sq m in sales area, which have a focus on freshness, on added value, on bringing that experience that we just heard about to life in categories where we hope to be and excel and to be leaders in hero categories, be that in bakery, wine, as well as also non-food, and we're excited about the possibilities of collaboration also with the strength of Tokmanni in non-food for the benefit of the SPAR International Group, and that brings our larger format stores to come together in this very modern targeted retail format, which puts an emphasis on value and freshness, which again we see the synergies together with Tokmanni.
Allows us in the future then to also develop strong SPAR standalone supermarkets from smaller footprints of 400-1,000 sq m. Our strength in product is in our own brand, the strength of our own brand and the strategy that we have of a multi-tiered from price entry level through to added value to premium. This is differentiated in a tiered strategy where we utilize our number one own brand range for everyday low price, while utilizing that to signal number one in quality and value and also in width and range to the market. The core is the core part of our product assortment, which covers everyday needs across all grocery categories.
And then we seek to differentiate again by in the added value categories, and this is the example of introducing, for example, biological or fair trade items under the SPAR Natural product range, which add an additional added value and again exceptional value. We utilize our strong international network. SPAR has a presence, for example, in over 17 of the 27 EU countries, in such countries such as Spain, Italy, and many markets, which allows us to use our local lead buyer network to identify the best products in those markets and make those accessible to all of the partners. That is a key differentiation from SPAR because of our wide network that we have.
And that gives us an advantage also in certain categories such as wine, which is obviously a huge opportunity when SPAR already has a presence in Italy, in France, in South Africa, and in Spain, and all the wine-producing countries that we can utilize that local scale and skill and direct contact to sourcing to be able to make that available to the wider group. That is how we work within the SPAR model. And we also work together and we invest together actively empowering our brand. And one of our key joint investments over the years of the last 25 years has been to be the principal sponsor of European Athletics since 1996. That is a huge investment on our behalf, but an investment that has been sustained in such a way that SPAR has become synonymous with athletics, not only at international level.
It has then carried through at national, local level, and it has been a huge brand enhancer for us. So in concluding, our purpose today is to enhance the competitiveness, productivity, and profitability of our retail and wholesale partners, which as of today is also includes the Tokmanni Group. We look forward to a strong partnership. We're very confident in the future. And I thank you for your time. And now maybe I invite Mika back to summarize the content thus far. Thank you. Yes. Thank you, Tobias. Please, I'm sure it's soon time for the questions. So stay close, so then we can start answering the questions. Thank you for the presentation. A short summary. So from customers' point of view, customers will benefit from increased assortment and lower prices as Tokmanni grows into a major player in the Finnish grocery market.
This is, of course, very, very important that the customers get some benefits out of this cooperation, and then one more time, SPAR is the best possible partner for Tokmanni. Through this partnership, Tokmanni can expand its offering in grocery retail and serve its customer better than ever. We can benefit from the SPAR's strong and internationally well-known brand, leverage SPAR retail network's purchasing power, expertise, and proven operational concepts, and drive sustainable growth, and last but not least, we can enhance the Finnish grocery retail landscape, so here's the presentation, and now it's time for questions, and I have a feeling that we should go right away on the online questions. Okay, so let's see.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue.
If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Svante Krokfors from Nordea. Please go ahead.
Yes, hi, Svante Krokfors from Nordea. Thank you, Mika and Tobias for the presentation. I would actually have two questions, and they are directed to Tobias. First one is, do you have some examples of similar license agreements in other countries that you have done resembling the one you have announced today with Tokmanni?
Yes. I think if I stay here in the Nordics, I think the long-standing license agreement that we've had is with the NorgesGruppen from Norway. That's now celebrated over 30 years of success where we are working in the same manner, very successfully in the development of EUROSPAR and Spar formats.
But as I said, our license model is active in over 17 of the 27 EU countries. So that is many examples, including throughout Europe and also internationally.
And which one are the most recent ones that you have announced prior to this?
I think the most recent announcement in terms of developments from a European perspective would have seen our growth into new markets such as Malta. But internationally, we would have also seen a strong growth and development into the Middle East.
Thank you. And then I asked this Mika already, but I will ask it from you too. Do you have any comments on volume targets or ambitions for Finland? I think Tokmanni is probably the best choice for you when entering the market, but could you give some color on that?
Yeah, absolutely.
I agree with you that Tokmanni is the best partner, certainly for SPAR. I think it's a strong fit. In terms of the expectations that we have in growth, I think Mika has outlined that very well. We're going to start targeting, obviously, growing the penetration in grocery today. We see that at 53% in Tokmanni. We believe we can add to that. This time, I think we will see significant growth. At this moment in time, I think it would not be wise to go into any more depth into that at this time.
Okay, thank you. That is all from me.
Thank you, Svante. Any more questions?
There are no more questions at this time, so I hand the conference back to the speakers.
Okay. In this case, we continue with chat.
Yes. The first question is, how much does CAPEX this require?
Will the CapEx be split between Tokmanni and SPAR?
The CapEx will be Tokmanni, and of course, we do have a plan for the investments in the future, but obviously, the first ones, the first stores which will be open this year, we will also see what kind of investments do we have. Do we need to add basically on our stores? But at the moment, we basically have a plan for this, but like I said, we'll still see how the first ones will end up and what kind of new investment areas there are. But obviously, we're also with, let's say, the furniture and fixtures regarding the stores and things like this, we will also turn to SPAR International because obviously there are joint buying of this kind of products as well, so we're very happy to kind of join the team. Absolutely. Thank you.
Will the SPAR products come with better gross margin than the current comparable offering? If so, how much on average?
Obviously, I'm not going to start opening up now the gross margin of these SPAR products or any other products.
How about the license agreement? What does the license deal mean in financial terms? Does Tokmanni pay for SPAR or how?
There is the license agreement, but we're not going into details regarding the costs regarding the license agreement. The biggest, let's say, costs will be in the investment part regarding the stores.
Until now, the fresh food especially has not been in the focus of Tokmanni growth strategy. Why this change now?
This is not only fresh food. This is like full groceries. We definitely want to improve our groceries offer to customers, both with products, the product quality, and with the prices.
So that's the main goal over here. But obviously, we talk to our customers quite a lot. And we hear very often that our customers would like to shop also food in our stores. In a couple of the fresh food stores that we've opened during the last years, they've been very successful. So that's why we're very confident with going with fresh food as well in Tokmanni stores.
How about the cooperation with Europris? How does this impact our current sourcing agreement with Europris?
The joint buying and the joint venture in Asia together with Europris, that's actually concerning non-groceries. And now we're talking about especially groceries. So it's like two different things.
Then question for Tobias. How Finland differs from other countries where SPAR stores can be found?
Well, we have some experience, obviously, of Finland and of the Nordics.
I think within the market that we see here, it is a very concentrated market with key players. Together with this partnership, we hope that we can grow the share of food within the Tokmanni Group. That together, we will be a successful player that can win significant market share. The market, there are commonalities, but each market has its idiosyncrasies. That, I think, is the strength of our partnership, of the best of local, having the understanding of the Finnish consumer with an international partnership, which brings the best of both worlds.
In which countries SPAR has been especially great? Success story.
I think if I look on a European basis, it would be in Austria.
I'm sure that many Finns also enjoy their winter sports and will have had the experience of shopping within SPAR in Austria, where we have well over 37% market share, over 1,500 stores and sales in Austria, which are coming up to close to EUR 10 billion alone. It's one of our strongest markets.
Could you please summarize what SPAR offers to Tokmanni in this deal? Just buying volume or something else?
SPAR offers a tried and tested food retail format. All that comes with it in terms of not only the stores, the supply chain, the product, and the services I outlined, which gives resources to the already strong Tokmanni team that allows them to fast track their aspirations and development in the grocery sector.
Then back to maybe to Mika. How is the license payment from Tokmanni to SPAR determined?
Well, we're not going into details regarding the license agreement and related license fees.
Then the last question. Who would be the right person to contact in case there's available potential location of SPAR store in Finland?
Well, that would be Mr. Harri Koponen, who's responsible for our store sites.
Thank you.
Thank you very much.
Thank you all. And thank you, Tobias. It's been a pleasure, and it will be a pleasure. And hopefully, we are able to invite you to Tokmanni's stores as soon as possible to get to know the SPAR products. And later on during the year, to come to the first SPAR store in Finland. Thank you.
Thank you very much. Good talk.