It’s with mixed feelings I’m writing our usual business update as it has been the toughest year in Tregren’ s 5 year history.
The recession in Finland with the continuous re-structuring at our retailer partners have created a turmoil that we couldn’t not foresee. This left an ugly mark on our growth target of more than 100% as we grew with only 20%. However this shouldn’t been seen as a failure as the consumer goods market at the same time saw the biggest decrease for decades.
At the same time Tregren is stronger than ever with a competitive product portfolio, both in terms of number of products and in product specific profitability. We have also seen that our internationalization efforts are bearing fruit. There are several reason why we should be proud and satisfied of the past 12 months even if we couldn’t reach profitability as planned.
I would like to thank our sales team who were able to grow our market share in Finland to over 60%. And this when there were three new product launches by our competitor! The magnitude of this achievement is even bigger as our exports simultaneously grew with 400%. Our sales team should be proud of these achievement and continue on the set course.
It’s not only our sales team that have over preformed. Our production and sourcing team have matched the sales team’s achievements by significantly decreasing our production cost. The impact of these efforts will be visible during the next twelve as our production cost will decrease with more than 20%. The impact of this work can be seen both in the production of the existing products as well as on the products to be launched this fall.
A strong indication of our team’s abilities is that have concluded the development of three new products while our focus has been on sales and production efficiency. These products will be launched during the fall. The new products will add significant new business as we estimate that they will account for more than a 25% of our turn over and more than a 33% of our profits this year.
Personally I’m most proud of the fact that Tregren biggest R&D effort, a new to the world vertical garden, has reached a phase where the first products are in use at our office and the launch is only months away. The patented features and the new product architecture offer a wide platform for our future business. This product platform opens up a whole line of new customer segments for us.
Looking forward, our main focus for the next 12 month in Finland is to improve the profitability thru more efficient sales and re-establish the leadership in public awareness. We have entered new partnerships to strengthen our public awareness. We will also be introducing tighter cooperation with our channel partners to boost sales.
The main focus of our exports activities is to continue to strengthen our presence in both the French and Scandinavian markets while we simultaneously introduce two new markets in the coming 12 months. The needed product variations and partnerships are well in progress to achieve our export targets.
We have no doubt that with these investments in export activities together with the new product launches we will get back to our growth target of more than 100%.
As we didn’t reach profitability this financial year, we have gone thru our operations to be better adjusted to the market situation. It’s important for us to understand that the biggest reason for not reaching the profitability, was that the consumer goods business in Finland decreased almost 10 % during the last 12 months. We have now stream-lined our sales and marketing activities to get closer to our customer. These activities and the new product will bring back the steady growth that we have experienced in the past. We anticipate that during the next 12 months we will reach a profitability of more than 10%. This even if we don’t anticipate that the Finnish consumer goods market will recover during this time.
To conclude, we are confident that we will sell our next 40 000 indoor gardens based on Active Growing TechnologyTM within the next 18 months. Simultaneously we will grow our accessories business to more than 30% of our turnover.
With this positive outlook I will conclude our yearly business update.
Markus “MaCCa” Nilsson
Founder & Business development director
For more information please contact markus.nilsson(a)tregren.com