Strategy and businesses
Music, laughter, whispers, rushing water, rustling leaves… sound enriches life in every moment. Sonovaʼs vision is to extend those moments into lifetimes, bringing the delight of hearing to ever more people. This means understanding the experience of each consumer at every stage, and developing innovative, bespoke solutions to meet each need: from personal audio devices that deliver immersive and enhanced sound experiences to medical products and services that treat every type of hearing loss.
The Sonova Group
As a leading global provider of hearing care solutions, the Sonova Group is a closely integrated business, harnessing technological innovation and ever-broadening access channels to establish deep and lasting relationships with consumers and hearing care professionals worldwide. The Groupʼs comprehensive spectrum of solutions, fast-expanding range of digital sales and marketing channels, and disciplined approach to the innovation cycle foster close collaboration between its businesses and add value for consumers in every interaction.
The Group is comprised of four businesses serving four distinct customer segments, with complementary areas of specialization and extensive cross-sharing of technological and market expertise. Each business serves its market through one or more established and well-respected brands.
STRATEGY AND BUSINESSES
The Hearing Instruments business, through its Phonak and Unitron brands, sustains Phonakʼs more than 75-year tradition of innovation leadership in hearing aids and wireless communications devices with a regular launch cadence of new technology platforms. Each combines novel hardware and software advances to deliver step-change improvements in hearing performance and consumer experience.
Consumer Hearing, operating under license through the Sennheiser brand, enriches consumersʼ hearing experience with its range of audiophile and true wireless premium headphones and immersive soundbars, and now adds Sonovaʼs audiological expertise to create enhanced hearing solutions that serve consumers earlier on their hearing journey.
Audiological Care, represented by AudioNova and other strong national brands, connects directly to end-consumers, providing expert professional hearing care through an omnichannel approach that complements its expanding network of physical stores with increasing investment in digital interactions: online, through dedicated apps, and over the phone.
Cochlear Implants, operating under the Advanced Bionics brand, serves those people whose hearing loss is beyond the point where hearing aids can help, offering them the combined benefits of Phonak audiological performance and cochlear implant expertise.
Strategic progress continues
The past financial year has presented significant challenges. Macroeconomic volatility – specifically, the inflationary pressure that has both raised input costs and dampened consumer demand – has stress-tested many corporate strategies. Thanks to consistent implementation and a focus on execution, our strategy continues to deliver.
Our strategy calls for Sonova to lead innovation, expand consumer access, extend customer reach, invest in high-growth markets, drive continuous improvement, and leverage M&A to accelerate growth.
In each of these areas, we can report meaningful progress. The new Phonak Lumity technology platform and groundbreaking Sennheiser products extend our record of market-leading innovation. Our Digital Lead Generation Hub and World of Hearing stores let us present the full range of our solutions in an accurately targeted way to the consumers who will benefit most. Cooperation between the expanding salesforces in our Hearing Instruments and Cochlear Implants businesses allows us to bridge the gap between two significant phases of the consumerʼs hearing journey and generate new business for audiologists. Enlargement of our digital and physical footprint in China gives our omnichannel approach traction in a major growth market. Further improvements in productivity and efficiency across all of Sonova continue to strengthen the foundations of profitable growth. Finally, the significant expansion of our Audiological Care store network broadens our opportunities in a consolidating industry.
Underpinning this strategic progress is the Sonova eXellence System, generally known as “Sonova X:” a structured methodology to improve core processes and free up resources to drive profitability and further investment in growth. Over four years of implementation, Sonova X has delivered significant gains across all our businesses, such as increasing productivity, reducing emissions, retaining and promoting in-house talent, and maximizing returns from sales opportunities. In the months since the acquisition of the Sennheiser Consumer Division, applying Sonova X at its production plant in Tullamore, Ireland resulted in a more than 40% increase in audiophile headphone output, with significant savings in labor costs and material. Recent initiatives in pricing excellence show our commitment to selling value and offsetting inflationary impacts despite a challenging environment.
Consumer access: an engine of growth
Everyone in the world is on a hearing journey – but each journey is personal. Our success depends on our ability to understand, anticipate, and fulfill the individual needs and aspirations of our consumers, sustaining long-term cost-effective relationships through whatever channels they choose.
All relationships must have a beginning, and increasingly their starting point is digital. Over the past years, our Audiological Care business has developed a sophisticated in-house digital marketing capability for online lead generation, qualification, and conversion. In the five major markets where it has been rolled out so far, the results have been very encouraging, with significantly higher conversion rates and better selling prices, and a full ten-year reduction in the average age of the consumer at first sale in the new channel. This combination of a broader market with more precise targeting also creates opportunities for new offerings, including medicalized services.
Our Consumer Hearing business already has around 60% of its sales originated online, and aims to significantly increase this proportion. An online consumer base that is already loyal to the Sennheiser brand for its uncompromising dedication to excellent sound quality can now choose early-entry hearing support solutions developed with Sonova expertise, opening up a whole new market segment and establishing a potential market entry point for providing over-the-counter hearing instruments.
Reaching consumers globally requires increasing our access channels – and in China, one of our highest growth potential markets, we are extending the scope of our sales and marketing capabilities. We have long-established Hearing Instruments and Cochlear Implants businesses in China, as well as a strong direct-to-consumer digital presence, with multiple online sales channels on all the major platforms. We are expanding our own successful AudioNova store network and have opened the first World of Hearing store in the Shanghai area. To further increase our reach, we acquired the HYSOUND Group in December 2022. HYSOUND is a highly professional national hearing care network with medical expertise and strong value creation across its more than 200 clinics, providing a strong platform for further expansion in this high-growth market.
Innovation that enriches life
Technological innovation is at the heart of Sonova – but not innovation just for its own sake. Our research and development efforts are dedicated to making real and significant improvements in the life of our consumers. That is why it is gratifying to see that our Phonak Audéo Fit, the worldʼs first commercially available hearing aid with heart rate tracking, was included in TIME magazineʼs Best Inventions of 2022: inventions, as the editors said, “that are changing how we live, work, play, and think about whatʼs possible.”
This financial year saw the launch of the Phonak Lumity technology platform. Building on the foundations of the successful Marvel and Paradise platforms, Lumity enhances consumersʼ active participation in all moments of life by its sophisticated monitoring of the listening environment and direction of speech, improving understanding and ease of conversation in the most challenging situations.
Our Consumer Hearing business has taken innovation further by establishing an entirely new product category: the speech-enhanced hearable, launched with the Sennheiser Conversation Clear Plus earbuds. These provide all the features of our acclaimed true wireless premium earbuds with the added benefit of Phonak-developed technology to improve speech understanding in noisy environments. This hearing support capability helps bridge the gap between consumer audio products and prescription hearing aids.
Tinnitus affects between 10 – 15% of the adult population, many of whom report that it negatively affects their quality of life. Our Audiological Care business has therefore introduced SilentCloud™, an app-based mobile solution that optimally combines accessibility with advanced tinnitus management, including assessment, sound therapies, cognitive behavioral therapy, and counseling. SilentCloud™ helps to establish a strong consumer relationship, which (since tinnitus is often linked with a degree of hearing loss) can also give us the opportunity to offer one of our hearing aids.
ESG: an integral part of our business success
Sonovaʼs long-standing commitment to good environmental, social, and governance (ESG) practice is based on straightforward business logic: we remain convinced that continuous and verifiable improvement in ESG performance is an essential contributor to long-term market success. In an uncertain global environment – one that includes climate change, talent scarcity, public health risks, macroeconomic instability, and armed conflict – it becomes even more important to accelerate action on sustainability, because, in our view, sustainable practice also sustains our business. Sonova continues to apply the same rigor and intensity to the improvement, measurement, analysis, and reporting of our ESG performance indicators as we apply to our financial ones.
We have made good progress in implementing IntACT, our ESG strategy, which specifies goals and concrete actions for key sustainability topics, including climate change, diversity & inclusion, employee health & well-being, human rights, and a responsible supply chain.
As one example, we have initiated further actions to reduce our global carbon footprint and have established ambitious climate targets that commit us to significantly reducing CO2 emissions across our whole value chain in line with the standards set by the Science Based Targets initiative (SBTi). By 2032, Sonova aims to reduce its Scope 1+2 emissions by 78.3%, and Scope 3 emissions by 32.5% from their respective 2019 levels.
Major sustainability indices and rating agencies confirm Sonovaʼs strong ESG performance: the 2022 Dow Jones Sustainability Index ranked Sonova second out of 268 companies in our industry. The disclosure ratings agency CDP gave us a grade of A-, in the top 12% in the healthcare equipment & supplies industry – putting us among the leaders for climate action and for transparency in reporting.
You will find detailed information and data in our ESG Report, including a section on climate-related disclosures based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
