Partnership case: African Coffee Roasters

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1 Partnership case: African Coffee Roasters CSSI Conference 2018 Copenhagen, June 11th 2018 Jens Visholm, Executive Vice President, Coop Denmark

2 1130 shops, of which 450 are owned by local cooperatives employees. Turnover: 45 bn DKK 36% Marketshare members. To whom 820 mdkk were returned in dividends and special rebates i people active in 850 local boards.

3 152 years with responsibility as a core value Labeling products for quality control 1976 Introduction of the Food Pyramid 2006 GoCook introduced in schools 2015 Food Manifesto launched 2016 Animal welfare label introduced 2017 Crowdfunding platform launched 1866 First consumer cooperative founded 1929 FDB s central laboratory 1981 First retailer with organic products 2015 Chemical strategy: The dirty dozen 2016 African Coffee Roasters started 2018 Packaging strategy

Background: In 2010 Coop launched a development through trade initiative After years of primarily providing aid to developing countries Coop wanted to grow trade - and chose to focus on

4 Background: In 2010 Coop launched a development through trade initiative After years of primarily providing aid to developing countries Coop wanted to grow trade - and chose to focus on Sub-Saharan Africa In line with our values the ambition was to benefit both local producers and societies provide aid via trade The projects were done with existing suppliers and in partnership with NGO s

5 The first initiatives Chocolate sourced directly from cooperatives of smallholders and family farms. Action against child labour, supporting education, farmer training for better quality Beef from semi-arid pastoral landscapes. Supporting the integration of traditional pastoral nomads in the value chain. Enhancing sustainable land management and water protection Vegetables and avocados from outgrowers. Farming techniques (field schools), financial litteracy training. Supporting a further transition towards organic production (composting facility)

6 We created a brand to tell the story

7 Key learnings from the first projects +100 products launched and several aid projects implemented with NGO s. Coop Members and people working liked the concept so the CSR and NGO-people were happy.. However 4 of 5 products did not meet quality expectations from the Danish consumers and was delisted from our stores shortly after introduction so the commercial people were not happy In 2015 we visited various suppliers and producers across the African continent to decide the future for the Savannah-brand and came home with an idea

2015: Imagine if we could..create the shortest and most efficient coffee value chain for our members....create new competitive quality products to the Danish market.

9 2015: Imagine if we could..create the shortest and most efficient coffee value chain for our members....create new competitive quality products to the Danish market....trade directly with the primary producers and their cooperatives thus creating development through trade....cut middlemen and strengthen the quality and ensure faster payment and fair prices to primary producers..produce ready to shelf products with a maximum of added value in Kenya..create a healthy business with the ambition to over time share the ownership with local producers..

s and Kenyan Coffee Cooperatives by Coop Denmark and IFU (Investment fund

supply chain competences 20% IFU + loan + competences in acting in a

10 So we created African Coffee Roasters.. Established in 2015 with great support from the Danish Embassy, local NGO s and Kenyan Coffee Cooperatives by Coop Denmark and IFU (Investment fund for developing countries) 80% Coop + access to stores + commercial and supply chain competences 20% IFU + loan + competences in acting in a developing region 100% Partnership Factory build from February to August 2016 and commercial production began in September 2016

Business case for farmers and consumers For farmers: Faster payment Higher payment

coffee Kenya Ethiopia Tanzania Burundi Uganda Rwanda DR Congo Direct trade: We

11 Business case for farmers and consumers For farmers: Faster payment Higher payment Training in the field (Farmer field schools) Guaranteed market access For consumers: Competitive purchase prices Higher quality coffee More innovative products Brand enhancing activities High level of traceability from farm to consumer Origins of the coffee Kenya Ethiopia Tanzania Burundi Uganda Rwanda DR Congo Direct trade: We believe in direct trade and therefore have a direct relationship with the farmers we are sourcing from

High quality standards The first certified organic coffee roasting facility in Kenya FSSC 22000

State of the art roasting mashine and production facilities Working towards zero waste through

12 High quality standards The first certified organic coffee roasting facility in Kenya FSSC (ISO 22000) and Fairtrade certified and coffee lab is in the process of becoming SCAA certified State of the art roasting mashine and production facilities Working towards zero waste through compostable packaging First capsule factory in East Africa = highest possible value addition in Kenya

13 Coffee with a good taste in your mouth

14 Present and future products 17 different products in production: New product in 2018: The Big Five 10 new high end products from selected premium origins (ground and whole beans) Launching in China in

Status 2018 Helped increase the annual income for 15.

500 farmers trained in better farm practices ~50 direct new jobs created in Kenya

through better farmer practices Annually ~10 mill USD in value addition created in

15 Status 2018 Helped increase the annual income for farmer households by 212% farmers trained in better farm practices ~50 direct new jobs created in Kenya 17 different products in our portfolio Next project: Organic Coffee in Kenya through better farmer practices Annually ~10 mill USD in value addition created in Kenya Positive sales development and consumer feedback on product quality Growing local competences and still having a long term wish of ownership from the farmers Cooperative

competences are key to succeed At Coop we see partnerships as a natural way of operating our business and acting in

16 To summarize.. Our philosophy is that no single person or organization knows everything - partnerships building on each others competences are key to succeed At Coop we see partnerships as a natural way of operating our business and acting in our society and we have many strong partnerships with suppliers, NGO s and state institutions In the case of ACR we would not have succeeded without the strong partnerships with IFU, Danida, the Danish Embassy and many other partners

17 Thank you for your attention!

Savannah & - a developmental story. Enhancing cooperation and trade for decent work. Geneva, 12 June Thomas Roland CSR-manager Coop Danmark

Savannah & - a developmental story. Enhancing cooperation and trade for decent work. Geneva, 12 June Thomas Roland CSR-manager Coop Danmark Savannah & Enhancing cooperation and trade for decent work Geneva, 12 June 2018 Thomas Roland CSR-manager Coop Danmark - a developmental story 1130 shops, of which 450 are owned by local cooperatives 12%