Future of Food

 

Reflecting on the past year, one of things of which I am most proud is the Co-op’s development of our “Future of Food” strategy.  Building on many years of pioneering ethical and responsible sourcing of products, we have been working hard to revitalise our commitments for the next decade and beyond.  In a world where we are all challenged by issues of environmental sustainability, its great to see us setting ambitious targets to build on our existing strengths in conjunction with our partners, taking action on what matters most.

Our goals revolve around three areas:

  • Sourcing products that are created with respect for people and planet – sustainability, health, reduced waste, reduced use of plastics, agricultural innovation.
  • Treating people fairly – working for justice in supply chains through more Fairtrade, empowering vulnerable workers and women, tackling water poverty, supporting British farmers and ensuring that all our suppliers get a fair deal.
  • Learning and celebrating together – educating and empowering future generations to make informed choices, working with partners and sharing good practice, helping everyone understand the true value of food.

Our programmes and plans have been developed after a lot of consultation with our supply partners, NGOs and academic experts as well as colleagues in all parts of our business. Having attended several workshops around this process as well as the launch event, I have been impressed by the hugely positive feedback they have given about the Co-op difference they can already see and our qualitatively stronger commitment to partnership.

You can read about our plans in much more detail on our website:  https://food.coop.co.uk/food-ethics/future-of-food

2017 AGM

Just back from the Co-op AGM in Manchester.  This was an inspiring event, with a good turnout of members, impressive debut speech from our new Chief Executive Steve Murrells and a great sense of an organisation now back in a stable position and beginning to think more about areas in which we can challenge the status quo as well as extend our trading.

  For me there were four particular highlights:

1. Modern Slavery

We gave great attention to our new commitment to leading work on Modern Slavery.  It was horrific to learn that there are thought to be 21 million victims of slavery worldwide – more than at any other time in history.  And it is estimated that there are 10,000 slaves in the UK today.  We are committed at the Co-op not only to working hard to ensure that our supply chains are free of this scourge, but to providing survivors with paid employment to help restore their dignity and sense of self worth.  There was a powerful and emotional video sharing the story of one of the three former slaves who have been given permanent employment by Co-op, together with a commitment to taking on 30 more this year working with two charities (City Hearts and Snowdrop) in our Bright Future initiative.  It was great to get an endorsement from members of our plans to campaign to encourage other companies to do likewise.

2. Fairtrade

This is a picture of me with Brad Hill, who heads up the Co-op’s Fairtrade work.

More good news on the Co-op’s commitment to Fairtrade, with our volumes of FT sales (18.5% up on last year) now over-taking Tesco’s to make us the second largest Fairtrade retailer in the UK.  Only Sainsbury’s sells more, and with their momentum appearing to wane it is clear that our support for the movement is increasingly crucial.  Our focus on maximising impact for producers is driving our new initiatives.  Having taken all the cocoa in own brand products Fairtrade this year, we are now going to do the same with tea, coffee and bananas.  So not only will these product categories continue to be 100% Fairtrade, but we will always source them on fair trade terms when they are used as ingredients in other products too.

It was also great to hear that because of our work with One Foundation (donating 3 pence per litre on sales of our bottled waters to water projects in Kenya and Malawi) we are the only UK retailer to be invited to join a new UN backed initiative (the Global Investment Fund for Water) to promote clean water.

3. Waste and recycling

New commitments on making all our food packaging recyclable by 2023 (though there is perhaps still more to do on reducing packaging).  We will also be working with FareShare to redistribute the food for 20 million meals.  These are great initiatives – although in my view we still need to do more to tackle the root problems behind food waste.

It was also great to see the Co-op’s first hybrid diesel/electric powered lorry outside the conference centre!  It is the only 26 tonne lorry of this type in the UK, and we are trialling it as a way of improving fuel efficiency and reducing noise.

4. Community engagement

The launch of our Member Pioneer scheme, which over time will lead to 1500 activists working in the localities we serve to mobilise our members behind improving the well-being of their communities.  About 60 Pioneers have been recruited so far (from 450 applicants) and we have started to train and resource them.

Lemn Sissay, the poet and Chancellor of Manchester University, has agreed to be Ambassador for the scheme, and gave a rousing speech on the importance of communities and also on our embracing migrants and refugees (recognising that migration is part of all our stories and integral to being human).  This initiative promises to make our community support even more meaningful than the money given to good causes:  £9 million distributed just last month as a result of our 5+1 membership scheme, and a further £6 million raised to fight against loneliness with the Red Cross (nearly double our target figure).  I hope tackling loneliness will become a big feature of our local work going forward – with hard evidence that nothing does this better than encouraging people to volunteer and become engaged with local initiatives.

Re-elected!

Oh, and then there was the good news that I have been re-elected for a second term as Member Nominated Director!  Although the voting numbers weren’t announced formally at the meeting I am told that I received over 40,000 of the first preference votes, with the other two candidates being on just under 20,000 each.  I am humbled and delighted by this endorsement, and look forward to the next two years of serving the Society.

Election time – my manifesto

It seems hard to believe that is almost two years since I joined the Co-op Board.  But AGM papers have just started going out to members, and include the ballot for electing Member Nominated Directors. It’s my turn to stand again.

I’m very much hoping to be re-elected for a second term.  My colleague Ruth Spellman has decided not to stand again owing to her other commitments, so I’m the only current MND standing in this year’s election.

Over the last two years I’ve got to know my way around the Society (you can see something of this by looking at my posts on this blog over the past six months). I’ve been able to build relationships with many colleagues and Council members and I’ve spent time listening the the views of customers and members around the country.  So I believe I’m well-placed to contribute to our planning for the next stage of the Co-op’s Renewal, and can provide continuity as we build on the successes and learn from the experience of the last two years.

My “manifesto” can be found here and if you are gluttons for punishment you can even see a short video of me making a two minute pitch!

A brief summary is that if re-elected I would focus on four things:

  • Firstly, empowering and equipping our colleagues so that they can use their skills and enthusiasm to serve our members and customers even better and get properly rewarded for doing so.
  • Secondly, extending our commitments to sustainability and ethical trade: more Fairtrade; more local suppliers; healthier ranges; less food waste.
  • Thirdly, I want to see us re-engage with the wider co-operative movement so that together we can truly champion better ways of doing business.
  • And fourthly, we need to build local structures that really connect with members and their communities and deliver benefits to them so that we feel like a real Co-op and not just any other business.

So if you are a member of the Co-op and entitled to vote I would very much appreciate your support!

 

Co-op: back to the future

Spent yesterday visiting the wonderful Beamish open air museum here in the North-East. As always one of the highlights was going round the village high street from the early 1900s: a high street dominated by the Co-op’s grocery and haberdashery stores.

I loved the nostalgia of looking along shelves to see some brands that are still going strong (Colman’s mustard, Rowntree chocolate …), and other products that have long since disappeared.  Lots of Co-operative Wholesale Society own brand products too, of course, many of them manufactured and packaged in our own factories and proudly labelled with their origins.  Early examples of the importance of knowing a product’s provenance.

And there were the posters urging customers to “Join Us” as members – something we are still encouraging people to do today.
   Over half a million customers have signed up to become members since the New Year – so we are well on our way to the target of one million new members this year.  But we need to do more than sign people up.  We need to reconnect with the local community too, in the same way that the store at Beamish was once the heart of the community in Annfield Plain.

So I am delighted with the £9 million we have given to 4,000 good causes around the UK and that we have announced in the last week.  This is the first fruit of our 1% donations on all own brand products bought by members since the relaunch of our Membership offer in September. As the scheme builds we hope to be giving £20 million a year in this way: that’s serious money.  I hope the pioneers and the many colleagues who worked for Co-op down through the last 170 years would be proud of what we are still able to do in the spirit of the service they gave their local communities.

Co-op Funeralcare

I was delighted to spend a morning attending a “town hall” meeting with colleagues from Co-op Funeralcare in Washington.  These are a relatively recent initiative to allow colleagues to be updated on progress in the business and get their feedback.  Colleagues from the Funeralcare support centre in Manchester are encouraged to get out to these local meetings around the country as a way of ensuring they keep in touch with the realities of life at the front line.

Thinking back through Co-op history making provision for a dignified funeral was a key concern of our members in the nineteenth century, so it is great that we continue to provide a high level of service in this sector to this day.

Recent progress

There is a remarkably good story to be told about our recent performance:

  • Growth in market share for the first time in five years 29% market share in sales of pre-need funeral plans – an excellent sign for the future Investment in new funeral homes – now over 1,000 around the UK – and in renewing our fleet of vehicles.
  • Launch of a low cost Simple Funeral to help address funeral poverty – which has forced competitors to respond in kind.
  • Announcement that we will provide funerals free of charge to any person who is 17 or younger, helping families at a time of acute grief:  an initiative that was recently commented on positively by the Prime Minister in the House of Commons.
  • Merger of the funerals business with our legal services operation, to maximise the synergies around will writing and probate work and provide a fuller service to our clients.
  • Development of new software by our Digital team that promises to transform the back office operations of Funeralcare, improving efficiency and releasing colleague time to care for bereaved families.

Under the leadership of Richard Lancaster and Robert McLachlan there is a new confidence and willingness to take the business forward with a clear focus on caring for families.  I was impressed by the positive comments and clear engagement of the colleagues at the briefing session.

Digital developments

At the session I was able to hear more about the Digital project (now being trialled in Edinburgh) from Regional Operations Manager, David Knowles.  David was seconded to the Digital team for six months, to make sure that someone who really understands the needs of the business was plugged into the systems design from the outset.  His enthusiasm for the potential improvements that would flow through was tangible, but I was especially pleased to note how positively other colleagues responded to the news:  embracing the change rather than fearing a new challenge.

High standards

 

It was also great to be given a tour of the Washington Funeralcare centre, the hub of a network of homes in the area.

Our senior manager Karen Crake, with nearly thirty years of experience, is justifiably proud of her purpose-built building, for it looks very smart and professional throughout.  They are the sort of premises in which the deceased can be handled in a dignified, respectful and professional manner, with strong standards clearly in place.  I heard several stories of funeral directors visiting from other non-Co-op organisations and being amazed by the quality of what we do.  Our main competitors, Dignity, in their recent results announcements called for more regulation of standards in the funeral industry.  I am confident that the Co-op already leads the way in this respect, and we would welcome the opportunity for standards to be improved across the board to benefit families everywhere.

So thanks to David, Karen (shown in the photo above, with me) and Funeralcare’s Head of Marketing Lorinda Robinson for making me so welcome!

Annual results

This week has been dominated by preparations for the release of the Co-op Group annual results for 2016 on Thursday.

The headlines have predictably focused on the decision to write down the value of our holding in the Co-operative Bank to nil.  Although the headlines say this means we just get it to be “worthless”, in fact it simply points to the impossibility of being able to put a clear value on the shares at a time when a sale is in prospect and uncertainty is being fuelled by (often misleading) press speculation.

Highlights

The newsworthiness of this item and the fact that the write-down turned our year end profit into a loss have hidden a lot of other good news:

  • All three of our core businesses (Food, Funerals and Insurance) have shown growth in both sales and market share.
  • Strong uptake of our new membership scheme, and re-engagement of many members with the Society.
  • Operating profit was up 32% year on year.
  • Underlying profit before tax was slightly down on last year, but ahead of our budget and unsurprising given the scale of re-investment we are making across our businesses and in re-launching our brand and membership proposition.

The full press release can be found here.

Future prospects

Our markets remain fiercely competitive, of course, so the next couple of years will be challenging.  Nevertheless we now have a stable and much stronger platform from which to develop and launch our plans for the future. It was interesting that the BBC coverage ended up focusing on what markets the Co-op might choose to enter next and disrupt.  That’s quite a change from just three years ago when everyone was wondering whether the Group could even survive!

 

Co-ops UK Retail conference

Earlier in the month I attended a conference organised by Co-ops UK (our industry trade association) focusing on the challenges and opportunities faced by co-operative retailers.  Its an annual event, but it was my first time there.  I was particularly impressed by a presentation from James Walton, chief economist at IGD (the Institute for Grocery Distribution) surveying past and future trends in retailing and the economy as a whole. And the whole proceedings were ably presided over by Ed Mayo, Secretary General of Co-ops UK.

This picture shows me chatting with Nick Matthews, chair of Co-ops UK and director of Heart of England Co-operative Society, between two of the sessions.

Shared brand and services

It was a great chance for me to get to chat at greater length with leaders from some of the independent co-operative societies.  Many of these are closely linked to the Co-op Group, many of them use our brand and have votes within our democratic structures. We have a federal wholesaling system, meaning that many products are brought centrally using our collective purchasing power to get better prices.  But they are also proudly distinct, with their own histories and a clear focus on their own regional constituencies.

The existence of these independents is sometimes a cause of confusion to Group members and customers.  They see the Co-op brand over the shops and on own brand products inside, but find they cannot swipe their membership cards. If you understand the history behind this you can understand it, but in the modern era with so much more focus on clear brand identity you would probably not want to invent such structures!

The Co-op Membership offer

So I was especially interested to gauge the thoughts of the independents about adopting the Group’s 5+1 membership offer.  It would be so much simpler if members could receive 5% on Co-op branded products and get 1% donated to local community projects, regardless of where they bought those products.

But you can understand why some of the independents are feeling reticent about adopting the same scheme. In a business where margins are often wafer thin, giving away 6% of margin can feel a big risk, especially if you still want to be able to give away dividends or support good causes in other ways too in accordance with the wishes of your own members.

To be able to afford it you need to be able to see a number of factors coming to fruition.  You need existing members to switch their purchases from branded products to own brand products, as we need to give away less margin to suppliers on the latter ranges.  Secondly, you need your members to start increasing their basket size and frequency of visits in response to the offer – so they are buying more from you than before. And thirdly you need to attract new members – not just converting existing shoppers to membership (though that is a good thing in itself), but attracting in brand new customers to increase volumes.

There are already promising signs on all these fronts for the Group, with growing proportions of own brand sales and half a million new customers signed up as members.  But you can understand why an independent may for the moment want to wait and watch before plunging in.

Fairtrade Fortnight – Co-op’s cocoa initiative

In the last week it has been great to catch up at various events with Mike Gidney, Chief Executive of the Fairtrade Foundation who for many years used to work with me at Traidcraft where he used to be Director of Policy while I was chief exec.

Mike Gidney               Fairtrade mark

Update on Fairtrade

Mike was able to share the good news that the value of Fairtrade sales in the UK rose slightly in 2016 despite the challenges posed by changes in the EU sugar regime which have severely hit Fairtrade sugar sales.  Given food price deflation, the underlying volume growth (which matters most to producers) was about 8%.

At one event a producer from Divine Chocolate (or rather from Koapa Kokoo the co-operative which owns and supplies Divine), impressed Co-op Group staff with her simple explanation of how selling cocoa on Fairtrade terms had allowed her community to achieve clean water, build a school and provide decent toilets for themselves.

Co-op’s cocoa initiative

But for me the stand-out event of the fortnight has been Co-op Group’s announcement that from May 2017 all the cocoa in any of our own brand products (not just the chocolate bars) will in future be sourced on Fairtrade terms. We are the first business in the world to make a commitment like this, and it means our purchases of Fairtrade cocoa will go up an impressive five-fold, with an extra £500,000 per annum in Fairtrade premiums flowing through to our producer suppliers on top of the value of the coca sales themselves.  Co-op is challenging other businesses to follow suit, as this is how we can really achieve scale of impact.

Chocolate report

It is a source of justifiable pride that Co-op is still leading the way in Fairtrade – perhaps particularly after the disappointing announcement that the Fairtrade logo will shortly disappear from Cadbury’s Dairy Milk (shame on them!).  I am pleased to have been able to play a small part by providing Board-level encouragement for our commitment to Fairtrade, but the credit must go to our Fairtrade sourcing manager Brad Hill whose commitment and focus over many years has been absolutely exemplary.

 

Council and Senate

I am getting a little bit behind with my blogging, but ten days ago we had a dinner for Board and executive team members with members from the Senate of the National Members Council, to mark Richard Pennycook’s departure as chief executive.   This was a good occasion, not only because of the excellent food and wine (exclusively Co-op own brand products of course!), and a memorable farewell address from Richard, but also because of the chance to build informal relationships between Board and Senate members.

Co-op democracy

The ten members of Senate are elected from the 100 members of the National Members Council (many shown in the image below), and as well as leading the work of the Council they are a forum to which the Board can refer for guidance on how Council might react to particular courses of action being considered.  To carry out this latter role effectively requires the building of trust between individual directors and Senate members, so that we can speak openly with each other and yet know that confidentiality will be respected.

Co-op logo Council

Role of MNDs

In my role as Member Nominated Director I am fortunate to have had more opportunities than many of my colleagues on the Board to get to know our Senate members and the wider Council.  This is both through attending Council meetings and because I am a member the rather strangely named Stakeholder Working Group (which acts as a point of liaison between Board and the Council President and Vice-Presidents), and last year I also served on working parties relating to the election process for MNDs and the development of the “Co-op Compass” as a way of measuring our performance against key objectives.

Holding the Board to account

The Co-op’s governance give the Council a vital role as representatives of the interests and priorities of our members, holding the Board and individual directors to account, providing inputs on possible future direction and acting in many ways as the “conscience” of the Society – making sure that we strive to hold true to co-operative Values and Principles and high ethical standards.  At times dialogue can feel uncomfortable – when Council challenges a decision or proposal from the Board.  That discomfort is essential and can be creative if we are to ensure that the Board really does steer a course that is in line with what our member owners would like. It can and does have a very positive influence for the good.  But there is always a risk that it can descend into confrontation and misunderstanding if mutual trust is replaced by suspicion or an assumption that either the Board is wanting to undermine our Values or that the Council is just wanting to create obstructions.

The way to make sure that Council-Board relationships add value to the Co-op is twofold:  firstly – clear, open and early communication; secondly – strong personal relationships.  We can always do better at both, and as an MND and member of the Stakeholder Working Group I believe I have a particular responsibility to help make sure we continue to invest in making dialogue and mutual understanding as effective as possible.  Social interaction such as the dinner are a really important way of creating human relationships that will then make more business-focused discussions increasingly productive.

Changing of the Guard

Richard Pennycook 2

You will have heard by now that Richard Pennycook has decided to stand down as chief executive of the Co-op Group.  This comes after nearly four years during which he successfully rescued us from imminent collapse and rebuilt us to a point where we are once again looking to the future with confidence.

We all owe Richard an enormous amount.  Without his experience, intellect, integrity and steadying sense of calm at the centre of the Group things could have turned out very differently.  His vision for how we could express our co-operative values and re-engage with our communities whilst remaining a professional and successful set of businesses has helped us recruit many talented leaders into the Co-op.

It is typical of Richard that he recognised that unless he was to stay on for another four or five years, it would be best that he moved aside early to allow a new chief executive to lead our planning processes through this year for the Renew phase of our turn around.

And we are very fortunate to have had a clear successor in place in Steve Murrells, who in October was awarded the 2016 Grocer Cup as the person judged to have been “the individual who has contributed most to the industry over he past year and who has shown exceptional leadership in inspiring his company to achieve exceptional results”.

Steve_Murrells 2

Steve is the person who has transformed Co-op’s food business in the last three years.  By focusing more clearly on our natural strengths the convenience sector and re-building an own brand range that we could all be proud of, Steve has been instrumental in restoring morale, momentum and sustained market-leading growth to our stores.

I am delighted to be working with someone whom I know will bring vision, enthusiasm and energy to the task of leading the Co-op, and who totally buys into our values and ethos.  More exciting times ahead!