Fair Trade Original ANNUAL REPORT 2012
Doing good never tasted so great
Colophon Text Fair Trade Original Photos Fair Trade Original Remko Kraaijeveld p. 1, 6, 17 Mark Prins p. 3 Manasnan Pongajayavanij p. 9 Sjoers Eijckmans p. 12, 21, 25 Sisaket Fairtrade Farmer Group p. 28 Design and lay-out Studio Bassa Fair Trade Original Multatulilaan 12 4103 NM Culemborg The Netherlands tel. +31 (0)345 545151 info@fairtrade.nl www.fairtrade.nl
Contents Foreword . . . . . . . . . . . . . . . . . . . . . . . 3
Cooperation with trading partners
About this Report . . . . . . . . . . . . . . . . . . . 5
Trading themes . . . . . . . . . . . . . . . . . . . 29 Development of Fairtrade chains . . . . . . . . . . 29
The organization
Monitoring . . . . . . . . . . . . . . . . . . . . . . 31
Profile of the board . . . . . . . . . . . . . . . . . 7
Projects . . . . . . . . . . . . . . . . . . . . . . . 33
Strategy . . . . . . . . . . . . . . . . . . . . . . . 8
Trading partners . . . . . . . . . . . . . . . . . . . 35
Sustainability targets . . . . . . . . . . . . . . . . 11 Care for the environment . . . . . . . . . . . . . . 13
Single annual accounts 2012
Working at Fair Trade Original . . . . . . . . . . . . 15
Balance . . . . . . . . . . . . . . . . . . . . . . . 37 Profit and loss account . . . . . . . . . . . . . . . 37
Market developments
Cash flow statement . . . . . . . . . . . . . . . .
Financial results . . . . . . . . . . . . . . . . . . . 18
Explanatory notes . . . . . . . . . . . . . . . . . . 38
Food . . . . . . . . . . . . . . . . . . . . . . . . . 20
Other information . . . . . . . . . . . . . . . . . . 45
Gifts & Living . . . . . . . . . . . . . . . . . . . . . 24
Five-year financial summary . . . . . . . . . . . .
38
45
Marketing . . . . . . . . . . . . . . . . . . . . . . 25 GRI Index . . . . . . . . . . . . . . . . . . . . . . 46
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Annual report 2012 Fair Trade Original
Bert Jongsma, managing director: ‘For Fair Trade Original, trade is more than importing products.’
Foreword A fair income for farmers and farm workers in developing countries. That is the ambition of Fair Trade Original. Since our incorporation in 1959, we have been collaborating with farmer cooperatives and producers according to the principle ‘No aid, but trade’. That principle is still highly relevant today and has been followed widely both in the Netherlands and abroad. As the founder of fair trade in the Netherlands, we are pleased with this development. Yet even today, many farmers and farmworkers and their families live in poverty. The race for land and water, the rising prices of fuel and artificial fertiliser and climate change, are all placing farmers in a vulnerable position. There is still much work to do. It is not easy to achieve structural improvement to the income position and the working conditions, and it demands close and lengthy collaboration. For many years, Fair Trade Original has stimulated the development of farmer cooperatives and
that consumers think of as engaging and credible. A new packaging that
producers and that is working.
reflects the new market positioning is part of this. The coffee range is the first product that is available in the shops in the new packaging. In the course of
In 2012, Fair Trade Original decided that in the future it would concentrate
2013, many other products from our range will follow.
fully on the development and sale of a broad range of food with an essential
3
place in the daily shopping basket. We are adjusting our focus by adding
For Fair Trade Original, 2012 was the year in which the gifts & living
new, tasty products to our range, products that are made with care and
activities were made independent. From 1 March 2013, these activities will
attention and appeal to the consumer. It is important, we feel, that our
be incorporated in a new organization FairForward. Fair Trade Original is
range is attractive and recognizable and that is why we invest in our brand
delighted that Mike Jansen, former director of Fair Trade Original, has taken
and our packaging. We are sure that the redesign of our brand logo has
the initiative to acquire the gifts & living activities and the employees who are
not gone unnoticed. Fair Trade Original wants to be a compelling A-brand
part of this.
Annual report 2012 Fair Trade Original
Difficult market circumstances has seen turnover in 2012 decline by 6% to
trade relations contribute to strengthening the position of farmers and farm
€ 18.5 million. Consumer confidence has fallen considerably over the past
workers.
year and from the summer onwards this was translated into a downward trend in turnover. The recession is hitting the wallet of an increasingly large
For Fair Trade Original, fair trade is more than a certificate on packaging;
group of consumers and will, in the coming year, have repercussions for
it is a way of working that is significant at all levels of the organization. We
turnover development. The spin-off of the gifts & living activities has led to
want to show that it is possible to do business successfully in an honest and
a one-off increase in costs during the year under review. The result after tax
transparent manner. That is certainly not easy and presents us with daily
was, in 2012, € 1.4 million negative. This loss is much lower if the one-off
challenges that demand commitment and time. We are justly proud that,
costs are not included. The negative operating result from normal business
together with our partners, we are the first company to have succeeded in
activities is then € 188,000 and is largely the result of a lower turnover.
introducing a culinary fair trade line from Asia on the Dutch market. This has helped us attract many new customers in the past year. A fine example of
Customers continued to buy Fair Trade Original products, even in difficult
trade that continues to develop.
market circumstances. The sales in supermarkets actually rose and we have high hopes for the future. Worldshops and WAAR shops experienced the
We are now ready, with a team of 28 motivated colleagues, to give
effects of a decline in the number of shoppers, but remain an important
substance to our new pay-off. Fair Trade Original: doing good never tasted
customer group. Over the coming year, Fair Trade Original wishes to stabilize
so great.
the turnover in Gift Retail and it will be used to recruit new customers in the Food Service channel.
Bert Jongsma
The collaboration with our trading partners has, in the past year, led to several significant results. Last June, I paid a visit to the fruit farmers in Ghana who supply the orange concentrate for our juices. With our support,
Managing Director
the 8 cooperatives to which these farmers belong have gained certification
Fair Trade Original
in a very short time. The enthusiasm of the farmers is considerable and that has been rewarded with the first premium income. Fairtrade certification is a good start and forms a firm basis for improving together both productivity and food safety. I also visited wine cooperatives in South Africa with which we have worked for years. The results of such long-term collaboration are clearly visible. The employees of the wine farmers have been able to enjoy personal development through training programmes. Several of them now hold management positions. Both projects demonstrate that sustainable
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Annual report 2012 Fair Trade Original
brand. Section 2 describes Fair Trade Original’s Dutch operations. Section 3 reviews Fair Trade Original’s activities with the trading partners in developing countries. The scope of the review of the environmental impact of the operations is limited to the Netherlands, where the organization has direct control of and can influence that impact.
About this Report
Collection of information The information about the departments was obtained from input from
This Annual Report of Fair Trade Original is intended for the stakeholders
departmental staff and from qualitative and quantitative questionnaires.
in the organization: trading partners/producers, consumers, customers,
These questionnaires were drawn up on the basis of the G3 indicators and
suppliers, staff, NGOs, authorities and donors and other interested parties.
the organization’s insights. Most of the information about the organization’s
It describes the relevant developments that have taken place in 2012. This
operations is based on invoices or on management information and records
is the last time that the annual report of Fair Trade Original deals with both
maintained by the organization or submitted by the suppliers on request.
the food and the gifts & living activities. Since the gifts & living activities were
The necessary conversions of figures were carried out on the basis of factors
formally acquired by FairForward at the start of 2013, these activities no
from reliable sources and in accordance with specified protocols.
longer fall under the Fair Trade Original organization. The report is based on the G3 guidelines of the Global Reporting Initiative (GRI) and the guidelines issued by the Dutch Accounting Standards Board. The selection of issues of importance is based on the relevant GRI issues. Needless to say, the most relevant subjects with regard to the business operations of the organization are discussed. The information in this report can be accessed by referring to the relevant section or via the GRI table that refers to the relevant page numbers. The GRI has adopted levels of
Online Annual Report
application in the G3 guidelines. Fair Trade Original hereby declares that the C level of the G3 guidelines is applicable to its Annual Report 2012, as was
This Annual Report is published online at
also the case in 2010 and 2011.
www.fairtrade.nl. The annual reports for previous years are also available from this
Scope of this Annual Report
website. We hope that you will find this
Section 1 gives a sketch of the organization itself and its environment, and
Annual Report interesting. We welcome
reviews the strategic decisions that have been made to enhance both the fair
your response via jaarverslag@fairtrade.nl.
trade principles throughout the chain and strengthen the Fair Trade Original
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Annual report 2012 Fair Trade Original
Fair Trade Original THE ORGANIZATION
Fair Trade Original is an organization that specifically and exclusively focuses on development trade, and therefore holds a unique position in the area of sustainable business. The organization operates within a broad international fair trade context in which numerous organizations make a contribution to conducting fairer trade. Fair Trade Original wishes to make a material contribution by cooperating with these organizations and further deepening its fair trade expertise. The organization markets a broad range of fair trade coffee, food and gifts & living products under the Fair Trade Original brand to shop formulae and customers in the Gift Retail, Food Retail, International and Food Service sales channels. The products are purchased from selected trading partners, with due regard for the ten fair trade principles adopted at an international level.
Profile of the board
Our vision
Our mission
Poverty and the unequal distribution of wealth constitute major obstacles to the wellbeing of individuals and the communities in which they live, impede development and create a continual source of tension and contrasts between individuals and groups in society.
Fair Trade Original intends to make a positive contribution to the struggle against poverty by means of trade development in cooperation with selected trading partners and producers in Africa, Asia and Latin America. When conducting trade we attach paramount importance to profitable operations, sustainable relations, autonomy, and selfrespect for the trading partners and producers.
The Managing Director submitted the 2012 budget and business plan to the Supervisory Board in February. The Supervisory Board approved the
On 1 October of the year under review, the management of the Fair Trade
Annual Accounts 2011 in April. In 2011, the Supervisory Board of Fair Trade
Original foundation was handed over by Mike Jansen to Bert Jongsma. The
Original approved the decision to spin off the gifts & living activities and
director is also general manager and forms the Board of Management as
thus clear the way for a complete focus on the food activities. In the course
stipulated in the Works Councils Act. The Managing Director is appointed by
of 2012, the Supervisory Board agreed to terminate the orientation stage for
the Supervisory Board and is the Chair of the Management Team.
the sale of gifts & living activities, which was undertaken in collaboration with an agency specialised in acquisitions and mergers. The director was
Fair Trade Original, as a development trade organization, has decided to set
requested to develop alternative scenarios for either spinning off or ending
the remuneration of the Management Board at a level within the guidelines
the gifts & living activities. Before a final decision was made concerning
formulated by the Ministry of Foreign Affairs for organizations that receive
the future of gifts & living, the general manager made a proposal for a
development cooperation subsidies. This is regardless of the fact that Fair
management buyout. This proposal lead in November 2012 to the signing of
Trade Original no longer receives any subsidy from the Ministry.
a sales agreement with Mike Jansen. Part of the sales agreement is a longterm licensing agreement which gives the new gifts & living organization
The Supervisory Board met on six occasions during the year under review.
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Annual report 2012  Fair Trade Original: the organization
– operating under the name of FairForward – the right to continue using
the Fair Trade Original brand name on gifts & living products. The parties
Works Council
decided to set the transition and transfer date at 1 March 2013. The
The composition of Fair Trade Original’s Works Council, which has four
Supervisory Board gave its approval to the proposed sale, which means
members, remained unchanged after the elections in April 2012. In addition
that employment for trading partners and employees was retained. On 1
to regular meetings with the director, there were also various additional
October 2012, the Supervisory Board appointed Bert Jongsma, formerly
meetings, sometimes in the presence of a representative of the Supervisory
Controller within the organization, to the position of interim General Manager
Board. An important and recurring subject was the sale of the Business Unit
and director. This temporary appointment was made permanent on 8
Gifts & Living to the former director of Fair Trade Original. The Works Council
March 2013. In January 2013, the Supervisory Board gave its approval to
issued an opinion about the sale. In this process, which also directly affected
the business plan 2013-2017 for the new food organization. The long-term
a considerable number of staff, the Works Council was supported by the
strategy is directed at acquiring a position as the leading fair trade brand in
Basis & Beleid agency. Other matters that arose towards the end of the year:
food.
the proposed removal of the food organization and the business plan Food 2013-2017.
In 2012, the Supervisory Board comprised five members, who do not receive an emolument: Ms J. Schraverus (Chair) Chair of the Board of Directors of the Flevo Hospital (until March 2013) Chair of Fair Trade Original’s Supervisory Board since 2007 Mr. H.E. de Grooth Chartered Accountant, Chair of the Ernst & Young offices in The Hague until 2006 Member of Fair Trade Original’s Supervisory Board since 2007 Mr M.J.O. Delfortrie Owner-Director of Artitec Member of Fair Trade Original’s Supervisory Board since 2007 Mr M.J. Roos Consultant to the Board of the Centraal Bureau voor Levensmiddelenhandel (‘Netherlands Food Retailers Association’, CBL) Member of Fair Trade Original’s Supervisory Board since 2010 Mr H.B.J. Mentink Director of Wheels4All Member of Fair Trade Original’s Supervisory Board since 2000 Mr. Mentink retired from the Supervisory Board on 1 March 2013.
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Annual report 2012 Fair Trade Original: the organization
Strategy Together with its trading partners in developing countries, Fair Trade Original is developing a varied range of fair trade products. This collaboration creates opportunities for farmers and producers to develop and improve their income and living conditions. Fair Trade Original markets a broad and innovative fair trade range under its own brand name. The innovative strength of the organization is expressed in the independent development of fair trade product concepts and the creation of collaborations with producers and/or trading partners in the land of origin. Fair Trade Original maintains mainly personal contacts with its trading partners and works locally with them in order to have the plans implemented. Chain development A characteristic of the Fair Trade Original approach is an increase in the range of Fairtrade certified products. Fair Trade Original regularly helps new producers to achieve certification, by offering intensive support and training.
The whole chain is involved in this, so that ultimately the products are eligible for the Fairtrade seal of approval. Certification is, however, not an end in itself and by definition goes hand in hand with creating good sales opportunities. Fair Trade Original is regularly the first international customer to purchase fair trade products from a producer. With sustainable collaboration, producers can develop into strong trading partners who can meet the high demands of customers in the areas of quality, food safety and delivery time. Sustainable range In order to accomplish the objectives listed above, Fair Trade Original aims to reach as large a public as possible by offering quality products through the most important sales channels for groceries. That is why it is concentrating primarily on developing a range that fits the needs of customers who shop in supermarkets. For this, high demands are made on the sustainability of the range by paying attention to environmentally friendly packaging, regularly making use of biological ingredients and reducing artificial additives to a minimum. As 100% fair trade foundation, Fair Trade Original occupies a unique position on the shelves of the supermarkets and at the same time maintains cordial links with Worldshops and WAAR, and thus has fulfilled the
Fair Trade Original regularly helps new producers to gain certification. These chilli farmers of Sisaket Fairtrade Farmer Group in Thailand are meeting with consultant Manasnan Pongjayavanij about the results of their first Fairtrade inspection. Their peppers are used, for example, in Fair Trade Original’s Red Curry Spice Paste.
role of pioneer for many years. Consumer confidence
food producers is in decline and the demand for transparency is growing.
The general economic developments are unfavourable and the prognosis
Quality labels are also critically tracked. These trends offer opportunities by
is that consumer confidence will remain negative for the time being.
capitalizing on the demand for healthy, sustainably produced and honest
Consumers are more price conscious and increasingly do their shopping
products from reliable and transparent suppliers.
in supermarkets. The perceived added value of A brands is declining,
9
which results in a greater proportion of house brands in the shopping
Quality label guarantees
basket. The promotional demand increases and exerts pressure on the
A large number of Fair Trade Original’s range of products bear the Max
profitability of food produce companies. The importance of healthy and
Havelaar fair trade Seal of Approval. The organization behind this quality
sustainably produced food is increasing and an increasing number of food
label, Fairtrade International, is facing competition from other sustainable
companies and shops are capitalizing on this. The faith customers have in
quality labels and is developing new strategies to attract major market
Annual report 2012  Fair Trade Original: the organization
parties. This struggle goes hand in hand with the implementation of new
New brand identity
licensing models with lower demands for the processing industry. Fair Trade
In the autumn of 2012, the management presented a business plan for the
Original is carefully following these developments and gives input concerning
new food organization and expressed the ambition to establish itself as
content for the development of new standards by Fairtrade International.
the A-brand for fair trade food in the Netherlands. The launch of the new
Traditional, the Max Havelaar Seal of Approval concentrates on developing
brand identity will be a major priority in the coming year. Fair Trade Original
farmers and cooperatives. Partly because of this, there is a limit to the
wishes to appeal to a broad group of consumers and give more experience
number of products with this seal of approval and there is less emphasis
to the brand and the products. The repositioning the brand goes hand in
on improving the position of employees and standards for the processing
hand with the development of a new line of packaging and communications
industry.
strategy. The position on the shelf of the supermarket will be reinforced by introductions in various product categories. The sales activities will be
In its role as pioneer, Fair Trade Original does not wish to restrict itself to
expanded into the Food Service channel where the current range of Fairtrade
products that can gain the Max Havelaar Seal of Approval. For this reason,
certificated products is still relatively small.
products are also sold under the Fair Trade Original brand name which do not carry the Max Havelaar Seal of Approval. The organization has developed its own control system for this group of products in collaboration with European fair trade organizations. In 2013, the control of these products will be allocated to an external certification authority so that independence is better guaranteed. Furthermore, a start will be made with regular assessment of working conditions at processors in the countries of origin. For this, Fair Trade Original will, in consultation with the processors, work towards a social certification of these organizations.
Doing good never tasted so great
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Annual report 2012  Fair Trade Original: the organization
Sustainability targets
various organizations and their specific roles. The lack of clarity about what fair trade actually means, together with a general scepticism about
In the 2011 Annual Report, Fair Trade Original listed six sustainability targets
charities, poor visibility on the shop floor and the price perception, forms a
which are related directly to Fair Trade Original’s work and sphere of
barrier for many consumers. Fairtrade is too frequently placed in the area
influence and for which specific results are feasible.
of development aid and is – unlike, for example, organic – less clearly ‘of today’. These results were the basis for the development of a new
By 2015, food sales (in kilograms, including coffee) will have increased
campaign strategy for Fairbezig which will be implemented in 2013. As a
by 25% from the level in 2011 (from 3.6 million kg to 4.6 kg). In 2012,
run-up to the revision of the packaging line, Fair Trade Original also entered
sales (in kilograms) fell by 4% from the level in 2011. Fair Trade Original
into discussion with consumers, some acquainted with the brand, others
hopes to reverse this trend from 2013 onwards with the introduction of a new
not. In response to this, the new packaging was changed in a number of
packaging line with associated promotions and publicity.
important ways.
By 2015, the share of the food products purchased directly from the
On two occasions, Fair Trade Original sought the opinion of Worldshop
producers will increase to 35% of sales (2011: 28%). The share of the
keepers: once about the activities and resources that the organization
direct purchases (ingredients or final product) grew by 1% in 2012 and now
develops specifically for this channel and once about the sales of Christmas
accounts for 29% of the total sales in kilograms.
hampers. Fair Trade Original made new plans for 2013, based on the large and mainly positive response.
By 2015 all producers and employees making Fair Trade Original products will receive a basic-needs wage. In 2012, payment to producers
During the coming years Fair Trade Original will work on a structural
and employees was a priority during contacts with trading partners. Chapter
improvement in the sustainability of its packaging.
3 describes in greater detail the progress that has been achieved.
The tool developed in 2011 for assessing the sustainability of the packaging was deployed various times in 2012; tests included those on
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In 2012, the organization will form a consumer panel and a customer
the South African culinary products packaged in glass and Argentinian
panel for the Worldshops, both of which will be consulted two or
olive oil. In collaboration with the trading partners, a study was made
three times a year. An extensive consultation with customers was held
into whether the glass bottles could be replaced with PET bottles. The
within the Fairbezig collaboration about their experience of fair trade in
herb mills from South Africa were studied to see whether these could
general, the role of the various organizations in it, the products and the
be considered recyclable plastic waste; the results follow in 2013. The
communications. Although the results were sometimes highly diverse,
products introduced in 2012 are clearly labelled with instructions for
the main thing that emerged is that consumers are aware of fair trade
sorted waste disposal: the Plastic Heroes logo is featured on the PET
as a concept, but when questioned further, they do not really know what
bottles and the Flakes have a recycle logo to indicate that the packaging
it stands for. Furthermore, there is considerable confusion about the
can be disposed with old paper.
Annual report 2012 Fair Trade Original: the organization
A very sustainable packaging has been developed with the supplier for the new herbal teas: the pyramid bag is biologically degradable, the box is made of FSC paperboard and, thanks to its ingenious design, does not need a cellophane wrapping. The milk and plain Chocolate l&tter are now packaged in a box made of FSC paperboard. The annual evaluation with the organization’s Van Uden logistics partner to identify points for improvement in secondary and tertiary packaging has not yet taken place. The same is true of specifying quantitative targets for the reduction of the environmental impact of packaging. This is once again on the schedule for 2013. Fair Trade Original is also making its own internal environmental policy more stringent. The results of the internal environmental policy is described further under the section headed ‘Care for the environment’.
A sustainable packaging has been developed for the new herbal teas.
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Annual report 2012 Fair Trade Original: the organization
Care for the environment
> Gas consumption The offices rented by Fair Trade Original in 2012 were not insulated optimally
Attention to the environment is compatible with and an integral element
and were equipped with obsolete heating. In 2012, Fair Trade Original
of Fair Trade Original’s sustainability targets. The trading partners and/
consumed virtually the same quantity of gas as in 2011. On 1 March 2013, Fair
or producers work with their production on a better environmental
Trade Original moved to modern and sustainably built office premises. The
management. This is assessed by internal audits by the organizations
heating and cooling of this building is regulated by storage sources in which
themselves and by external audits by certificating agencies.
summer warmth and winter cold can be stored for later use. This will mean
When developing new fair trade chains, attention is given during trainings
that Fair Trade Original’s gas consumption will decline considerably in the
and workshops for farmers and producers to the implementation of
coming period.
improvements in order to satisfy environmental demands. This is also a subject of discussion during regular planned on-site visits. Where necessary, Fair Trade Original offers support to producers for improving their environmental performance. When the producers are neglectful in this
Gas consumption in Fair Trade Original’s offices and stores at Beesdseweg 5 2008 m3 48.400
2009 m3 39.900
2010 m3 47.200
2011 m3 26.307
2012 m3 26.214
respect, Fair Trade Original can contribute to looking for and implementing a solution.
> Electricity consumption Fair Trade Original began to source Nuon’s Natuurstroom (‘green electricity’)
Internal environmental reports
in 1999. All this electricity is generated from solar, wind and water resources.
Fair Trade Original reviews the organization’s use of paper (printed matter,
This enables Fair Trade Original to avoid emissions equivalent to 99 tonnes
company stationery) and consumption of gas, electricity, fuel and packaging
of CO2. In 2012, Fair Trade Original again endeavoured to achieve at least
materials.
a 2% reduction in the organization’s consumption of electricity by means of a critical review of the equipment in use. Unfortunately this proved
> Consumption of paper
unsuccessful. The premises that Fair Trade Original moved into in 2013
The consumption of paper by Fair Trade Original (stationery and envelopes)
are designed in such a way that a high light yield is generated with little
declined in 2012 with the introduction of digital invoicing. The paper Fair
electricity. To a large degree, a daylight dependent regulation is used.
Trade Original uses for printing and copying bears the Forest Stewardship Council (FSC) Mixed Sources Seal of Approval. Because the consumption of paper will continue to decline rapidly in 2013 thanks to the smaller size of the organization, the decision has been taken not to include this any longer as a relevant issue in the Annual Report.
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Annual report 2012 Fair Trade Original: the organization
Electricity consumption in Fair Trade Original’s offices and stores at Beesdseweg 5 2008 kwh 158.000
2009 kwh 146.600
2010 kwh 147.500
2011 kwh 144.500
2012 kwh 149.000
> Transport
> Packaging
In the year under review, Fair Trade Original leased five cars for the general
Fair Trade Original pays packaging tax on all packaging materials they bring
manager and the account managers. The environmental performance of
on the Dutch market. Records are kept of the use and type of packaging
the cars was examined at the time of their purchase. In 2012, the five users
for each article. The sales of Fair Trade Original products in cans, coconut
drove approximately the same distance as in 2011: around 160,000 km. The
milk and pineapple, rose in 2012 and again accounted for an increase in
fuel consumption per kilometre by all the users of leased cars was higher
metal waste. The use of wooden pallets has largely been replaced by roll
than the levels specified by the lease company. When replacing the leased
containers. The rise in aluminium use is largely due to a registration error.
cars, an attempt will be made to find an even more environmentally friendly model. In the year under review, the Citroën Picasso was replaced by a Toyota Prius and from February 2013, an electric Opel Ampera will be leased. Members of Fair Trade Original’s staff regularly visit trading partners and producers in Latin America, Africa and Asia, as do external consultants who are contracted for specific assignments. In the longer term, Fair Trade Original intends to compensate for these CO2 emissions by carrying out activities at the organization’s trading partners directed at reducing CO2. The organization has reached a carefully-considered decision not to compensate these emissions solely with third-party certificates. Intercontinental kilometres flown on the instructions of Fair Trade Original: 2009 1.435.700 km 322 ton CO2
2010 940,000 km 213 ton CO2
2011 506.705 km 87 ton CO2
2012 543.200 km 95,8 ton CO2
Flights within Europe are not taken into account in the above figures as these are not booked from a central location and, consequently, are not registered. Staff are requested to travel on journeys of less than 500 kilometres by train and otherwise by car.
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Annual report 2012 Fair Trade Original: the organization
Material
In 2008 In 2009 In 2010 In 2011 In 2012 (rounded (rounded (rounded (rounded (rounded up in kg) up in kg) up in kg) up in kg) up in kg) Paper and cardboard 127.000 130.000 137.500 145.000 140.000 Plastic 24.000 27.000 27.500 25.000 25.600 Glass 234.500 247.000 245.500 250.000 238.000 Metal (other than aluminium) 9.000 16.000 23.000 28.000 31.000 Aluminium 400 250 350 420 900 Wood 1.500 1.500 1.300 1.300 500 Turnover Fair Trade Original 100 116 122 128 121 Index 2008 = 100
Working at Fair Trade Original
During the year, work consultation is held regularly with managers and departmental staff. Once every quarter, all employees are informed about
The employees are the face of the Fair Trade Original organization: a
the most important developments in the organization. From 2013, the human
socially-engaged organization, directed at creating opportunities for trading
resources policy will be explained each year to the employees.
partners and improving the working conditions of employees. As employer, Fair Trade Original wishes to operate a good social policy and create a
Jobs
healthy and pleasant working climate so that employees are enabled to
Fair Trade Original had a staff of 47 at the end of 2012. One colleague was
perform well. Fair Trade Original stimulates employees to take the initiative
stationed in Guatemala.
and responsibility, and thus to work on an organization in which they feel at home and of which they are proud. In addition to a comprehensive employment conditions programme, it offers its employees the possibility for personal development and room for substantial involvement. HR policy instruments The employees of Fair Trade Original are represented by the Works Council.
Jobs at 31 December 2012 2011 30/17 45/2 19/28 47 40
Women/men Indefinite period / Definite period Fulltime/part-time Total number of staff Total number of FTEs
2012 28/17 43/2 19/26 45 39,5
The current agreements concerning the rights of the employees were reached in 2011 by the management and the Works Council and laid down
Age structure
in regulations concerning the legal status. In the regulations concerning
At 31 December 2012, the average age of the men was, as in 2011, 47.
the legal status, agreements have been laid down concerning primary and
The average age of the women increased by 2 years to 46.
secondary employment conditions. The regulations are in part based on the hospital collective labour agreement and are in part tailored to Fair Trade
Staff turnover rate
Original.
Four employees left the organization. In the same year, two employees were hired: an Online Marketer and a Product Manager.
The organization structurally implements its human resources policy by carrying out regular progress and performance reviews with its employees. The organization has, in consultation with the Works Council, formalized the assessment policy and has developed standard instruments for this. At the end of the year, the employee’s immediate superior assesses performance and makes agreements for the coming year. Half-way through the year, a progress meeting is held in which the employee and the manager discuss the current state of affairs and make adjustments where necessary.
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Annual report 2012  Fair Trade Original: the organization
Staff turnover rate by age category and gender 20+ 30+ 40+ 60+
Departing staff 1w 1m 1w 1w
New staff 1m 1w
The average number of years in service was 12.9. Almost half of the staff had
In 2013, the management shall, in consultation with the Works Council, reach
been in employment with Fair Trade Original for more than 10 years.
a decision concerning the future structure of the workers’ representation within the organization. Since January 2013, the organization has been
Pension fund
reinforced with a Channel Development Manager who shall concentrate on
Fair Trade Original is affiliated with the Zorg en Welzijn Pension Fund.
the growth of sales in the Food Service channel.
Employer and employee each pay half of the pension contributions. Organization chart at 1 March 2013 Health and safety The organization’s policy is to anticipate any sick leave, for example by
Supervisory board
creating a good working environment and giving personal attention to the staff. Because of the radical change in the organization, the figures for sick leave have, unfortunately, been lost. Two employees took long-term
Managing director
sick leave. As much contact as possible was maintained with them with the objective of simplifying their return to work. The medical officer held a surgery at the office when required. Periodic consultations also took place
Management support
between the HR consultant and the medical officer. The services of the
Finances & ICT
permanent confidant were not called on in 2012. Training courses In 2012, € 12,000 (2011: € 17,000) was allocated to training courses. The
Marketing manager
Sales manager
account managers enjoyed a commercial training and an administrative employee followed an SPD training.
Communication & online
Supply chain management
Account Management & Trade Marketing
Product management
Sourcing & development
Sales Office
The future At the start of 2013, a new workforce plan was drawn up and approved. This workforce plan contains an adjustment of staffing to meet the new situation that has arisen through the spin-off of the gifts & living activities. The number of staff jobs has been reduced, which means that 3 jobs have been ended. At the beginning of March 2013, a termination contract was signed with the employees concerned. The colleague who is stationed in Guatemala has been asked to move to the Netherlands.
16
Annual report 2012 Fair Trade Original: the organization
Fair Trade Original MARKET DEVELOPMENTS
At the end of 2012, Fair Trade Original adopted a long-term plan for
Fair Trade Original concluded the 2012 financial year with a net loss of € 1.4
guaranteeing that the model for trade that is developing shall remain
(2011: € 39,000 profit). The decline in the result can be explained by the one-
successful in the increasingly competitive Dutch market for food consumer
off costs (€ 1.2 million) of spinning off the gifts & living activities. In 2012, net
goods. In 2012, in addition to all activities and on-going matters for that year,
turnover decreased by € 1,1 million (6%) to € 18.5 million. Turnover generated
the preparations were made for giving shape to this new strategy.
by the Food Business Unit dropped by 4% to € 15.7 million. Net turnover generated by the Gifts & Living Business Unit amounted to € 2.8 million, 12% lower than in 2011.
Financial results 2012
Movements in turnover After an initially good start in 2012, the turnover in the second half of the
Net turnover (in millions of euros) 0,25
25
Net turnover (in millions of euros)
the Netherlands and the resulting further decline in consumer confidence.
0 20
18,5
15
19,6
0
–0,25
The turnover of gifts & living products was particularly hit by this, due also to the fact that customers in the Gift Retail channel (primarily Worldshops)
–0,5
encountered the most problems from the economic adversity. The increased
–0,75 10
turnover decline in the Gift Retail channel is also the most important
–1 –1,25
5
explanation for the decline of turnover in food and coffee. Disappointing
–1,4
sales of Christmas hampers confirmed this trend and the distributor of
–1,5
Christmas hampers for the corporate market also achieved a considerably
0
2012 2011
2012
5,6 4,7
supermarkets) on the other hand showed some growth. This growth did, however, come under pressure in the second half of 2012, partly because of materials has been normalised. This means that price increases have had
3 2,5
lower turnover than in 2011. The turnover in the Food Retail channel (mainly
a lower coffee price. The development of the purchasing prices for other raw
3,5
5 4
2011
Other income including subsidies (in hundred thousand euros)
Gross margin (in millions of euros) 6
only a limited effect on the total food turnover in 2012.
2,6
2
3
Movement in the margin
1,5 2 1 1
1,1
0,5
0
In 2012, gross margin income decreased by 17% to € 4.7 million. This considerable decline can be attributed to the margin results in gifts & living. The spin-off of the gifts & living activities has resulted in a one-off
0
2012 2011
18
year collapsed as a result of the continuing bad economic circumstances in
2012 2011
Annual report 2012 Fair Trade Original: market developments
depreciation of the stocks, which is reflected in the gross margin. Moreover,
both the turnover and the gross margin in terms of percentage were under pressure because of the difficult market conditions and the less favourable dollar exchange rate. The gross margin income from food increased by € 0.1 million to € 4.3 million. This is largely a result of the recovery of the margin on coffee. Subsidy In 2012, other income amounted to € 0.3 million. In 2012, Fair Trade Original has, in collaboration with Max Havelaar and the National Association of Worldshops, and thanks to a contribution from the Nationale Postcode Loterij,
Logistics Fair Trade Original concluded a renewed cooperation agreement with the organization’s Van Uden logistics provider in 2011. In the subsequent year, the efficiency has been increased through new agreements about cooled transportation of products. The costs for storage of goods have been lowered further by a better monitoring of stocks and the storage costs have dropped thanks to new agreements with several supermarket chains. In 2013 new possibilities for cost savings shall be sought in collaboration with suppliers and customers.
been able to implement the Fairbezig campaign aimed at an increase in the number of consumers buying fair trade products. Fair Trade Original received a contribution of € 115,000 towards costs via the representative of Max Havelaar. PSO financed a multi-stakeholder programme of Fair Trade
Service Level Agreements have been concluded with the supplier. Fair Trade
Original with six partner organizations. A total of € 74,000 was paid for
Original has implemented measures to guarantee the availability, continuity
programme activities with citrus farmers in Ghana and workshops in South
and security of its ICT systems. These measures are laid down in procedures
Africa and Peru. ASN Foundation paid a contribution of € 37,000 for the chain
and amended to modified circumstances at regular intervals.
development for the benefit of Fairtrade certification of the Asian culinary line and for five other smaller programmes with trading partners.
In 2012, Fair Trade Original launched a new website for corporate customers. This has resulted in a further simplification of order processing. The ICT
Costs
infrastructure was replaced at the same time as the removal in March 2013
As a consequence of the spin-off of the gifts & living activities, the
and a new virtual network was implemented. This will ultimately lead to an
organization saw a 10% rise in costs to € 6.3 million. The demerger of the
upgrade and virtualization of SAP in the autumn of 2013.
gifts & living activities has lead to an increase in the costs of staff. In addition, the consultancy costs for external support by consultants and lawyers for the
Prospects
sale of gifts & living were higher than in 2011.
Fair Trade Original is using 2013 to revitalize its brand and to clarify further its relevance for consumers and customers. This repositioning shall last
19
The provision of information and automation
throughout the year and a slight increase in turnover is included in the 2013
Fair Trade Original uses the SAP All-in-one business information system.
budget. This budget also takes into account the continuing difficult economic
The majority of the functional and technical management of this system
circumstances. Despite these circumstances, a further growth in the Food
has been outsourced to an approved SAP supplier; contracts in the form of
Retail and Food Service channels is predicted for 2013 and particularly for
Annual report 2012 Fair Trade Original: market developments
the years thereafter. The organization has the intention of making more
terms, after a difficult period for coffee in particular. This goal has been
structural investment in the development of the brand and opening up new
achieved.
markets. In addition, sourcing and development of new trading partners will be funded from the organization’s own resources. The organization expects
Sales channels
a negative operating result for the year 2013 because of the extra costs that will have to be made for marketing activities and one-off costs for the
> Food Retail
adjustment to staffing.
Although an increase in turnover of 5% was achieved in the Food Retail channel, the budget was not reached. This is mainly a consequence of a less than expected willingness on the part of a number of supermarkets
Food
to purchase goods, a lower turnover after the summer and disappointing sales during the Fairtrade Week. An essential improvement in the margin
Fair Trade Original shall endeavour to enhance its position as the leading
was achieved, considering the lower purchase price of coffee. The sales of
premium fair trade food brand in the Netherlands. By continuing to stress this
coffee were, however, under pressure, ultimately achieving an index of 99
unique role to decision makers within the most important sales channels,
compared to 2011. The sales of other food grew with 7% compared to 2011.
Fair Trade Original hopes to keep the organization high on the agenda. The
This growth was largely achieved by expanding the distribution of existing
product categories of Fair Trade Original are of utmost importance for the
products such as the Asian line and better sales of existing products.
recognition of the brand. There were a large number of developments in the product range and the various market channels in 2012. New products were
> Gift Retail
introduced and the expansion of the range stocked by the supermarkets,
Because of the poor prospects in the Gift Retail channel, a decline in the
Worldshops and other sales channels was a success.
turnover in this channel was calculated in. The decline was sharper than expected, which resulted in Gift Retail showing a turnover index of 83
20
The alignment between Marketing and Sales has been improved compared
compared to the turnover of 2011. The recession means that fewer people
to previous years. By literally reducing the distance between both
visit the Worldshops and shops regularly have to close. The activities
departments via an internal removal, more, easier and better contact was
developed especially for this channel did not lead to the objectives for 2012
made possible. In addition marketing/sales teams have been created, based
being attained. In addition, the sales in this channel of Christmas hampers
on product portfolios.
were very disappointing, despite the efforts of the volunteers in the shops.
Development of turnover and margin
> Food Service
The total food turnover declined by 4% from € 16.4 million in 2011 to € 15.7
In addition to the successful collaboration with Van Oordt and United Coffee
million in 2012. The margin rose by 3% from € 4.2 in 2011 to € 4.3 million
for portion packs and coffee respectively, it did not prove possible to gain a
in 2012. One of the aims for 2012 was to restore the margin in percentage
greater foothold in this channel in 2012, despite sufficient opportunities being
Annual report 2012 Fair Trade Original: market developments
The introduction of Fair Trade Original fruit juices in 330 ml bottles was directed at consumers who wish to enjoy juice while on the move.
Belgium started selling products of Fair Trade Original and this has resulted in this slightly positive index. In 2012, sister company Fair Trade Original Belgium, which accounts for approximately 70% of the total turnover within the international channel generated by food (including coffee), recorded food sales 10% below the level in 2011. This is partly explained because there were fewer Christmas hamper orders than in 2011. Coffee is still an important turnover generator for Fair Trade Original Belgium: Coffee generates 87% of the food turnover. Unfortunately, the turnover in coffee declined slightly, with an index of 97 compared to 2011. Promotion In 2012 Fair Trade Original, in cooperation with its customers, focused on discount offers and tasting sessions to promote sales of its products to a broader group of consumers. An example of this were the Langloop (Longterm) bonuses (a discount of 10% on the shelf price for 4 weeks) at Albert Heijn and a sponsored recipe in Allerhand with complementary recipe card. The Langloop bonuses did not, unfortunately, have the desired result for Fair Trade Original. At Jumbo, the ‘Jumbo Deal’ on coffee stimulated the consumer to buy Fair Trade Original products. In addition there was
available. This is, however, a laborious channel, with its own dynamics.
a buy & win promotion: consumers could send in their sales slip for Fair
Fair Trade Original therefore decided at the end of 2012 to hire a Channel
Trade Original Espresso Beans and have the chance of winning a Fair Trade
Development Manager to handle this channel, including Christmas hampers.
Original Coffee pack. Marqt opened several new shops and Fair Trade
This staff member joined the organization in 2013. The sales of products for
Original products were well-represented in the product range on the shelves.
Christmas hampers were disappointing, partly caused because the most
The customers of this innovative supermarket formula feel at home with the
important supplier of Fair Trade Original products to Christmas hamper
Fair Trade Original concept. Several successful promotions with rice, coconut
packers encountered a severe drop in turnover. Food products accounted for
milk and biscuits were held on the shop-floor.
85% of the Christmas orders. Food sales were also actively promoted with special offers at the Worldshops
21
> International
and WAAR shops in 2012. In 2012, recipe cards were again issued to
Fair Trade Original sold slightly more food to the international market than
customers. These recipe cards were well received and many Worldshops
in 2011 (101% of the 2010 level). Halfway through the year, Oxfam Fairtrade
placed the recipes on their website. The introduction of the take-away bottles
Annual report 2012 Fair Trade Original: market developments
of fruit juice was accompanied by setting up a number of walking and cycling
certificating a food-safety system based on HACCP (Hazard Analysis and
routes. During the Fairtrade Week, a promotion was held in collaboration
Critical Control Points).
with fiarbezig.nl for tea. Some 250 shops participated. The response was very positive. Almost all Worldshops selling Christmas hampers made use
In June 2012, Fair Trade Original itself changed from a certificated HACCP
of the Christmas hamper folder compiled in cooperation with Fair Trade
system to ISO22000 certification in order to meet the demands made by GFSI
Original’s colleague importer De Evenaar.
(Global Food Safety Initiative), an initiative of the international grocery trade. The ISO22999 standard was introduced for managing food safety throughout
Customer satisfaction
the food chain, from production to the shelf, including the supply companies
Fair Trade Original holds an annual survey into whether the activities
such as the packaging and cleaning agents industry. This norm is directed
designed for Gift Retail customers meet their expectations and achieve
at taking food safety in the chain to a high level. Management and quality
the desired results. In 2012 a total of 277 respondents completed the
management are also important issues.
questionnaire. This revealed that the Worldshops were satisfied with the various materials, such as the newsletters and the monthly recipe cards. The
Supplier assessment
promotions developed in collaboration with Fairbezig, a display with tea and
Within the quality aims set by Fair Trade Original, considerable attention is
a Big Fair Bag filled with food products, were very well received. The display
given to assessing the quality of producers. A supplier assessment system
for the new Fair Trade Original herbal tea was used by more than half the
has been set up for this. One of the objectives in 2012 was that 90% of
shops and nearly all the shops would like a similar action to the bag in 2013.
the producers should a certified safety system or a system approved by
Work is under way in 2013 on both a new display and bag. A survey was
an independent organization (in 2011 this was 85%). This objective was
also conducted amongst the Worldshops that sold Christmas hampers. The
achieved: at the end of the year, 90.7% of the producers satisfied this
respondents (183) were satisfied with the Christmas brochure and with Fair
demand. There are processes for the remaining producers to ensure that
Trade Original’s service. Fair Trade Original was awarded an average score
in the future they too will satisfy the stipulated demands.
of 7.6.
The other objectives were: > 99.9% of the order lines were delivered without complaints about
Quality and product liability Every single step within the chain of food supply must be carefully
managed in order to guarantee the quality and food safety of the end
> supplier assessments: category orange: 2.5% (maximum);
product. It is a prerequisite for trading partners and producers to manage
yellow 12.5% (maximum); green 85% (maximum).
this process if they are to have any chance on the export market. Fair
Result: orange: 4.7%; yellow: 11.6%; green: 83,7%.
Trade Original operates an active policy of stimulating trading partners
> carry out 2 traceability tests and 1 recall test. Result:
and producers in the development of their business operations. In this
context, they help them where necessary in setting up, implementing and
22
the products.
Annual report 2012  Fair Trade Original: market developments
Result: 99.8%.
2 traceability tests, no official recall test.
Recalls and calamities In 2012, there were no calamities and no recalls were initiated in the area of
Complaints
food safety. On two occasions, however, a product was withdrawn from the shops because a quality deviation was discovered. One of these was a batch
In 2012, a total of 221 product complaints was registered, 37% more than in 2011.
of wine which no longer tasted at its best. In addition, a decision was made
It is not possible to give a clear reason for the higher number of complaints. The
shortly after the introduction of the Chocolate Flakes to withdraw this product
top 3 types of complaints are:
from the Worldshops because the bottom of the packaging did not close
> Appearance: 76 complaints
properly.
> Physical packaging: 57 complaints > Flavour: 33 complaints
Fair Trade Original can also be reached outside office hours via an emergency call centre for reports in the area of food safety. In 2012, this
These top 3 were responsible for 75% of the total number of registered
possibility was used 21 times, compared to 14 times in 2011. None of the
complaints. In 2011, these three categories were also responsible for the most
reports proved an emergency. These reports did show that the system works.
complaints. Then, most complaints were registered in the packaging category, followed by unusual appearance and flavour. The change to the opening of the
The future
chocolate sprinkles packaging at the end of 2011 resulted in a drop of more than
The Food Retail channel will also ensure the growth of the Fair Trade Original
80% in complaints about this aspect. In response to complaints, the recipes of
brand in the future and this will prove one of the major boosts for total
two products were altered.
growth. There is sufficient development potential in supermarkets to sell more products more frequently in more shops to consumers who increasingly demand sustainability. In addition to growth in this largest channel, the sales in Food Service will also increase. Thanks to the appointment of a salesperson specifically for this channel, Fair Trade Original can enormously stimulate its sales in the coming years. The best possible use will also be made here of the growth trend towards sustainable solutions in the outdoor market. Fair Trade Original also still sees opportunities for growth of its brand in the Gift Retail channel despite the difficult circumstances being encountered by the Worldshops. By using promotions specially developed for this channel, full advantage will be taken of these growth opportunities.
23
Annual report 2012 Fair Trade Original: market developments
Gifts & Living
resulting lack of consumer confidence. There was a decline in the sales of non-food throughout the Netherlands, but the Worldshops were hit harder
In 2012, the gifts & living range was responsible for a limited but attractive
because of their frequently vulnerable position in B locations. In addition, they
part of the Fair Trade Original range. Products from the range, which
lost market share to other providers including webshops. Last but not least,
changed regularly, appeared almost weekly on shopping pages of a
the Christmas sales (and in particular those of Christmas hampers) were
highly diverse range of magazines. The product development also had
extremely disappointing. A number of shops were forced to close down.
repercussions for the producers: in Thailand, porcelain factory Sang Arun was so inspired by the cheerful colours of the new range of china that they
In 2011 the International share in the turnover was 19%, and in 2012 it grew to
painted all the cupboards and display shelves to match.
23%. The turnover increased by 2% to 0.6 million. The range attracted largely new customers. This market will be expanded further in the future, partly by
Movement in turnover
participating in reputable international trade exhibitions.
The new collections could not prevent a decline in turnover for gifts & living articles in 2012 to € 2.8 million while the budget had foreseen in a rise to
Promotion
€ 3.5 million. This implied a reduction in turnover of 11% compared to 2011
In order to support sales primarily in Worldshops and WAAR, Fair Trade
(3.2 million).
Original organised promotions and activities throughout the year. Special offers were aimed at the traditional holidays (such as Valentine’s Day, Easter, Turnover movement per channel in 2012
Mother’s Day, Christmas). Fair Trade Original also participated in the product folders for the Worldshops and organized collection days in order to highlight
Gift Retail: ¤ 2.1 million
the background of the products and their origins. In consultation with the
Out of Home: ¤ 0.1 million
Worldshops, the shop themes were elaborated and Fair Trade Original also developed actions in the context of Fairbezig that found their way to the shop floor. Shopkeepers were kept informed of developments and activities through a monthly newsletter.
International: ¤ 0.6 million
The future In 2013, the gifts & living activities were spun-off to FairForward B.V. This means that the attention in this fair trade segment can also be focused on
Sales channels In 2012, the turnover at Worldshops and WAAR was € 1.5 million. The turnover to other retail outlets in the Netherlands was € 0.6 million. In total, this mean a decline of 18%. The Worldshops suffered from the economic crisis and the
24
Annual report 2012 Fair Trade Original: market developments
product groups and customers.
Marketing
households, including 344,000 new households purchasing fair trade products. The average purchasing frequency, the average quantity and the
The trend towards more responsible products continued unabated: 2012
level of expenditure also increased per household. The survey also showed
once again saw more households buying fair trade products. This emerged
that with the introduction of its Asian line, Fair Trade Original was able to
from the annual survey held by NCDO in cooperation with the Max Havelaar
attract new fair trade purchasers in the culinary segment. This is exactly what
Foundation and Fair Trade Original. Almost 60% of all Dutch households
Fair Trade Original has in mind: to reach more consumers by developing new
bought one or more fair trade food products in 2012. This means 4.5 million
fair trade products, and thus increase the sales for producers in developing countries with fair trading conditions.
With the introduction of the Asian line, Fair Trade Original was able to attract new fair trade purchasers in the culinary segment.
For Marketing, the year 2012 was very much one of preparation for the 40th coffee anniversary and the introduction of the new market positioning in 2013. Repositioning of the brand In 2013, the Fair Trade Original brand will be given a complete metamorphosis. Everything is aimed at attracting a new, younger target group, while retaining the trust that existing customers have in the brand. Consumer research has shown that although Fair Trade Original enjoys high brand awareness, it is still considered primarily a seal of approval. The packaging line is recognised and appreciated mainly for its sobriety, but the packaging has too little ‘appetite’ and attraction for reaching new target groups. Furthermore, the sobre, pure packaging of Fair Trade Original has become the reference in the growing segment of responsible products in the supermarket, which means that Fair Trade Original packaging has lost some of its distinguishing character. In 2012, the guiding principles for the new Fair Trade Original brand were laid down, after which a new design was made for both the logo and the packaging line. A new campaign concept and a new tone of voice have also been developed for the brand. In 2013, the repositioning of the brand was rolled out. The coffee range was the first to be given a new look, partly because it is 40 years ago this year that Fair Trade Original first introduced fair coffee.
25
Annual report 2012  Fair Trade Original: market developments
New in the product range Fair Trade Original introduced various new fair trade concepts in 2012.
Nationale Postcode Loterij
In collaboration with brand licensee Van Oordt the Portion Company, individually packaged mini treacle waffles were introduced. After the success
Fair Trade Original, the National Association of Worldshops and the Max
of chocolate sprinkles, it was a logical step to extend the breakfast range
Havelaar Foundation have been joint beneficiaries of the Nationale Postcode
with plain chocolate flakes. Immediately following their introduction, they
Loterij since 2010. By running a campaign together under the umbrella of
were taken up by, inter alia, Albert Heijn. The Fair Trade Original fruit juices
Fairbezig, we want to stimulate sales of fair trade products. In 2012, various
were introduced in a 330 ml PET bottle for consumers who wish to enjoy their
sub-campaigns were implemented, including a chocolate campaign in
juice on the move.
cooperation with Verkade, a bag campaign Fairbezig@school, a tea campaign in collaboration with a number of Superunie members and a rice campaign during
After the successful introduction in 2011, Fair Trade Original introduced the
the Fairtrade Week.
chocolate letter & – a unique letter for everybody – in the autumn of 2012. The letter was introduced in a plain chocolate variety, alongside the existing milk chocolate letter. The packaging was a striking black, reminiscent of
two new biological wines from Chile to the wine range. The new legislation
a blackboard, and consumers could used the white pencil included to
for biological wine proved an enormous stumbling block for our Chilean
personalise the box.
partner. The result was that the required import certificates could not be supplied on time. There has also been little progress with the nut range, so
A basic pepper and salt mill were added to the herbs and spices range. The
that this once again is an agenda item in 2013.
mill with pure black paper gives a kick to various recipes at the turn of the top. Together with the mill with pure sea salt, these mills form an attractive
Removed from the range
duo in the kitchen and on the dining table. Caterer Albron was the first to
In 2012, several products were scrapped from the range for a variety of
introduce the set and did so on a fair trade bamboo tray in its company
reasons. Sometimes because of quality problems, sometimes because
restaurants.
the supplier stopped and sometimes because the sales declined making the product unprofitable. From the very beginning, Fair Trade Original had
At the end of the year, Fair Trade Original introduced a special line of four
a 4 gram black teabag in its range, which was sufficient for a pot of tea.
new tea varieties. Luxurious herbal tea in a pyramid-shaped bag, in which
This version was also included in the new tea range introduced in 2011.
the rich flavours develop to the full. And state-of-the-art for sustainability:
The first batch had to be rejected because of quality problems. The trend
both biological and fair trade certified tea in biologically degradable bags in
in the market is a shift from bags of tea for one pot to bags for one cup.
an FSC certified box that makes no use whatsoever of cellophane.
The combination of these two factors was the reason to discontinue this product. The treacle waffles with honey and the chocosticks have been
There were also disappointments. It did not prove possible in 2012 to add
26
Annual report 2012  Fair Trade Original: market developments
scrapped from the biscuit range and the peppersweets, salt mills, chutney
sauces and the piri piri oil have been removed from the South African
of winning a trial subscription to Elle Eten or a trial pack with Asian cooking
culinary range.
products. In the autumn, the Fair Trade Original rice took a central position in a Fairbezig campaign, developed in collaboration with Max Havelaar and the
Range policy
National Association of Worldshops. The unique promotional code on the rice
Within Fair Trade Original’s broad and varied grocery range, all products
packaging gave customers a chance of winning a trip to Thailand to visit the
demand a specific approach, but they all meet a number of general
country’s rice producers. Nearly five thousand consumers took part in these
principles. These principles were reviewed again in 2012 and some made
promotions.
more stringent. During the development stage, for example, more attention will be given to avoiding wherever possible the use of artificial additives. The
The future
market demands more concept-thinking – ‘everything for an Asian meal’
In 2013, the new positioning of the Fair Trade Original brand was rolled out
– because broader concepts have greater relevance and added value on
and will be carefully monitored to see whether it gives a new impulse to the
the shelves than individual products. In addition, various quality standards
brand and leads to attracting new target groups. This, together with actively
were reviewed and Fair Trade Original has decided how to deal with them:
developing new fair trade products and entering into new sales channels
the company’s own brand principles are often higher than the minimum
such as Food Service and online, is how we are implementing the growth
demands stipulated by the quality label directives.
strategy for the brand.
Campaigns In 2012, Fair Trade Original was on television for two periods. In anticipation of the new brand positioning and the focus on a new target group, a decision was taken to broadcast on RTL and 24Kitchen. In March, rice, wine and coffee were featured for two weeks, supported by commercials. A tagon was developed for supporting the Asian line: it was shown after the rice commercial. Commercials with the Asian line, coffee and breakfast were run for two weeks in September. The plain chocolate flakes were introduced in the summer, and for this reason a tag-on was developed to run after the breakfast commercial. An on-pack promotion was run twice in 2012 on Fair Trade Original rice products. In the first half of the year, a joint promotion was designed with the culinary magazine Elle Eten. In the spring, customers of Fair Trade Original rice could enter a unique code found on the packaging and had the chance
27
Annual report 2012 Fair Trade Original: market developments
COOPERATION WITH TRADING PARTNERS
Fair Trade Original is one of the founders of the fair trade movement in Europe. An organization was created around the concept that every person
Trading themes
has the right to a decent existence, which championed the development
Fair Trade Original purchases its products from selected trading partners that
of fair trading practices. Fair Trade Original supports the ten fair trade
respect the ten fair trade principles. In 2012, several specific themes drew
principles, puts them into practice and thus contributes to the development of
attention:
best practices that demonstrate how those principles can best be applied.
.
 Declining coffee prices: the coffee prices declined in 2012 after having
enjoyed a major rise in the previous period. For coffee farmers this means The organization concentrates particularly on the development of new fair
that the minimum price guaranteed for Fairtrade certificated coffee is slowly
trade chains. It is not just farmers and cooperatives, but also processors
gaining in relevance.
and employees, that are part of this approach. Work is undertaken in
.
collaboration with partners in developing countries on expanding the range
fair trade range on the market. Fair Trade Original shall always be partly
of fair trade certificated products for Dutch consumers. Fair Trade Original
reliant on external expertise for the necessary knowledge and experience
does not wish to restrict itself to purchasing fair trade ingredients, but
with all these various products. This regularly gives rise to outsourcing the
wherever possible prefers to have the complete product manufactured there.
purchasing to a third party that is specialised in purchasing the product
In this way, more added value is created in the land of origin.
concerned. A method is being sought for establishing an efficient, structured
  External expertise: Fair Trade Original offers a broad and innovative
method for contacts in such cases between Fair Trade Original and the Fair Trade Original wants its development activities to better match
trading partner.
developments in the range and market. The added value of the organization is encapsulated in the idea that it is involved in the whole production chain and is expert in making fair trade applicable in practice. In 2013, the organization will work with Development Managers who are responsible for
Development of Fairtrade chains
sourcing new producers and processors in developing countries. Fair Trade
Developing new fair trade chains and strengthening existing ones is a
Original will monitor its trading partners proactively and offer support in
major concern for Fair Trade Original. The aim is to prepare farmers and
gaining and maintaining fair trade certification.
their organizations for Fairtrade certification and subsequently to help them maintain and further raise this high standard. Certification is of major importance for producers because it opens a completely new market to them as well as offering good trading conditions. During the certification process, Fair Trade Original starts the trading process with them because of the stimulus this gives. With the development premium that they receive during this stage, they can also cover part of the costs involved in the transition. In 2012, Fair Trade Original worked on the following fair trade chains:
29
Annual report 2012  Fair Trade Original: cooperating with trading partners
Asian culinary line After the introduction in 2011 of various Thai culinary products, work was undertaken in 2012 on the certification of farmers who grow the processed sugar cane, chillies and soya. Thanks to the assistance of Fair Trade Original, all the actors in the chain are now Fairtrade certified. A lot of attention has been paid to training representatives of farmer organizations and of the processing companies. Working with its trading partners, Fair Trade Original has succeeded in finding motivated farmer cooperatives. In 2013, work will be undertaken on expanding the Asian culinary line and farmers will be assisted in retaining the Fairtrade certification. Orange juice from Ghana Work is being carried out in cooperation with Fair & Organic Products, the importer of the Fair Trade Original orange juice concentrate, and the Fruittiland juice factory in Ghana, on the development of the organization. Training was given in Good Agricultural Practices and Fairtrade to eight farmer organizations with a total of 4,500 farmers. Better knowledge of Good Agricultural Practices will enable the citrus farmers to guarantee food safety and increase product quality and production volume. In the framework of the Thematic Learning Project of PSO, a survey is
During the autumn 2012 harvest, it transpired that the quality and food safety at the Fruittiland juice factory in Ghana were not yet at the required level.
being undertaken into whether small citrus farmers actually strengthen themselves through Fairtrade certification. A researcher from Ghana was contracted by Fair Trade Original, and participated in the training and
priorities. Fruittiland and the citrus farmers will be given assistance in
meetings and wrote a practical manual for building up Fairtrade chains.
applying for a subsidy to cover these activities.
During the autumn 2012 harvest, it transpired that the quality and food
30
safety were not yet at the required level. The processing of the fruit in
Coconut milk and herbs from Sri Lanka
the Fruittiland juice factory was delayed by technical problems. For the
Fair Trade Original’s MA’s Tropical Food trading partner is organizing the
coming year, the focus is directed at solving technical bottlenecks and
coconut and herb farmers into the SAFE Network. The aim is to obtain
increasing the product quality through better monitoring and support.
Fairtrade certification for coconut milk and herbs. In 2012, a major step
Fair Trade Original will work closely with Fair & Organic Products on these
was taken with the administration of the future Fairtrade farmers. The
Annual report 2012  Fair Trade Original: cooperating with trading partners
expectation is that coconut milk will be eligible for Fairtrade certification in
attitude. In the follow-up stage, a collaboration will be formed with
2013.
the local organization Agrocel and the English fair trade organization Traidcraft. This project was financed in 2012 by the ASN Foundation
Sugar from Mauritius
(€ 5,000).
32 fair trade cooperatives of cane sugar farmers in Mauritius were organized into an umbrella organization in 2011. In 2012, Fair Trade Original supported this umbrella organization and its cooperatives with fair trade control of FLO-CERT. In addition, Fair Trade Original has insisted that the
Monitoring
sugar processor should gain a social certificate in order to better guarantee
In 2012 compliance with the ten fair trade principles was guaranteed for
good working conditions for its employees. This has resulted in a successful
64% of Fair Trade Original’s net turnover by means of the Max Havelaar
completion of a SMETA audit (Sedex Members Ethical Trade Audit). In 2013,
Seal of Approval (2011: 63%). The compliance of the remainder of the
attention will be directed at maintaining the Fairtrade certification for all 32
products (primarily gifts & living products) is monitored via EFTA fairtrade
cooperatives.
assessment. Plans of action are drawn up with the assessed trading partners and the producers that supply products to them. These provide
Olive oil from Argentina
for the implementation of the necessary improvements within a stipulated
Until now, no olive oil from Argentina has been Fairtrade certified. In
period of time. In 2013, Fair Trade Original aims to have the complete food
collaboration with a local foundation, the cost price of olives and olive oil
range certificated by an external body. In addition to the Max Havelaar Seal
in Argentina is being researched and a minimum price will be set. Small
of Approval, a choice will be made for a second certification system that fits
farmers will be trained in Fairtrade and will be eligible for certification in
into the organization’s fair trade policy.
2013. This project was financed in 2012 by the ASN Foundation (€ 5,000). FLO CERT inspections
31
Noodles from India
Wherever possible, Fair Trade Original’s products carry the Fairtrade (Max
Wheat is purchased for the Fair Trade Original noodles made by Amdo
Havelaar) seal of approval. Monitoring of compliance with the seal of
Foods from farmers who also produce Fairtrade certified rice. They
approval demands is carried out by the independent organization FLO-
therefore operate according to Fairtrade standards. In the mill where the
CERT. As part of its support of developing new trading chains, Fair Trade
wheat is ground, a project was started in 2012 to make the management
Original assists farmer cooperatives and processors in obtaining Fairtrade
and employees aware of the ten fair trade principles. The impact of the
certification. For this, collaboration is sought with local consultants who carry
training was monitored in November 2012. An action plan for 2013 was
out training and pre-audits in order to ascertain whether the organizations
drawn up with the management and the representatives of the workers.
are ready for a first official inspection by FLO-CERT. Fair Trade Original asks its
In this way, a start has been made in improving human rights, working
partners for information about the results of inspections so that support can
conditions and remuneration. The management has adopted a positive
be given on time.
Annual report 2012 Fair Trade Original: cooperating with trading partners
EFTA fair trade assessments
> Palm oil candles, Indonesia
In 2012, several chains were assessed according to the EFTA fair trade
Wax Industri, candle factory was assessed for the first time by Fair Trade
assessment for compliance with the fair trade principles. As a consequence
Original and a Balinese consultant. Is operating a plan to shift from minimum
of the assessments, the following improvements were implemented:
wage to a living wage and shall in 2013 pay attention to the communication concerning employment conditions and registering agreements with
> Eco-leer, India
employees.
Sheong Shi, leather tannery: action plan to better guarantee the safety of its employees.
Evaluation EFTA fair trade assessment
EMA, processor of leather products (bags, wallets etc.): improvement of
The assessment system was evaluated in India and South Africa in the
employees’ remuneration and living conditions. Setting up a workers’
context of the PSO Thematic Learning Programme. It is clear that in response
committee.
to the assessments, much is being done and improved, each in its own time and manner. The monitoring of action plans sometimes leaves something to
> Culinary products, South Africa
be desired. This is partly caused by the lack of official certification that can
Turqle Trading, exporter: improve the management of the fair trade premium,
be used for other clients other than EFTA. This means that the adjustments
in particular the expenditure policy and the appointment procedure of
are sometimes too limited for the trading partner. In addition, employees
director.
and producers are insufficiently involved in the implementation of the
Eight producers (processors, packers): a bottleneck came to light on three
action plans. The interests of trading partners (exporters), producers and
occasions concerning chain responsibility (fair trade sourcing of ingredients),
employees can differ in matters such as remuneration and investment. Last
once with regards to discrimination and twice with regards to freedom of
but not least, customers sometimes place the continuation of the trading
forming an organization (no labour council). In 2013, the prompt observance
relationship above strict enforcement of the rules.
of the action plan will be monitored. The directives and a number of instruments of the EFTA fair trade assessment > Glass, Bolivia
were adjusted and improved in response to these evaluations. From 2013 no
Crisil, glass factory: had an assessment done in 2012 at its own initiative and
further EFTA fair trade assessments will be undertaken by Fair Trade Original
costs by a local consultant. The report and the action plan was discussed
In principle, Fair Trade Original would like to have all its products carry the
in detail with the Company consultant and the Programme Manager of Fair
Max Havelaar seal of approval. A similar seal of approval will be sought for
Trade Original. Weak points were remuneration, safety on the work floor and
those products which are not eligible for a Fairtrade quality label.
freedom of forming an organization (no labour council). The most important actions points were completed before the end of 2012.
32
Annual report 2012  Fair Trade Original: cooperating with trading partners
Projects
Workshops living wages
In 2012, additional attention was paid to those principles that often cause problems for trading partners: living wages, trade union freedom and safety
In 2012, two regional workshops were given for trading partners and producers
on the work floor.
of Fair Trade Original and other EFTA members in South Africa and Peru. The aim was to clarify the living wage policy and to make partners aware of living
33
Fair prices and fair wages
wages as a focal point for Fair Trade Original. Attention was paid to calculating
Work on the inventory of the cost price calculations for products without
living wages, the current state of affairs among the participants and possible
Fairtrade certification was restarted in 2012. Fair Trade Original now has a
strategies for achieving living wages. The subject is now current, not only
database which is updated twice a year during the purchasing rounds. The
for trading partners and their producers, but also for organizations such as
trading partners and producers use these cost price calculations during their
Fairtrade International and EFTA. The partners have started thinking about
negotiations on prices and reviews of production processes to analyse issues
plans for implementing this policy issue. In a number of cases, this has already
for improvement.
produced tangible results.
Fair Trade Original developed its living wage policy further in 2012. This
In South Africa, 41 persons participated, including representatives of trading
states that fair wages are living wages as calculated according to the SAI
partners and producers in South Africa and Mauritius (only food), local
Basic Needs Wage formula. The objective of this policy is that all partners
consultants and representatives of Fairtrade International and Fairtrade South
and producers that are not Fairtrade certified pay living wages by the end
Africa. For the workshop, the living wages were calculated by local consultants,
of 2014. In the event of Fairtrade certification, the policy for living wages
whilst the participants had made an inventory of the wages that are being
of Fairtrade International will be followed. Fair Trade Original influences
paid for sourcing producers and cost-price calculations. Using this data, two
organizations’ living wage policy where possible and necessary through
cases were developed to calculate the rise in the FOB (purchase) price if all
those that assess them or are associated with them, such as the National
employees were to earn a living wage, and what the producers could do to pay
Association of Worldshops, Fairtrade International and EFTA. During 2012,
living wages without increasing the FOB price. Following introductions by Fair
consultation was regularly held with all three. Fair Trade Original took part
Trade Original, Fairtrade International and Peter Lewis, researcher into labour
in a pilot with Dutch fair trade suppliers who are monitored by the National
conditions of agricultural labourers on vineyards, the cases were worked out in
Association of Worldshops. The aim is to create a mutual database of current
groups. These gave rise to much discussion and inspiration for a living wage
living wages for employees of trading partners in developing countries.
plan, both during the workshop and afterwards.
Annual report 2012  Fair Trade Original: cooperating with trading partners
Discrimination and freedom to form organizations
(goggles, masks) and equipment. This project was financed in 2012 by the
The EFTA fair trade assessments reveal that many trading partners and
ASN Foundation (€ 5,000 per project).
producers score poorly for trade union freedom. Most work places and factories with more than fifty employees do not have a labour council that
In the Sheong Shi leather tannery where Fair Trade Original eco-leather is
negotiates with management about wages and improvements to working
produced, staff members were trained and new equipment was purchased
conditions.
for making leather without the use of damaging substances such as chromium. Old machinery was safeguarded and the employees are receiving
In 2012, a project was started with Craft Aid, the packer of Fair Trade Original
first aid training. Thanks to the purchase of a water filter, all employees can
sugar in Mauritius. More than 30% of the two hundred employees at Craft
now drink clean and safe water. Sheong Shi is working on a canteen for the
Aid have a physical or mental disability. Craft Aid does have a works council
employees.
of six employees, but their disabled colleagues felt they were not well represented. Furthermore, there were daily communication problems on the work floor. The works council was trained in its role, status, house rules, organization and communication with management and its colleagues, specially with deaf colleagues. Management, staff and employees were given training in what they could expect from a works council. The result is a works council that knows what it must do. The disabled employees at Craft Aid Mauritius can now participate actively. The communication both between the staff and the employees and between the colleagues themselves has clearly improved. This project was financed in 2012 by the ASN Foundation (€ 5,000). Working conditions and safety in the workplace In 2012, as a follow-up to the EFTA fair trade assessments, a number of projects were carried out with trading partners for improving safety in the workplace. In the Cottage Craft coppersmith workshop in Nepal where they make Fair Trade Original cymbals, work is taking place on a better extraction system for dust and smoke. Employees are also being trained in how to operate fire extinguishers, how to execute the evacuation plan, use of protective clothing
34
Annual report 2012 Fair Trade Original: cooperating with trading partners
Trading partners The website www.fairtrade.nl lists the trading partners behind each product. In 2012, Fair Trade Original began cooperation with: > Dakman/Eakiet, coffee organization in Vietnam; > ECPP, coffee organization in Honduras; > Driefontein Small Farmers Co-op, producer of rooibos in South Africa; > Guzhang Gaofeng Organic Tea Association, producer of green tea in China; > Royal For Herbs Company, producer of camomile and mint in Egypt. In 2012, Fair Trade Original decided to end trading with: > Manos Campesinas, coffee organization in Guatemala. Fair Trade Original’s market is too small for their high quality and therefore highly priced biological coffee; > Coopecaju, supplier of cashew nuts in Brazil. The nuts are currently being purchased via an English fair trade organization in India; > CRC, supplier of fashion accessories in India. Continuing delivery and quality problems were the reason for stopping working with this trading partner; > Sasha, supplier of home and fashion accessories in India. Their products no longer fitted into the range of Fair Trade Original; > Eco Tasar Silk, supplier of silk scarves in India. The turnover was too low to continue this contact.
35
Annual report 2012  Fair Trade Original: cooperating with trading partners
In 1973, Fair Trade Original took receipt of its first batch of coffee beans from the Fedecocagua coffee organization in Guatemala. It still purchases from this organization. In preparation of the 40th anniversary in 2013, discussions were held at the end of 2012 with local coffee farmers. They were asked about their current situation and what fair trade has brought them. This resulted among other things in a short film, which can be seen on www.fairtrade.nl/allesoverkoffie.
Fair Trade Original ANNUAL ACCOUNTS 2012
SINGLE BALANCE SHEET AT DECEMBER 31, 2012
SINGLE PROFIT AND LOSS ACCOUNT FOR 2012
(after result allocation) EUR FIXED ASSETS Tangible fixed assets Financial fixed assets
CURRENT ASSETS Stock Trade accounts receivable Advance financing of trading partners Other receivables and prepayments Liquid assets
Note 1 2
2012
2011
113.220 15.359 128.579
153.623 20.081 173.704
3 4 5 6 7
2.364.620 2.584.409 14.976 180.618 433.239 5.577.862 5.706.441
4.088.205 2.700.741 50.930 121.655 321.154 7.282.685 7.456.389
EQUITY Other reserves
8
2.154.242
3.522.123
PROVISIONS
9
54.834
193.655
Total
EUR GROSS MARGIN Net turnover Cost of sales
2012
2011
14
18.513.098 13.839.189 4.673.909
19.621.730 13.989.829 5.631.901
Other income
15
255.615
113.751
COSTS Personnel costs Depreciation Selling costs Accommodation costs General costs
16 17 18 19 20
3.176.915 92.987 2.236.431 271.317 533.687 6.311.337
2.592.550 173.522 2.212.870 267.869 474.261 5.721.072
(1.381.813)
24.580
10.302
1.361
SHORT-TERM DEBTS Trade accounts payable Overdraft facility, Fair Trade Assistance Taxation and social security charges Other debts and accruals
10
982.434
(1.371.511)
25.941
3.630
13.079
11 12
Annual report 2012  Fair Trade Original
1.011.137 94.853 285.927 1.123.014 2.514.931
1.418.060 154.171 343.557 842.389 2.758.177
(1.367.881)
39.020
5.706.441
7.456.389
21
OPERATING RESULT BEFORE TAXATION Corporation tax
TOTAL
37
982.434
13
RESULT FROM ORDINARY COMMERCIAL OPERATION Financial income and expenditure
LONG-TERM DEBTS Interest-free loans
Note
RESULT AFTER TAXATION
22
SINGLE CASH FLOW STATEMENT
NOTES TO THE SINGLE ANNUAL ACCOUNTS 2012
The cash flow statement recognizes the funds that became available during the year under review and their use. The cash flow from operational activities
General
is determined using the indirect method.
The single Annual Accounts form part of the company’s Annual Accounts 2012. For those posts in the single balance sheet and the single profit and loss account that are not explained further here, please refer to the
EUR OPERATING ACTIVITIES Result after taxation Depreciation and value adjustments to tangible fixed assets Movement in provisions Movement operating capital
2012
2011
(1.367.881) 93.177
39.020 174.054
(138.821) 1.632.980 219.455
(202.514) (91.138) (80.578)
explanatory note on the consolidated balance sheet and profit and loss account. The 2011 figures are, where necessary, reclassified in order to make a comparison with 2012 possible. Income recognition The principles for the valuation of assets and liabilities and the income recognition are the same as those for the consolidated balance sheet and
INVESTMENT ACTIVITIES Investments in tangible fixed assets Income from the sale of tangible fixed assets Movement in financial fixed assets
profit and loss account. (53.088) 314 4.722 (48.052)
(33.860) 9.783 (24.077)
Financial instruments In the single annual account, financial instruments are presented based on the legal form.
FINANCING ACTIVITIES Movement in overdraft facility, Fair Trade Assistance
(59.318) (59.318)
154.171 154.171
Spin-off gifts & living activities On March 1, 2013, Fair Trade Original sold its gifts & living activities to Fair
MOVEMENT IN LIQUID ASSETS LIQUID ASSETS Balance of liquid assets at 1 January Balance of liquid assets at 31 December MOVEMENT IN LIQUID ASSETS
38
Annual report 2012 Fair Trade Original
112.085
49.516
Forward B.V. The costs relating to the sale of these activities are € 1,180,000 and are recognized in the Annual Accounts 2012. The costs involved in the
321.154 433.239
271.638 321.154
112.085
49.516
sale are included in the gross margin (€ 631,000), the staff costs (€ 406,000) and the general costs (€ 143,000). Excluding these one-off costs, the result was, after taxation, € 188,000 negative.
SINGLE BALANCE SHEET
CURRENT ASSETS
FIXED ASSETS
3. Stock
1. Tangible fixed assets Alterations
Inventory
Total
30.517
Computer equipment 93.464
29.642
153.623
Balance at 1 January Investments and assets Divestments Balance of purchase price at 31 December 2012
803.995 803.995
975.714 53.088 (27.448) 1.001.354
366.835 (495) 366.340
2.146.544 53.088 (27.943) 2.171.689
Balance at 1 January Depreciation Divestments Balance of depreciation at 31 December 2012
773.478 30.517 803.995
882.250 53.140 (27.448) 907.942
337.193 9.520 (181) 346.532
1.992.921 93.177 (27.629) 2.058.469
Book value at 31.12.11
Book value at 31 December 2012
Goods Goods underway Packaging material Provision for unmarketable items
2012 2.712.144 429.551 38.577 (815.652) 2.364.620
2011 3.890.728 375.388 57.329 (235.240) 4.088.205
The stock value based on the actual value does not deviate significantly from the valuation given. 4. Trade accounts receivable
Dutch accounts receivable Provision for doubtful debts
2012 2.584.725 316 2.584.409
2011 2.701.961 1.220 2.700.741
In the trade accounts receivable, no amount is included with a remaining -
93.412
19.808
113.220
duration of more than 1 year. 5. Advance financing of trading partners
2. Financial fixed assets
This amount receivable of â‚Ź 14,976 relates to advance payments to trading partners in developing countries for future deliveries of Food and Gifts &
Loan to Cooperativa Campesina Apicola Valdivia 66.76 depository receipts for Triodosbank N.V. shares 26.76 depository receipts for Oikocredit Nederland shares
2012 5.000 5.006 5.353 15.359
2011 10.000 4.810 5.271 20.081
In 2012, stock dividends resulted in the acquisition of one depository receipt for a Triodosbank N.V. share and 0.4 depository receipt for an Oikocredit Nederland share.
39
Annual report 2012  Fair Trade Original
Living products.
6. Other receivables and prepayments
Corporation tax Prepaid selling costs Security deposits Prepaid ICT costs Subsidies to be received Insurance premiums Procurement costs Interest Prepaid pension premiums Personnel costs Consultancy fees Other
9. Provisions 2012 46.143 38.438 30.132 22.263 16.226 10.135 5.687 3.484 1.634 1.014 5.462 180.618
2011 13.206 10.622 29.428 18.107 9.216 2.888 2.839 3.109 6.561 9.900 15.779 121.655
Anniversary bonuses Social Plan Unoccupied real estate
2012 32.025 22.809 54.834
2011 27.732 39.541 126.382 193.655
A Social Plan was agreed with the trade unions prior to the reorganization implemented in July 2007. A provision has been formed for future commitments towards the staff who have left the organization or have been transferred which runs until 31 December 2015. Fair Trade Original’s conditions of employment include a provision for a non-recurrent bonus to employees who have been in service with the organization for 12.5, 25 or 40 years. On the basis of the current workforce
In the trade accounts receivable, no amount is included with a remaining
the current obligations extend to a nominal amount of € 32,025, whereby
duration of more than 1 year.
account is taken of mortality risks.
7. Liquid assets
LONG-TERM DEBTS
The cash at bank and in hand relates to the balance in bank accounts and cash resources. The cash at bank and hand is freely disposable unless
10. Interest-free loans
otherwise stated.
The interest-free loan of € 982,434 granted by the Fair Trade Assistance Foundation has been provided until 31 December 2020. This loan is based on
8. Equity
Balance of other reserves at 1 January Result for the financial year Balance of other reserves at 31 December
40
Annual report 2012 Fair Trade Original
the agreements reached with the tax authorities. 2012 3.522.123 (1.367.881) 2.154.242
2011 3.483.103 39.020 3.522.123
SHORT-TERM DEBTS
contract value or notional principal amounts of the financial instruments are solely an indication of the extent to which financial instruments of this nature
11. Taxation and social security charges
are used: these are not an indication of the amount of the credit or market risks. The estimated market value and total contract value / notional principal
Turnover tax Payroll tax and national insurance premiums
2012 142.350 143.577 285.927
2011 214.714 128.843 343.557
amounts of the foreign exchange forward transactions and currency options at 31 December 2012 are listed in the following table: The foreign exchange forward contacts were transferred on 1 March 2013 to FairForward B.V. and all profit and loss arising from these contracts will be charged to FairForward B.V.
12. Other debts and accruals
Personnel costs Procurement costs, additional costs, licences and bonuses Other Logistics costs Issued gift vouchers Selling costs Accountants and consultancy fees Goods invoices to be received Prepaid subsidies
2012 681.465 224.716 86.991 39.266 36.831 33.804 18.512 1.429 1.123.014
2011 247.396 290.017 128.309 32.981 37.451 48.901 16.839 608 39.887 842.389
FINANCIAL INSTRUMENTS The company makes use of various financial instruments for its normal operations which expose the company to market and/or credit risks. This relates to financial instruments which are recognized in the balance sheet and foreign exchange forward transactions and currency options that cover future transactions and cash flows. The company does not trade in these derivatives and has implemented procedures and a code of conduct to limit the scope of the credit risk associated with each counterparty or market. Any losses arising from a counterparty’s failure to pay amounts due to the company are limited to the market value of the respective instruments. The
41
Annual report 2012 Fair Trade Original
Estimated market value
Purchase of foreign exchange forward contract US$ 600,000
“Contract value/ notional principal amounts” 454.752 462.542 454.752
462.542
RIGHTS AND COMMITMENTS NOT REFLECTED IN THE BALANCE SHEET
NOTES TO THE SINGLE PROFIT AND LOSS ACCOUNT
An amount of € 205,466.00 is deposited in a blocked account with the
GROSS MARGIN
Rabobank and BNP Paribas Fortis to serve as warranty for rents and as 13. Net turnover
surety for risks related to foreign exchange forward transactions.
Rent Lease Company cars Logistics Service provider Outtasking Fixed telephony Lease printers Current order merchandise
2013 92.000 33.000 70.000 21.000 3.000 14.000 955.000 1.188.000
2014 87.000 27.000
2015 87.000 16.000
2016 9.000 8.000
1.000 12.000
12.000
12.000
127.000
115.000
29.000
2016>
Total 275.000 84.000 70.000
21.000 4.000 27.000 77.000 955.000 27.000 1.486.000
The current lease commitments are for the areas and rooms used at Fair
Food Coffee Gifts & Living Total
2012
2011
10.715.295 4.974.346 2.823.457 18.513.098
11.062.218 5.333.339 3.226.173 19.621.730
Realization in % of 2011 97% 93% 88% 94%
% of turn-over 28% 26% 13% 25%
2011 3.213.061 991.307 1.427.533 5.631.901
% of turn-over 29% 19% 44% 29%
2012 115.050
2011 17.406
73.910 37.371 21.517 6.000
67.835 16.610 285 7.000
1.767 255.615
4.615 113.751
14. Gross margin
Food Coffee Gifts & Living Total
2012 3.041.090 1.273.247 359.572 4.673.909
Trade Original’s premises in Culemborg and Bierbeek. The continuing commitments arising from the logistics service agreement with Van Uden
15. Other income
Logistics relate to the rent for storage space. At year-end 2012 the commitments arising from current orders of merchandise were completely for coffee and food. The commitment for orders for gifts & living articles was transferred to FairForward B.V. At 31 December, there is a claim from a former franchise holder concerning the financial settlement with regard to the termination of a franchise agreement. Negotiations are still taking place concerning the claim.
Contribution from Max Havelaar in the Nationale Postcode Loterij programme costs Income from subsidies Contribution from ASN Bank Other contributions to programmes Movement in the provision for the advance financing of trading partners Donations Total
PSO subsidized a multi-stakeholder programme and contributed an amount of € 73,910 to this programme in 2012. Fair Trade Original receives an annual
42
Annual report 2012 Fair Trade Original
advance payment from PSO for the performance of this programme. The
17. Depreciation
expenditure on the programmes is deducted from the amounts received. PSO 29.970 87.654 73.910 16.226
Debt at 1 January Advance payments received Expenditure Receivables at 31 December
The receivables and debts relating to subsidies are recognized under other receivables and other debts respectively. COSTS 16. Personnel costs Salaries and contracting of personnel Social security premiums Pension costs Study and recruitment costs Addition to or release from anniversary bonus provision Other
On-charged costs to others Total
2012 2.644.548 280.038 203.027 13.498 4.293 53.945 3.199.349
2011 2.150.849 260.926 195.292 4.591 (53.540) 52.792 2.610.910
22.434 3.176.915
18.360 2.592.550
During the year under review the average number of employees (excl. temporary employees) was 40 FTEs (2011: 41).
43
Annual report 2012  Fair Trade Original
Depreciation charges Result from the disposal of tangible fixed assets by sale Total
2012 93.177 (190) 92.987
2011 174.054 (532) 173.522
2012 967.275 505.025 457.875 143.552 83.698 39.021 18.791 13.636 8.343 (785) 2.236.431
2011 1.054.890 414.220 479.021 124.153 50.903 31.927 21.022 21.538 17.818 (2.622) 2.212.870
2012 128.936 66.986 55.819 27.542 (12.140) 4.174 271.317
2011 124.920 65.082 54.691 27.802 (8.558) 3.932 267.869
18. Selling costs
Logistics costs Branding & Communication Promotion costs and materials Packaging & product development Payment discounts Travelling and accommodation expenses Contributions, colleague fair trade organizations Other Annual Report Provision for doubtful debts Total
19. Accommodation costs
Rent Maintenance and cleaning of buildings and inventory Gas, water and electricity Insurance premiums Release from provision for vacancy of real estate Property tax and other levies Total
20. General costs
TRANSACTIONS WITH RELATED PARTIES
Transactions with related parties are an issue in the event of a relationship
Partner development Accountants and consultancy fees ICT Company cars Charges for post and telecommunications Purchase/maintenance of inventory and office supplies Other Total
2012 181.836 148.939 90.504 61.998 25.787 23.324 1.299 533.687
2011 139.653 69.371 99.433 63.387 33.483 24.736 44.198 474.261
between the company, its participating interests and members of their management boards or managers. No transactions with related parties have taken place. REMUNERATION SUPERVISORY BOARD AND MANAGEMENT BOARD Fair Trade Original has exercised the exemption as referred to in Article 2:383, Section 1, of the Netherlands Civil Code for the remuneration of members of the Management Board as any such statement could be traced
21. Financial income and expenditure
back to one single natural person. None of the members of the Supervisory
Board receive an emolument.
Interest expenses Interest income Dividend receipts and investment results Balance of expenses less income
2012 (4.994) 15.018 278 10.302
2011 (26.147) 27.236 272 1.361
Fair Trade Original has a current account credit facility with Fair Trade
SIGNED BY THE SUPERVISORY BOARD AND THE MANAGEMENT BOARD Culemborg, 26 April 2013 The Management Board
The Supervisory Board
B.E. Jongsma
J. Schraverus
Assistance for the financing of the working capital. The agreed rate of interest is equal to the deposit rate of interest of the European Central Bank, increased by 2.75%. The rate of interest is set per quarter, whereby the rate of interest in the previous quarter is adopted for the next quarter. The interest is due per quarter. No security has been furnished. At 31 December 2012 € 94,853 was loaned from Fair Trade Assistance. In 2012, the average balance of the current account credit facility with Fair Trade Assistance was € 174,490. The interest paid by Fair Trade Original amounted to € 4,994. 22. Corporation tax The final settlements of corporation tax returns have been issued for the years to 2011 inclusive. No corporation tax is due over the tax loss and will be deducted from tax profits in the future.
44
Annual report 2012 Fair Trade Original
OTHER DATA Allocation of the result The Articles of Association make no specific additional provisions in this regard. The loss of € 1,156,028 has, with the approval of the Supervisory Board, been deducted from the other reserves. Post balance sheet events On 1 March 2013, the activities of the Business Unit Gifts & Living were sold to FairForward B.V.
45
Annual report 2012 Fair Trade Original
FIVE-YEAR FINANCIAL SUMMARY WITH SINGLE ANNUAL ACCOUNTS In thousands of euros Movement in turnover by product group Food Coffee Gifts & Living Complementary Net turnover (inclusive of turnover bonuses) Result Net turnover (inclusive of turnover bonuses) Operating result before interest and taxation Result after taxation Cash flow (net result + depreciation) Capital Total assets Equity Fixed assets Balance sheet value Investments Depreciation Employees Number, year-average on the basis of fulltime employment Payroll, inclusive of social security charges and exclusive of temporary employees Ratios Gross margin as % of net turnover Operating costs (excl. depreciation) in % of the net turnover Operating result for annuity in % of the net turnover Result after taxation as % of net turnover Return as % of average equity Stock as % of net turnover Trade debtors as % of net turnover Solvency (equity as % of total assets)
2008
44
2009 10.337 4.463 2.939 68 17.807 17.807 312 251 426 7.086 3.215 394 70 175 43
2.335
2.507
32,4 41,2
29,4 38,5
28,4 35,7
28,7 28,3
11,3
1,8
1,7
0,1
7,5-
9,9 69,0
1,4 8,1
1,5 8,0
0,2 1,1
7,448,2-
9.156 3.043 3.053 39 15.291 15.291 1.725 1.520 1.802 7.549 2.964 504 75 282
2010
42
2011 11.062 5.288 3.226 45 19.622 19.622 25 39 213 7.456 3.522 174 34 174 41
2012 10.715 4.963 2.824 11 18.513 18.513 1.3821.3681.275 5.706 2.154 129 53 93 40
2.646
2.570
3.043 25,2 34,1
10.937 4.579 3.019 59 18.594 18.594 320 268 436 7.634 3.483 324 82 158
24,6 17,2 18,9 20,8 12,8 15,0 14,4 13,5 13,2 14,6 39,3 45,4 45,8 47,2 37,7
GRI Index GRI G3 Guidelines C-Level Page numbers
1. Strategy and Analysis 1.1 Statement from the Managing Director about the relevance of sustainability to the 3, 4, 8 organization and its strategy 1.2 Description of key impacts, risks, and opportunities 9-11 2. Organizational Profile 2.1 Name of the organization 2.2 Primary brands, products, and/or services. 2.3 Operational structure of the organization, including main divisions, subsidiaries and joint ventures 2.4 Location of organization’s headquarters 2.5 Number of countries where the organization operates (specifically relevant to the sustainability issues covered in the report) 2.6 Nature of ownership and legal form 2.7 Markets served (geographic breakdown, sectors served, and types of customers/ beneficiaries) 2.8 Scale of the reporting organization 2.9 Significant changes during the reporting period regarding size, structure, or ownership 2.10 Awards received in the reporting period 3. Report Parameters 3.1 Reporting period for information provided 3.2 Date of most recent previous report 3.3 Reporting cycle (annual, biennial, etc.) 3.4 Contact point for questions regarding the report or its contents 3.5 Process for defining report content, including relevance, determining materiality and stakeholders 3.6/3.7 Boundary of the report (e.g., countries, subsidiaries, leased facilities, joint ventures, suppliers) 3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations or other entities
46
Annual report 2012  Fair Trade Original
Reporting level (Full, Partial/Not)
Reason for nonreporting or partial reporting
V V
7 7 16
V V V
2 35
V V
7, 8 7, 20-24
V V
4, 15 3, 5, 7, 8, 24
V V N
5 5 5 5 5
V V V V V
5
V
5
V
35: link to site
Non applicable
Explanation of nonreporting or partial reporting
GRI G3 Guidelines C-Level
3.9 Data measurement techniques and the bases of calculations, including assumptions and techniques underlying estimations 3.10 Explanation of the effect of any re-statements of information provided in earlier reports 3.11 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report 3.12 GRI index 3.13 Policy and current with regard to seeking external assurance for the report 4. Governance, Commitments, and Engagement 4.1 Governance structure of the organization, including committees under the highest governance body 4.2 Indicate whether the Chair of the highest governance body is also an executive officer 4.3 For organizations that have a unitary board structure, state the number of members of the highest governance body that are independentand/or nonexecutive members 4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance body 4.8 Internally developed statements of mission or codes of conduct relevant to economic, environmental and social performance and the status of their implementation 4.9 Procedures of the highest governance body for overseeing the organization’s identification and management of economic, environmental, and social performance, including relevant risks and opportunities 4.12 Externally developed economic, environmental and social charters, principles or other initiatives to which the organization subscribes 4.13 Memberships in associations (such as industry associations) and/or national/ international advocacy organizations 4.14 List of stakeholder groups engaged by the organization 4.15 Basis for identification and selection of stakeholders
Page numbers
Reporting level (Full, Partial/Not)
5
V N
5, 16
Annual report 2012  Fair Trade Original
Explanation of nonreporting or partial reporting
Non applicable
V
46-51 N
7, 8
V
7, 8
V
8
V
8
V
7, 31
V
8-12
V
22, 31-34
V
7
V
5, 35
V N
4.16 Approaches to stakeholder engagement, including frequency of engagement by 11 type and by stakeholder group 4.17 Key topics and concerns that have been raised through stakeholder engagement, 11 and how the organization has responded to those key topics and concerns
47
Reason for nonreporting or partial reporting
V V
Social part of the Account is not verified
31: link to site
7: link to site
Information is not included in the Account
GRI G3 Guidelines C-Level
5. Management approach and performance indicators > Economic performance indicators DMA Economic aspects EC1 Direct economic value generated EC2 Financial implications and other risks and opportunities due to climate change
Page numbers
Reporting level (Full, Partial/Not)
18-20 18, 19, 37-45
V V N
EC3 Coverage of the organization’s defined benefit plan obligations EC4 Significant financial assistance received from government. EC6 Policy, practices, and proportion of spending on locally-based suppliers at significant locations of operation EC7 Procedures for local hiring and proportion of senior management hired from the local community EC8 Development and impact of infrastructure investments and services provided primarily for public benefit (through commercial, inkind or pro bono engagement) > Environmental performance indicators DMA Environmental aspects
16
EN1 Materials used (by weight or volume)
11, 29-35
N
Not material
V
13, 14
P
Emphasis on business in the Netherlands
13, 14
P
Only concerning packaging materials Information not available
N V V P
Not material
EN8 Total water withdrawal by source EN11 Location and size of land owned, or adjacent to areas of high biodiversity EN12 Description of significant impacts of activities, products, and services on biodiversity EN16/EN17 Total direct and indirect greenhouse gas emissions by weight
N N N
Not material Not material Not material
N
EN19/EN20 Air emissions (ozone-depleting substances, NO, SO) EN21 Water discharge
N N
Information not available Not material Not material
48
Annual report 2012  Fair Trade Original
13 13 13, 14
Explanation of nonreporting or partial reporting
Information not available 16: link to site Non applicable
29-35
EN2 Percentage of materials used that are recycled input materials EN3 Direct energy consumption by primary energy source EN4 Indirect energy consumption by primary source EN5 Energy saved due to improvements
V N V
Reason for nonreporting or partial reporting
Information environmental aspects in the chain partly available Information concerning products not available
1 March 2013 moved to sustainable building
GRI G3 Guidelines C-Level Page numbers
Reporting level (Full, Partial/Not)
EN22 Total weight of waste by type and disposal method
N
EN23 Total number and volume of significant spills EN26 Initiatives to mitigate environmental impacts of products and services, and extent 14 of impact mitigation EN27 Percentage of products sold and their packaging materials that are reclaimed 11, 12
N P
EN28 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with environmental laws and regulations EN29 Significant environmental impacts of transporting products and materials used for the organization’s operations, and transporting members of the workforce
N
> Social performance indicators: labor practices DMA Labor practices and decent work LA1 Total workforce by employment type, employment contract and region LA2 Total number and rate of employee turnover by age group, gender and region LA4 Percentage of employees covered by collective bargaining agreements LA5 Minimum notice period(s) regarding operational changes, including whether it is specified in collective agreements LA7 Rates of injury, occupational diseases, lost days, and absenteeism and number of workrelated fatalities by region LA8 Education, training, counseling, prevention and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases LA10 Average hours of training per year per employee by employee category
14
P
15, 16 15 15, 16 15
V V P V N
16
49
> Social performance indicators: human rights Human rights
Annual report 2012  Fair Trade Original
N N
N
LA11 Programs for employees to improve their skills and knowledge 16 LA12 Percentage of employees receiving regular performance and career development 15 reviews LA13 Composition of governance bodies and breakdown of employees per category 8, 15 according to gender, age group, minority group membership, and other indicators of diversity LA14 Ratio of basic salary of men to women by employee category DMA
P
8, 10, 11, 29-35
Reason for nonreporting or partial reporting Information not available Not material Information partly available Information partly available Non applicable Information partly available
Not material Not material Information not available Not material
Information not specifically available
V V V
N
V
Explanation of nonreporting or partial reporting
Information not specifically available
Legal deadlines
GRI G3 Guidelines C-Level Page numbers
Reporting level (Full, Partial/Not)
HR1 Percentage and total number of significant investment agreements that include human rights clauses or that have undergone human rights screening
35
P
HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights and actions taken HR3 Total hours of employee training on policies and procedures concerning aspects of human rights that are relevant to operations, including the percentage of employees trained HR4 Total number of incidents of discrimination and actions taken HR5/HR6/ Operations identified as having significant risk for (1) deprivation of the right to HR7 exercise freedom of association and collective bargaining, (2) child labor, (3) forced or compulsory labor, and actions taken to eliminate this HR10 Percentage and total number of operations that have been subject to human rights reviews and/or impact assessments HR11 Number of grievances related to human rights filed, addressed, and resolved through formal grievance mechanismsa
29-35
V
> Social performance indicators: society DMA Acting in society and community SO1 Nature, scope and effectiveness of any programs and practices with impact on communities SO2 Percentage and total number of business units analyzed for risks related to corruption
N
29-35 29-35
V V
31, 32
V
32-34
P
29-35 29-35
V V
SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures SO4 Actions taken in response to incidents of corruption SO5 Public policy positions and participation in public policy development and lobbying SO8 Monetary value of significant fines and total number of non-monetary sanctions for noncompliance with laws and regulations SO9 Operations with significant potential or actual negative impacts on local communities
50
Annual report 2012  Fair Trade Original
Explanation of nonreporting or partial reporting Human rights are anchored in fair trade principles and working method
Information not specifically available
Reporting partial defaults in relation to EFTA/FLO
N
Information not specifically available
N
P
Information not specifically available Information not specifically available 7: link to site
N
Non applicable
N
Non applicable
N 7
Reason for nonreporting or partial reporting Not reported as such
Monitoring on social aspects takes place, anti-corruption policy is in development See SO2 See SO2 As a member of EFTA part of Fair Trade Advocacy Office
GRI G3 Guidelines C-Level Page numbers
S10 Prevention and mitigation measures implemented in operations with significant potential or actual negative impacts on local communities > Social performance indicators: product responsibility DMA Product responsibility PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures PR3 Type of product and service information required by procedures PR4 Total number of incidents of non-compliance with regulations and voluntary codes PR5 Practices related to customer satisfaction, including results of surveys measuring customer satisfaction
PR6 Adherence to laws, standards and voluntary codes related to marketing communications (advertising, promotion and sponsorship) PR9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services
51
Annual report 2012  Fair Trade Original
Reporting level (Full, Partial/Not) N
22, 23 22, 23
V P
22, 23
V N
Reason for nonreporting or partial reporting Non applicable
Explanation of nonreporting or partial reporting
Information not available as such
Non applicable
11, 22
P
10
P
Information with regard Complaints registration to customer satisfaction is ongoing is not specifically available Not discribed as such
N
Non applicable