Consolidating the Value Chain the Co-Op Way

By R. Brent Lang

I am passionate about this segment of our nation’s economy and enjoy seeing entrepreneurship in the values of co-operatives and credit unions. According to Economic Impact of the Co-Operative Sector in Canada, a 2019 study by Co-Operatives & Mutuals Canada, the co-operative sector in Canada is about 3.4% of the total economy and 3.6% of the jobs.

A recent string of acquisitions caught my attention when Otter Co-op signs popped up in our local dining establishment, Hearthstone Brewery, in North Vancouver. Upon further exploration, I discovered another hospitality location, the Highwayman Pub, in Abbotsford, BC, was also brought under the Otter Co-op banner. These two pubs bolster their expansion, adding to their six liquor outlets, branded “Angry Otter” and spanning Metro Vancouver’s Fraser Valley to B.C.’s Okanagan Valley.

Why would a Co-operative want to expand into hospitality/retail/liquor and what mandate did the membership provide management to pursue this? It turns out it all makes sense when you consider the acquisition gives the business an opportunity to complete the “full circle” of liquor production – starting with grain currently grown by co-op farmers to the brewery processing them into Angry Otter beer and spirits. Jack Nicholson, CEO of Otter Co-op, continues, “Farm-to-fork and farm-to-glass; take full advantage of each step of the value chain for our co-op member-owners.”

According to Nicholson, “our mandate is to continue to add profitable services that member/owners can use and benefit from, thus our entry into the liquor business just over a year ago.” He further elaborated, “Otter originally started as a small farmers’ co-op buying and selling stumping powder and other farm needs, and has expanded into feed, food, pharmacy, hardware, petroleum, clothing and now liquor and the pub industry. We continue to try and add diversity to our co-operative, as we are heavily weighted in petroleum and see the value in diversity to weather the different economic storms that come. This diversity helped during mad cow and the avian flu, where our feed operations took a significant hit; and is certainly assisting our profitability this year with COVID-19 taking a significant bite out of petroleum profitability with folks not driving as much. Food, hardware, and liquor have assisted in offsetting the drop in fuel sales.”

Membership has its’ privileges, they say. A lifetime membership at Otter Co-op is $10. Full disclosure: I am a member. I embody the spirit of the co-op and credit union mission. I bank at a credit union. I truly feel their values are aligned to me more so than a publicly traded bank that answers to shareholders and institutional ownership.

Otter Co-op’s Mission: Provide quality products and services in our communities, to ensure growth, sustainability and member satisfaction by delivering exceptional service and value.

Otter Co-op’s Vision: To be the consumer’s first choice by connecting community, service, satisfaction and profit sharing where we live work and play.

Bottom Line… “Members are owners” and this needs to be celebrated.

Co-ops provide consumers with a distinct values-based and community-owned and controlled alternative. Unlike the private, public, or voluntary sectors, all co-operatives around the world are guided by the same seven principles:

1. Voluntary and open membership
2. Democratic member control
3. Member economic participation
4. Autonomy and independence
5. Education, training, and information
6. Co-operation among co-operatives
7. Concern for Community

Otter Co-op by all measures has navigated the COVID-19 pandemic in solid shape, led by their management team’s vision for building the brand, increasing membership and benefits, as well as offering great products and services to their diverse member-owners, that span farmer to urbanite.

In May 2020, Otter Co-op released their Membership Statement; in it summarizing “Otter Co-op is proud to be a strong local investor and community builder in the areas they live, work and play. Otter’s Board of Directors have approved a patronage reimbursement of over $4.7 million to their member/owners, to have been mailed out in the last week of November to coincide with the #GivingTuesday initiative. This money stays in the community and recipients are free to spend it as they choose”. CEO, Jack Nicholson added, “particularly with the challenges many British Columbians are facing today… stays in our community and is circulated into the local economy – that is the co-op difference. Right now, it’s even more important to shop local.”

Over the past five years, local co-op associations across Western Canada have returned almost $1.4 billion to their members.

Business, as well as industry and political leaders responsible for their economies are waking up to the benefits of ‘Beyond Capitalism’, for example, on October 9, 2020, Buy Social Canada, released “The Buy Social Canada Pledge”, inviting private companies and public entities to make the commitment to work toward a goal of percentage spend with social enterprises. The collective effort of leveraging social value from existing purchasing will change lives and create opportunities to build back better.

“If just a small fraction, like 5%, of what the public and private sectors spend on procurement went to social enterprise businesses, those organizations will have the power to build healthy and inclusive local communities,” says Elizabeth Chick, Executive Director of Buy Social Canada.

Robust and innovative businesses are taking leadership in their community and being recognized by their employees for their commitment to principles of a new economy; B Corporations, Social Enterprises and Enterprising Non-Profits are showing us their determination to being the fabric of the community they operate in.

R. Brent Lang, CIM FCSI, is a subject-matter specialist in finance & philanthropy. He enjoys contributing to enterprising non-profit organizations with an emphasis on social entrepreneurship, planned giving, community impact / donor-relations and board governance.

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