How can CSR be applied? Nedspice, a business case study of - The added value of sustainable sourcing

Vietnam

April 2018

Willem van Walt Meijer Nedspice team member

“We cannot only take from society, we have to contribute

or…….. we will not survive”

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Nedspice Group - Global network

Drivers behind Nedspice Business positioning

Economic

1.Global trend for outsourcing non-core processing missing economies of scale and quality

Consumer

1.Demanding and ever changing food safety regulations in consuming countries

Solutions

1.Supply Chain operations at origin brings control, quality and cost advantages

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How we got there?

Traders since 1870

Manufacturer at origin since

1998

Up-stream sustainable

Supply Chain integrator

since 2014

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Nedspice Business positioning Nedspice trendsetter in technology and business system innovation

CUSTOMER 1.Global reach: 400+ customers

34 countries 1.High service levels

PROCESSING 1.Leading edge processing

environment 1.Cost advantage & Market feel

FARM/COLLECTOR 1.Quality development

starts at the farm 1.Full supply chain tracking & tracing

1.Sustainability farming

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Nedspice Group - Customers

Nedspice Group - global sales

NFPP Vietnam

Competitive Vietnamese export

Market requirements delivered from ORIGIN

through compliant Nedspice farmers network + leading edge Nedspice factory & logistics

Farmer

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Collector

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Exporter

Exporter

Exporter

Up to 30 % of farms have issue at a point in time

Limitations on export

THE KEY ISSUE IN VIETNAM

Pesticide Contamination

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

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Collector

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Exporter

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Exporter

THE KEY ISSUE IN VIETNAM

Pesticide Contamination

So, backward Integration 1. Pesticides & Allergens control

2. Towards Sustainable supply chain

with farm management training and certification RA/NFPP

3. Tracking & Tracing, 100% testing of every delivery from farm level

4. Cost lower and quality up

International Export

Quality standards

MRL

Monitoring & advise to improve farming

Tracking & Tracing

& 100% testing to learn, pay for

performance and a guarantee

to customers

Pay, price Protection & Finance for Performance NFPP always buys every day

Growing

Successful

Sustainable Farmers

Nedspice upstream sustainable business foundations for competitive Vietnamese export

NFPP/RA Farmers

NFPP Farmers

NFPP Buying station

NFPP extended network Farmers

NFPP Franchise / T&T

Collectors

Farmers Collectors Traders Indirect Channel

Supply channel management

Collectors

Roll-out 2018

Growth districts in Binh Phuoc province

•Total pepper farmers: 10,000 •Total production: 20,000 tons Target: 2018 •1500 farmers •New: 1000 farmers Volume: 2000-3000 tons

= new

Status NFPP KPI’s and objectives 2020

Progress 2014 2015 2016 2017 Plan 2018 Plan 2020

Farmers # 202 540 540 623 16o0 >3000

Volume NFPP 380MT 880MT 1.100MT 1.800MT 3.000 MT 5.000 MT

Volume as % of total sourced pepper

4% 8% 14% 20% 26% 30%

Farmer loyalty 72% 68% 88% 90% 80-90% 90%

Staff 11 11 16 19 22-25 30

Viet Nam government

MARD

Province Leadership & Regional AEC

Farmer Groups,

Co-op’s & individual

Vietnamese Pepper

Association

Collectors & Traders

NL Embassy

Key Success Factors Nedspice of start of sustainable sourcing

Clear “sustainable” business opportunity

Sustainable business system design

Lead by example from the top to the long term

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Key Success Factors Vietnam

1. Bring market requirements which make a difference for customers & consumers back to objectives of farming performance

2. Coach small holder farmers to achieve these requirements and reward results at individual farm level

3. Patience

4. Capture added value of raw material through superior processing. Taking advantage of this input functionality into superior product, service and cost. Sales force to market these benefits accordingly to targeted customers.

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Creating Value with sustainable raw materials as starting point

Customer

Grow sales with focus on where value is

Competitive advantage

Customer management & marketing

Processing

Production efficiency

Recipes

Stock level

Procurement

Channel efficiency

Quality objectives

Credibility to customers

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Create Value

Capture Value

Focus on Value

Inte

gra

l Man

agem

ent

Nedspice approach in broader context

1. Alignment with Vietnamese government objectives

2. Closeness to local and international “sustainable” business development Nedspice chairmanship of International Sustainable Spices Initiative

Notably: McCormick, Unilever, Kerry, Olam, many other leading companies

US spices Board

India spices Board

In Vietnam active participation in MARD, AEC, PPD, DARD at several levels and VPA, projects & roles

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Summary impact on business results

1. Major contribution to deliver on ever increasing world market quality standards

2. Nedspice learned for own benefits a lot from going to the source and improved its procurement and supply chain operations

First step to structural cost reductions

Market feel delivering better buying result

Multi channel & farmer approach delivers lower risk profile

3. Enhances to attract and retain talent

4. Sustainability of source and company is becoming step by step a integral part of the company positioning i.e competitive position enhancing growth of new business and trust

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Nedspice Sustainability KPI’s summary 2018

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Nedspice Sustainability KPI’s summary

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TEAMWORK