2012The Natural Community Market

Concord FoodCo-opCONCORD • NEW LONDON

Co-op Annual Report

Last year, our Co-op’s member-owners voted to support the renovation of the Concord store’s space, taking a big step towards realizing our Co-op’s potential. Our report

last year expressed our hopes and dreams for this new space and all that we wanted to accomplish with the store for our member-owners. At this time, the renovation is complete, and we are settling into our new space. What a year this has been!

The year started with renovation of the basement so that our administrative staff could be located in the same building as the store staff. Watching the transformation from a dingy, dirty basement to one that now supports the human resources and business office, the marketing folks, the managers and buyers, as well as the General Manager was extraordinary. Roughly two thirds of the basement now serves as office space, while the remaining portion is devoted to product storage.

As the basement began its facelift, other aspects of the building were found to have an impact on that area. As the footings were being dug for the entrance to the store, workers found a small river running under the southeast corner of the building. Water was our nemesis with the renovation. Our contractors had to repair and dry out basement walls and floors that were affected by the water running around and under the store.

As the year progressed, the renovations moved to the main level, and we started to see small changes. All the while, the Board and the Finance Committee were monitoring the financials of the store closely, including the cost of the construction and of new equipment. While constructing the loading dock, the workers discovered an underground storage tank in the parking lot. We quickly notified the State of New Hampshire and assessed the condition of the tank. Ultimately, we removed it. More work needed to go into resolving water issues in the basement, and the Board decided that it would be prudent to return to you, the member-owners, and ask to increase the total costs of the renovation.

When we asked the members, you responded overwhelmingly, voting to add the additional funds. The ballot had the highest turnout in Co-op history, and roughly 98 percent approved of the question. We counted the ballots in the newly renovated bulk area and had the joy of watching surprised shoppers enter the area for the first time and start to really see the changes being made.

Over the spring, sections of the store began to shift and morph, and our member-owners proved to be gracious and patient as they navigated construction, changing aisles, and busy workers. It seemed as if something changed every day! The objective of our contractor was to allow the store to keep functioning with as little upheaval as possible, and yet we knew that as soon as the majority of the work was complete in the main part of the store, the kitchen area would need to be tackled. Through it all, the staff remained cheerful and helpful, making the best of what was sometimes a very trying experience. By summer, the kitchen was closed, not for the

two weeks that we expected but for almost a month! Our member/owners and loyal customers stayed with the Co-op as the last big renovation took place, and everyone was eager to complete the process.

Finally, the kitchen came together, and the work area in the back was complete. At last, as you looked around the store, you could see the final picture of what had been accomplished. With the Grand Re-opening, the Concord Food Co-op now offers a new and exciting experience to all our consumers. We found that our member-owners were thrilled with the store and its new spaces and offerings. Our staff were equally excited and proud of the new layout. We now have very visible areas for hot meals and soup, cheese, and olives. Wrapping the back of the store are the bakery, open kitchen, deli, and seafood areas.

Our Co-op has embarked on a new path, one that will allow us to maximize the capacity of the store and use that energy to benefit our members. Our Co-op will also continue its amazing role in the community, being a significant presence on South Main Street and working with the various groups in Concord that support the community, our health and a quality of life from which we all benefit. It certainly is time to celebrate what we have all achieved and to begin planning again for a positive future for the Co-op, its members and vendors and all of us who are grateful for the progress we have made and the milestones we have reached.

Cooperatively yours,Nancy L Girard, President

Report of the Board of Directorsby Nancy Girard, Co-op Board President

1

Going Above & Beyondby Paula Harris, General Manager

As many of you know, our primary focus for the past year has been the Concord store renovation. This highly successful project recently wrapped up with

rave reviews by our members, customers, and the community at large. The store remained open throughout the entire renovation, which kept the management team and staff on our toes day to day. You’d think with this immense project at hand in an already bustling store that we’d have little time for anything else. It couldn’t be further from the truth! Although we did run slightly fewer in-store events, we remained as busy and committed to our community as ever in a variety of ways.

Throughout the renovation period, the Celery Stick Café & Bakery Chefs entered several culinary competitions and won every single one, going head-to-head with top-notch restaurants and bakeries. Among these were Best Restaurant at the Mac & Cheese Bake-Off, Judge’s and People’s Favorite Amazing Appetizer at the Top Chef Cook-Off, and People’s Choice and Best Chocolate at the Chocolate Fest Awards. Chef Mike Cook has appeared at several community events and on television. All this garnered our Café & Bakery wide acclaim and awareness as a jewel of Concord and as an increasingly popular caterer.

Our commitment to local farms remains strong. Our certified organic hoop house and partnership with the Vegetable Ranch continued as beautiful, fresh vegetables began to come in for use in our store and Café. Outreach Coordinator Shane Smith collaborated with the Concord Boys & Girls Club and the YES Team to bring area youth to work in and learn about sustainable farming and healthy food. To satisfy the demand for local produce in our store, we formed a new partnership with Dimond Hill Farm in Concord so that we could provide an even better steady supply of farm fresh food for our customers, Café, and catering orders. We remained in partnership with Musterfield Farm to provide fresh seasonal vegetables to our New London store. On the legislative front, we tried to support our local farmers and everyone’s access to quality food in any way we could. We donated money to help send organic farmer Roger Noonan to several Washington, D.C. fly-ins with the New England Farmers Union (NEFU). With the assistance of Roger, the NEFU, and nonprofit watchdog organizations, we kept our members and customers informed about important action alerts regarding the Farm Bill, GMO labeling, and state agriculture legislation via email, Facebook, and in our newsletter.

Our award-winning Chefs donated their time to prepare sandwiches and soups at six Concord Winter Farmers Markets held at Cole Gardens. We sponsored a sold-out screening of the Greenhorns at Red River Theatres and took part in the Warner Fall Foliage Festival’s Go Local food tent. We launched a Farm 2 Fork program to increase the communication with our customers about the local and regional farms that provide goods to the Co-op. This included a special logo, increased store signage, employee education, a popular blog with articles and photos of the farms, and newsletter articles. We continue to carry thousands of

products by local and regional farms and companies and are constantly expanding our selection and connections. Our Café & Bakery is in the process of pursuing Certified Local status with the state’s NH Farm to Restaurant Connection.

With our commitment to food and farms comes a dedication to community wellness. We presented approximately 30 of our “Good to Grow” classes to children at the Concord Boys & Girls Club, Concord School District Afterschool Program, and the Emerson Pre-School. These classes teach children about proper body function, nutrition, and healthy snacks. We also provided educational store tours to children from Sant Bani School and various Girl Scout troops. We gladly assisted the Sycamore Community Garden’s seed collection; the nonprofit garden provides land for refugees to grow organic food. Our Wellness Classes continue to thrive and have outgrown our Café seating area! The Co-op facilitated a wide range of classes taught by area experts with more than 500 people attending. We recently partnered with the City of Concord to provide a larger space for the classes and to reach out to city employees. Our Move It & Lose It, Too! program was a tremendous success, and we also began working with MegaFood and Dr. Andrew Weil on an eight-week Spontaneous Happiness Community Workshop.

We have remained active in supporting local programs and fundraising efforts including the Community Spelling Bee, Rock ‘N Race, Market Days, Taste of the Nation, Five Rivers Fall Fest, the Anticancer Lifestyle Program, and the Concord Main Street Art Walk. We were a major sponsor of and chaired the event committee for the Heart of The Grape Wine Tasting Benefit. We were also the primary underwriter for the Be Local Concord program that launched last fall. As you can see from our Finance Manager Pete Deleault’s letter, a high percentage (approximately 70 percent) of each dollar spent at the Co-op is reinvested in our local community. These are just a few of the ways we remain dedicated to being more than just your regular grocery store.

We created and expanded programs to make Co-op shopping and quality food more affordable. We increased our Tuesday Senior Discount to 15 percent and created a Flower Membership program with an every day 15 percent discount for low-income families. We also increased our monthly and biweekly sales opportunities for all customers.

Of course, the year wouldn’t be complete without some great events of our own! Our annual Spring into Healthy Living Fair was our best yet with more than 5,000 people attending. We also enjoyed seeing you at many other events including Octoberfest, Holiday Tapas Bar, 12 Bites of Christmas, Brain Freeze, and our Red, White & Blues Wine Tasting. We have another great lineup in the works for 2013 – I can’t wait to see you there!

Cooperatively yours,Paula Harris, General Manager

2

This past year saw great changes in the physical appearance of our Concord store as well as our financial statements. Our net sales after discounts were

$6,067,833 with $5,562,128 of that from our Concord store and $505,705 from our store in New London. We saw a small decline, -.18 percent, in sales in our Concord store from the prior year. The good news is that it was less of a decline than the -2 percent predicted. Our New London store found its stride this past year and had a great year with a 16.5 percent growth rate over the previous year.

Our Cooperative provided our members with discounts totaling $237,661 through Member Appreciation Days and through our new Flower Membership and Senior Program this past fiscal year. This represents a 49.5 percent increase in discounts over the prior year. Our expenses grew by 8.6 percent this past year. Most of those increases were associated with the renovation project and increases in personnel gearing up for the increase in sales upon completion.

We welcomed 282 new members to our Cooperative last year with 72 members terminating their membership for various reasons. Our total member shares as of June 30, 2012 were $677,072, an increase of $73,311 over the prior year. (See the balance sheet on the next page.) At the end of the year, our Co-op had 5,755 members with 4,528 active members and 1,227 considered inactive. Last year we returned $64,970 to our membership in the form of a patronage refund paying out $9,638 in cash and issuing $55,333 in additional equity B shares to our members. Due to losses and renovation expenses this past year, there will be no patronage refund.

We paid down our member loans acquired in 2005 by an additional $50,385 leaving a balance of $40,960 of principal payments remaining. We are scheduled to pay another $27,260 in member loan principal payments next June. These member loans will be paid in full by 2015. We acquired $600,000 in new loans this past year from our members for the renovation project. This was a critical factor in our overall financial plan and strengthened our position as a cooperative. Thank you to all those who believed in and were able to contribute to our Co-op. This renovation project would not have been possible without your support. Principal payments on our new member loans are scheduled to begin in June of 2016.

In addition to our member loans, we acquired $720,000 from the Cooperative Fund of New England, $200,000

for renovations and the rest to re-finance existing loans; $800,000 from Merrimack County Savings Bank, all for renovations; and $250,000 from the National Cooperative Bank, $150,000 of that for renovations and the rest to re-finance existing loans. Our long-term debt was $2,508,367 at the end of the year, up from $1,449,254 from the previous

year. Because the renovation project was not completed by the end of our fiscal year and we had not utilized

or borrowed all of the construction loan monies earmarked for the project, these funds are not reflected in our year-end financial statements.

Member Equity decreased slightly by $23,972 to $899,182 at the close our fiscal year. (See the

balance sheet on the next page.)

The first few years after a major renovation are always critical

for any business. Although the project is completed, our work is just beginning. Balancing revenues and

expenses and managing cash flow as we grow our sales and

expand our services will be challenging over the next five years. With continued member and community support we can look forward to re-strengthening our financial position for all our future cooperative

endeavors!

Where We Standby Peter Deleault, Finance Manager

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3

Thank you to all those who believed in

and were able to contribute to our Cooperative.

This renovation project would not have been possible without

your support.

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The Dream Comes to Life