Marty Frost, FWC Development Cooperative | BCBusiness
Marty Frost, director of FWC Development Cooperative, at Vancouver's East End Co-op on Commercial Drive.
Co-op grocery stores, long a staple of backroads B.C. communities, are finding new life in the eat-local movement, just in time for the International Year of Cooperatives.
A produce section piled high with vibrant greens, yellows and reds greets shoppers stepping through the automatic sliding doors of the Kootenay Co-op Country Store in Nelson, B.C. Local organic apples are prominently displayed across the aisle from a mound of imported fair-trade organic bananas. Automated misters gently spray neatly stacked piles of local organic lettuce, chard, collards and other greens. Walking through the produce and past the deli counter leads to a wall of coolers stocked with dairy and other perishables and shelves full of bread and baked goods supplied by a half-dozen or so local bakeries. A quick left leads to stand-up freezers with meat, frozen berries and organic ice-cream. The rest of the store contains all of the essentials, from snack foods and shampoos to coffee, peanut butter and nutritional supplements. A visitor from Vancouver might think that they’ve stumbled upon the small-town cousin of the Whole Foods chain of upscale, urban natural-food stores.
But the big difference between the Kootenay Co-op and its big-city counterparts is that it is a co-operative, owned collectively by its member-customers. “We are independent,” says general manager Deirdrie Lang proudly. ”We don’t report to a head office. We are our own.”
Co-ops would seem to be an anachronism today. Born when workers banded together in 19th-century England, brought to B.C. by fishers, farmers and loggers seeking to pool resources and revived by ’70s hippies, what place could co-ops possibly have in today’s world of multinational retailers and global finance? Well, anyone who travels the back roads of B.C. can’t help but notice that co-ops are alive and well in this province, offering vibrant examples of the model touted by the United Nations as one answer to poverty and unemployment in this, the International Year of Cooperatives.
What makes a co-op?
Collective independence is what makes co-ops unique. “The ownership of the co-op is everything,” says Marty Frost, who has advised startups as well as established co-ops in his role as director of FWC Development Cooperative (DevCo). Co-ops come in a variety of shapes and sizes and management styles, he says, pointing to the examples of the East End Food Co-op on Vancouver’s Commercial Drive and the Otter Co-op in Aldergrove. “If you look at the way the East End [Food Co-op] is managed and run and directed by the board of directors and then you look at some place that would be equally successful, Otter Co-op for example, you wouldn’t think they are in the same world,” he says.
Image: Bobbi Barbarich
The Kootenay Co-op Country Store in Nelson, B.C.
Co-ops are always formed to meet the common needs of the members rather than to maximize shareholder profits. They have a policy of one vote per member, as opposed to one vote per share, ensuring that all members have an equal say in the business. Profits are shared among members, with allotments based not on how many shares are owned, but on how much the member uses the co-op. In the case of grocery co-ops, profit-sharing generally comes in the form of patronage returns: typically a certain percentage of yearly profits is divided among members based on how much that member bought throughout the year. The form this benefit takes differs from store to store: sometimes it will be a discount at checkout for members, and sometimes members will receive a cheque after the year-end financial statements are complete. The remaining profits are kept within the co-op to either grow the organization or maintain the current infrastructure.
B.C. has 29 food stores incorporated as co-ops, the third-largest total among Canadian provinces behind Quebec (116) and Ontario (36). Of those 29 stores, 18 responded to the federal government’s Rural and Co-Operatives Secretariat annual voluntary survey, and in 2008 (the most recent year for which statistics are available), those 18 stores recorded 51,342 members, 461 employees, more than $42 million in assets and $96 million in sales.
In order to compete with conventional businesses some B.C. co-ops have chosen to join the largest non-financial co-operative in Canada, Federated Co-operatives Ltd. (FCL). Travellers throughout B.C. will recognize the red and white FCL logo that adorns many co-op stores throughout the province. Founded in 1955 and headquartered in Saskatoon, FCL is a second-tier co-op whose membership is made up of other co-ops. FCL brought in over $7 billion in revenue in 2010 supplying its 265 member co-ops with wholesale goods and services. Like many of its member co-ops, food is a significant part FCL’s business, with distribution warehouses across Western Canada. But only 24 per cent of its revenue came from food in 2010, while nearly 65 per cent came from petroleum products.
Image: Bobbi Barbarich
Deirdre Lang, general manager of the Kootenay
Co-op Country Store in Nelson, is proud of the
store's independence and its role as cornerstone of
a town focused on community development.
Dissecting B.C.'s food co-ops
Food co-ops are established throughout B.C. in areas as diverse as Nelson, Dawson Creek, Vancouver, Burnaby, Cortes Island, Vancouver Island, Hornby Island, Argenta and tiny Sointula on Malcolm Island. The largest grocery co-op in B.C. is Peninsula Consumer Services Co-op on Vancouver Island, whose 50,000 members spend over $150 million at the co-op a year. Much of the revenue for Peninsula Co-op is generated from non-food sources, especially retail gasoline.
At the other end of the spectrum, the Sointula co-op on Malcolm Island, accessible by ferry from Port McNeill on Vancouver Island, is B.C.’s oldest and is currently struggling to survive in the face of a dwindling population. Founded in 1909, it was originally established to provide staple goods that were difficult to obtain in the remote fishing community. Today, the unionized staff structure and communal ownership continue a thread started by the early Finnish settlers who came to the island in hopes of establishing a socialist utopia. In recent years the co-op has been hit hard by the decline in the fishing industry and the exodus of young residents for greener pastures off-island.
“We are a struggling co-op,” says store manager and fifth-generation Sointulan Tasha Nelson. Competition from supermarkets and big-box stores that are now a day trip away in the Comox Valley have added to the strain on the co-op. “Twenty or 30 years ago people didn’t travel so much,” explains Nelson. The store does benefit from being the only option on the island for groceries, and despite seeing fewer visitors in recent years, the influx of tourists in the summer bumps sales enough to keep the store afloat and the 18 staff members employed. The store managed to eek out a $37,000 profit last year and Nelson says it is in a “hold-steady position.”
Vancouver's East End Food Co-op
In Vancouver, the East End Food Co-op on Commercial Drive has its roots in a counter-culture movement in the 1970s that would prove to be the precursor to today’s natural food movement. Throughout the province, people looking for access to bulk foods at the cheapest price joined in their local communities to form buying clubs. Fed-Up Co-operative Wholesale was formed in 1972 as a second-tier co-op that would provide wholesale goods to these dispersed buying clubs. From warehouses near Second Avenue and Main Street, Fed-Up anchored a wide network of buying clubs that quickly grew to 50 throughout the province. In 1975, a dozen of the buying clubs supplied by Fed-Up joined forces to buy a storefront that would become the East End Food Co-op. Originally at Victoria Drive and Second Avenue, the store opened exclusively to club members and was run by volunteer labour.
Images: Bobbi Barbarich
Kootenay Co-op Country Store (above) stands out
among B.C.'s independently owned co-ops for the
for the impressive revenue it brings in. The store
boasts annual sales of $2,000 per square foot of
floor space, and has seen steady growth since its
founding in 1975, with sales growing last year by
4.4 per cent to a total of $9.6 million.
In 1982 members of the co-op decided they needed to formalize their structure, form a board of directors and start paying staff. Today, the store has successfully evolved from a collection of volunteer buying clubs to a unionized store carrying a full range of grocery and produce items catering to a membership seeking ethically-sourced food. “Stores are really, in many ways, reflecting the culture of the people and customers that buy there,” says Frost, who was one of the earliest employees at the east end store. So, it’s no surprise that this co-op has evolved and thrived in the heart of Vancouver’s left-leaning enclave surrounding Commercial Drive.
A more recently incorporated store on Cortes Island tells a similar tale of reflecting a community’s values. In 2004, local producers seeking a common central marketplace started the Cortes Natural Food Co-op, in co-operation with local consumers looking for healthy, ethically-sourced food at low prices. “There was a great deal of community goodwill and many shares were purchased to provide startup capital,” says store co-manager Kelly Wand. The 2,000-square-foot store serves 700 member families on an island with a population around 1,000. Sales have been strong and stand at over $1 million a year. $100,000 of that is from products grown and produced on-island.
The Cortes Island store was initially staffed by volunteers, who were offered food vouchers in exchange for their labour until the co-op became financially stable enough to where today there are 10 part-time, paid staff members. Instead of patronage returns, the Cortes co-op has used its yearly profits toward securing equipment and inventory at the store. And it has now grown to the point where it is negotiating to buy the land where the store is located. Despite competition from three other grocery stores on the island, the co-op has used niche marketing to remain strong. It is developing a café and bakery in an adjoining space recently vacated by another restaurant tenant. Wand envisions this space as “a warm haven for the cold, dark winter,” a gathering place for locals and tourists and a space to develop, produce and sell value-added products.
Kootenay Co-op's steady growth
Back at the Kootenay Co-op in Nelson, business is booming, despite competition from supermarket giants including Save-On-Foods, Safeway, Loblaw’s Extra Foods and Real Canadian Wholesale Club. The co-op store has seen steady growth since its founding in 1975, with sales growing last year by 4.4 per cent over the previous year, to a total of $9.6 million. The 4,800-square-foot store anchors the western end of Nelson’s historic Baker Street and boasts 9,851 members, a number that is higher than the estimated official city population of 9,804. In today’s tightly consolidated, low-margin/high-volume grocery business, a successful, fully independent store is an anomaly. “Our sales per square foot are phenomenal for our industry,” says Lang, quoting an annual figure of $2,000 of sales per square foot of floor space. Ana Maria Peredo, director of the University of Victoria’s Centre for Co-operative and Community-Based Economy, gives a nod to the store as a model worth emulating, calling it “the most remarkable” co-op in B.C.
A membership fervent about the politics of the food they buy makes it possible for the Nelson co-op to thrive without relying on outside support like that offered by FCL. “We are not competing on price and we don’t even want to go there,” says board president Abra Brynne. “This is not the point of what we do.” Brynne, who has been involved in one form or another with the store since she became a member in 1990, points to the local community’s trust that the store is stocking products that are produced in line with their values, as well as understanding the community benefit of buying locally. “Consciously or unconsciously people do get a sense that what we are doing has more value in the community than a conventional grocery would.”
UVic’s Peredo describes co-ops as “key to articulating a bigger local vision of community development.” In Nelson, the Kootenay Co-op Country Store offers an example, anchoring a vibrant community that also includes a co-operative radio station, a car-sharing service, a community forest, an artists’ marketing organization, a health services organization and a credit union.
The co-op model, born of worker exploitation in Dickensian England, is finding new life in today’s organic and eat-local movement. Vancouver’s NOWBC Co-op, for example, is an online farmers’ market. Through the co-op’s website, NOWBC members order their weekly groceries a few days before they pick up their order at a neighbourhood delivery depot. NOWBC is just the latest example of the adaptability of the co-op model to meet a community’s changing needs.