FAN MILK GROUP
ANNUAL REPORT 2012
SERVING THE WEST AFRICAN CONSUMER
CONTENTS Corporate structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Chairman’s introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Consolidated financial highlights and key ratios . . . . . . . . . . . 4 Management’s review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Theme: Serving the West African consumer
The Fan Milk Group operates in six West African countries. Since 1960, the Group has produced and sold affordable frozen dairy and juice products to consumers through a unique street vending system. Through persistent leadership and innovation, Fan Milk has adapted to the local environment and proven its business model is sustainable for long term growth.
Over the years, the Group has created thousands of jobs and today employs more than 1,700 people. The Group sells its products through a network of more than 25,000 vendors and indoor sales points. The Group contributes positively to all stakeholders; share holders, employees and the societies in which we operate.
An iconic brand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 In focus: Growth in the West African economies . . . . . . . . . . 19 In focus: The rise of the West African consumer . . . . . . . . . . 21 Fan Milk – A best-in-class example . . . . . . . . . . . . . . . . . . . . . 22 Fan Milk – Connecting with the West African consumer . . . 27 Corporate Social Responsibility . . . . . . . . . . . . . . . . . . . . . . . . 31
900 800 700 600 500 400 300 200 100 2012
The 2012 accounts represent the strongest financial performance in the history of the Fan Milk Group
Revenue split Nigeria 37% Togo Group 11%
CÔte d'Ivoire 4%
Fan Milk International Denmark
Fan Milk Ghana
Fan Milk Nigeria
Fan Milk Togo
Fan Milk CÔte d'Ivoire
Fan Milk Group · Annual Report 2012 · Corporate structure
Fan Milk Benin
Fan Milk Burkina Faso
With an underlying revenue growth of 20 per cent and continued strong margins, the 2012 accounts represent the strongest financial performance in the history of the Fan Milk Group and confirm the potential of our business and markets. Looking ahead, substantial potential characterises all our markets which comprise some of the fastest growing economies in the world. Adding to this, the region has the world’s fastest growing population and a rapidly increasing urbanisation, which lends favourably to our business model and distribution system. With over 50 years of experience serving high quality dairy products and refreshments to West African
consumers, we are uniquely positioned to capture our share of the expected growth. We have a resilient and highly experienced organisation and a leading brand position. Recently completed market studies confirmed that Fan Milk is the leading brand in its category and beyond. We interpret this as a confirmation that Fan Milk is a best-in-class example of how to capture the loyalty of the West African consumer today and in the future. On behalf of Fan Milk International, I am pleased to present our Annual Report 2012.
Preben Sunke Chairman
Chairman's introduction · Fan Milk Group · Annual Report 2012
Consolidated Financial Highlights AND KEY RATIOS IFRS
Profit for the year, attributable to owners of the parent
Profit for the year
Operating profit (EBIT)
Profit before depreciation, amortisation, etc. (EBITDA)
INCOME STATEMENT Revenue
RETURN ON INVESTED CAPITAL
52 50 41
BALANCE SHEET Total assets
Investments in property, plant and equipment Index
Gross profit ratio
Return on equity
Return on invested capital (ROAIC)
Equity attributable to owners of the parent Index
Net interest-bearing debt Index
CASH FLOW FROM OPERATING ACTIVITIES 2012
2011 Average number of employees in the years
Fan Milk Group 路 Annual Report 2012 路 Consolidated financial highlights and key ratios
156 138 123
CAPITAL EXPENDITURE 2012
Consolidated financial highlights and key ratios 路 Fan Milk Group 路 Annual Report 2012
OUR BUSINESS IS STREAMLINED AND READY FOR CONTINUED GROWTH
Management’s Review 2012
2012 continued the long term growth trajectory of the Fan Milk Group. The significant investments made over the course of recent years are paying off and have made the production and distribution of our high quality products even more efficient and cost effective. Our two largest markets, Ghana and Nigeria, have been the drivers of revenue growth and both have sustained strong profit margins. However, our expectations for 2012 have not been met in all markets. The Fan Milk Togo Group continues to struggle to return to its growth path. The political and macro-economic situation has been challenging for businesses in general. We are, however, confident that we have made the necessary adjustments and that we are on the right track to return to historical growth levels. Another challenge was addressed in 2012 with the closing of our Fan Milk Liberia operations. It turned out that the Liberian market did not live up to our expecta tions, and as a result we decided to stop the activities in mid-October. Entering 2013, we are in a unique position. Our business is streamlined and ready for continued growth. On top of this, we find ourselves in a market with many posi tive external factors; ́́ Our markets comprise some of the fastest growing economies in the world
Understanding our markets even better Always focused on our consumers and trends in the market, we have produced extensive market studies to help secure our positioning and ensure that we are ready to capture a large share of the expected future growth.
Overall, we have been confirmed in our belief that Fan Milk has the right approach and strategy on how to capture the loyalty of West African consumers today and in the future. A Powerful brand with a rich heritage A brand survey carried out in 2012 confirmed that Fan Milk is the best known and strongest food and beverage brand in our markets. Fan Milk is found to be a very well-liked brand, outper forming even global iconic brands, with an extremely strong image of having good taste, convenient packaging and offering value for money. Fan Milk is seen as one of the most popular brands, for everyone and strongly associated with happiness and fun.
Serving the West African consumer In this year’s report, we will share why Fan Milk is a best-in-class example of how to capture the loyalty of the West African consumer today and in the future.
́́ A strong population growth and rapid urbanisation are bringing a surge of new consumers into our markets ́́ Consumer spending is rising fast, as is the number of economically active consumers
Management's review · Fan Milk Group · Annual Report 2012
Results for 2012 Revenue and gross profit The consolidated revenue reached DKK 880m (DKK 903m in local currencies), which represents a growth of 17 per cent in DKK against 2011, and a growth of 20 per cent measured in local currencies. Gross profit was DKK 515m (DKK 528m in local currencies) against DKK 427m in 2011. Due to a positive development in raw and packaging material prices and price increases towards the end of the year, the gross profit margin increased from 56.9 per cent in 2011 to 58.5 per cent in 2012. During the year, the Ghana Cedi depreciated against DKK by 15 per cent, whereas the Nigerian Naira ended 2 per cent higher than end of 2011.
EBITDA and operating profit The increase in activity levels led to capacity cost of DKK 264m (DKK 230m in 2011), an increase of 15 per cent.
EBITDA, defined as earnings before interest, taxes and depreciation, amounted to DKK 251m (DKK 198m in 2011). With depreciations of DKK 98m, operating profit (EBIT) for the year ended at DKK 153m (DKK 131m in 2011) with margins of 17.4 per cent against 17.5 per cent in 2011. The net effect of the exchange rate developments in 2012 was minus DKK 9m in both EBITDA and in operating profit.
Net financials and tax Net financial expenses in 2012 were DKK 13m against DKK 11m in 2011. With an effective tax rate of 29 per cent, the consoli dated profit was DKK99m against DKK 91m last year. Fan Milk Group’s share of net profits is DKK 57m against DKK 61m in 2011.
Cash Flow The free cash flow in 2012 totalled DKK 110m (minus DKK 43m in 2011). The free cash flow is calculated as the cash flow from operating activities less cash flow from investing activities.
262 156 110
-43 -152 -199
M.DKK 2011 2012
Cash flow from operating activities
Cash flow from capital expenditure
Free cash flow
Management's review · Fan Milk Group · Annual Report 2012
FAN MILK NIGERIA IS STRONGER AND BETTER POSITIONED FOR GROWTH THAN EVER BEFORE
ghana Fan Milk Ghana has been able to maintain stable prices on the key brands for a period of 21 months leading up to October 2012. Combined with relatively good weather conditions during the rainy season, the scene was set for yet another excellent year. The year ended with a topline growth of 21 per cent and a 22 per cent increase in EBITDA. Due to expected increases in raw and packaging mate rial costs and in response to the inflation and exchange rate development during 2011 and 2012, a general price increase was implemented in October. As usual, the effect was an immediate reduction in the sales volume, but we are expecting the volume development to regain momentum towards the end of 2013.
nigeria on a much larger scale and, thereby, improve the econo my and create many job opportunities. In light of the positive outlook, Fan Milk Ghana will con tinue the processes of enhancements of its operations. Looking ahead, we see a bright future for Fan Milk Ghana and with constant care and through expansion of the company’s infrastructure, we will continue to grow and improve the profitability in the years ahead.
Throughout 2012, Fan Milk Ghana continued the ex pansion activities with on-going installations of new equipment at the factory, building of regional distribu tion centres and acquisitions of sales equipment.
EBITDA EBITDA margin
The Ghanaian economy is likely to remain robust with growth being stimulated by oil revenues and its down stream businesses. Gold and cocoa prices are expected to remain high and related activities will subsequently filter through the economy in the country. We also hope that improved infrastructure programmes will continue
400 300 200 100 0 1990
Fan Milk Group · Annual Report 2012 · Management's review
With a revenue growth of 23 per cent and an increase in EBITDA of 48 per cent, 2012 marked a strong return to the growth path of Fan Milk Nigeria.
Continued investments in capacity in production and in sales equipment and increasing the geographical footprint all spurred new growth in the business. During 2012, continued focus on cost control, efficiency improvements and a positive balance between development of input costs and sales prices helped improve our margins and we are continuing with plans to make further savings in operational costs. Fan Milk Nigeria has been working closely with Lagos City Government in order to support a desire to develop and optimise the city traffic. Through a public private partnership, we have managed to join efforts of selling Fan Milk products with that of related collection of refuse. Furthermore, we have agreed on how we can sell from newly developed mobile kiosks on dedicated hot spots across the city.
Fan Milk Nigeria is continuously and successfully adap ting to the changes in the business environment. The most recent example of this is the continued develop ment of the indoor channels with focus on sales to supermarkets, shops, restaurants, bars and eateries. In addition, the macro-economic environment in Nigeria remains positive and looking ahead, Fan Milk Nigeria is stronger and better positioned for growth than ever before.
500 400 300 200 100 0 1990
Management's review · Fan Milk Group · Annual Report 2012
WE CONTINUE TO IMPLEMENT COST EFFECTIVE PRODUCTION PROCESSES
togo group 2012 was a challenging year for the Fan Milk Togo Group. The macro-economic situation in the countries has been difficult for the last couple of years. The political situa tion in Benin is especially difficult and causes uncertainty which leads to a cautious spending behaviour from the consumers.
Fan Milk Togo Group is continuously adapting to the prevailing market conditions. The latest initiatives include a new vendor incentive scheme, as well as new ways to approach and recruit vendors. The focus is on making the vendor job even more attractive and we are confident that we have made adjustments that put us on the right track to recapture the market. Studies have shown that the Fan Milk brand is par ticularly strong in the Togolese market and efforts are being made to defend this position at the same time as we ensure a profitable operation. Such efforts include continued implementation of more and more cost
Fan Milk Group · Annual Report 2012 · Management's review
Côte d’Ivoire (Ivory Coast) effective production processes and schedules, as well as relevant product development being carried out and implemented.
Revenue EBITDA EBIT margin
2012 began on a positive note as the euphoric aftermath of the civil unrest topped in November 2011 through January 2012, only to disappear in February. Throughout the rest of the year, the country did not see the recovery of trust among consumers that was anticipated. We are ending the year on a cautious note. We are, how ever, optimistic that the economy will recover although
not at the pace that everybody was hoping for after the elections of 2011. Nevertheless, we are continuing to expand our volume and geographical footprint. In spite of external challenges in the political and economic environment, we have grown the top line with an annual average of 19 per cent since 2009 and we expect to be able to continue on this path.
On behalf of the Fan Milk Group, I would like to thank our many dedicated employees for their efforts and contributions during 2012. Our combined efforts have resulted in a year of growth and strong financial perfor mance which we can all be proud of.
I would also like to thank our shareholders for endorsing our strategy, and our customers, partners and suppliers for their on-going support and co-operation.
On the back of 50 years of continuous work to develop our core competencies, and to improve the production and distribution of high quality and affordable refresh ments to the West African consumer, we find ourselves in a unique position. We are confident that we have the right platform and strategy to continue our long history of growth espe cially at this stage where the prospects for the West African economies have never been better.
Looking ahead with confidence We strongly believe that we are on the right track to achieve our vision of becoming “one of the leading food companies in West Africa”.
Jens Jørgen Kollerup Managing Director
SERVING THE WEST AFRICAN CONSUMER Since 1960, we have consistently delivered high quality products and service to our consumers, and we are committed to constantly developing our understanding of our markets. Passionately dedicated to producing
Fan Milk Group · Annual Report 2012 · Theme: Serving the West African consumer
high quality products, our reputation is secured by complete control of our value chain. Our brand reflects our core values and we consider ourselves a brand leader with our vision and mission shaped around them.
VISION We will be one of the leading food companies in West Africa.
VALUES We strive to: ́́ Ensure professional management
MISSION We create business for the benefit of all stakeholders. We produce and distribute high quality branded products to consumers in West Africa.
́́ Use world class technology ́́ Ensure high quality products ́́ Exercise sustainable business activities ́́ Be good corporate citizens
Theme: Serving the West African consumer · Fan Milk Group · Annual Report 2012
brand recognition 100% 85%
65% 55% 45% 35% 25% 15% 5%
brand attributes Top 10 attributes in each country
"Fun" "Value for money"
"Long time on the market" "Popular"
AN ICONIC BRAND In order to gain an in-depth understanding of the strength of the Fan Milk brand, our positioning among competitors and in the minds of consumers, we part nered with TNS Gallup and conducted a quantitative brand positioning and health survey in Nigeria, Ghana and Togo during 2012. Over 2,600 randomly selected respondents within a representative target group of people aged 10-39 took part in face-to-face interviews and the results clearly support what we already knew – the Fan Milk brand is iconic throughout West Africa.
“Fan Milk is by far the most consumed brand compared to a competitive set of brands with a very high share of regular users in all countries.” Fan Milk is a power brand in West Africa Our efforts have resulted in Fan Milk maturing into an iconic brand, with loyal consumers and brand recognition surpassing top global and local brands. Fan Milk is now a household name across West Africa, evoking images, memories and associations in the minds of West African consumers.
Fan Milk Group · Annual Report 2012 · An iconic brand
"For everyone" "Affordable price"
Fan Milk is a very well-liked brand outperforming even other global iconic brands with an extremely strong image of having good taste, convenient packaging and giving value for money. Fan Milk is seen as one of the most popular brands, for everyone and strongly associ ated with happiness and fun.
According to our 2012 brand health and positioning survey, the Fan Milk brand is highly associated with these specific image attributes:
"A treat / reward" "Filing"
awareness of fan milk products Nigeria
́́ Popular and fun brand
́́ A treat
́́ Convenient with especially convenient packaging for on-the-go consumption
́́ Fresh, cooling and filling
́́ For everyone, including kids, youth and adults
"A trusted brand"
An iconic brand · Fan Milk Group · Annual Report 2012
Growth in the west african economies
Our markets in West Africa comprise some of the world’s fastest growing economies, and accompanying the growth are rapid improvements in income levels, infrastructure and a business environment that promises even higher growth rates for the consumer market.
Economies are rapidly growing Africa’s economic growth has been accelerating in recent years, making Africa the world’s second fastest growing continent. The West African countries, espe cially, are experiencing high growth rates, which are predicted to continue for years to come.
Indexed GDP development (PPP-adjusted)
Ghana Nigeria Togo Group Côte d'Ivoire
Exp. CAGR '11-'17
*CAGR: Compounded Annual Growth
Urbanisation As the economy and population grows, urbanisation will rise, as more people seek work in the big cities of West Africa. Today, almost 50 per cent of the population in Nigeria, Ghana and Côte d’Ivoire live in urban areas. More than one third of the population in Togo and Benin live in urban areas, whilst in Burkina Faso 25 per cent of the population live in cities. Annual urbanisation growth rates are predicted to be between 3-6 per cent.
Household consumption is rising
Decrease in poverty
Supported by a global demand for minerals, oil and gas, the growing West African economies are likely to sup port the future household consumption. Hence a robust consumption growth is expected across West Africa.
GDP is growing faster than the rapid rise in population and along with the oil and gas revenues in the West African countries, a steady decline in poverty is pre dicted, and it has been estimated that by 2020 poverty levels in Africa will fall to 20 per cent.
Population growth According to the United Nations, Africa has the world’s fastest growing population and is projected to account for more than 40 per cent of global population growth by 2030.
Already the most populous country in Africa and the 7th most populated country in the world, Nigeria is anticipating an exceptionally high population rise of 28 million people by 2017.
Nigeria is forecasted to be the 30th largest economy in the world by 2017, and along with Ghana and Côte d’Ivoire, the country is expected to stay among the fastest growing economies in the world. Across West Africa, we are anticipating a strong GDP growth at an average projected growth rate of more than 8 per cent.
than 40 million new consumers by 2017, accounting for 8 per cent of the total increase of the world population in the same period.
Across West Africa, significant increases in population are expected, and the region is predicted to have more
A more stable business environment Fewer conflicts, more democratic development and improved business regulations are leading West Africa towards a more stable business environment. Loos ening trade restrictions are driving a global surge of imports and exports and creating a better environment in which to do business.
Source: Canback Dangel and IMF
In Focus: Growth in the West African economies · Fan Milk Group · Annual Report 2012
the rise of the the west african consumer
The combination of high population growth and rapid urbanisation, increasing household consumption and high growth rates in the West African economies is leading to a fast and sustained rise in consumer spending. As consumers accumulate wealth, a new middle class is emerging and resulting in more distinct consumer segments.
Brand loyalty and trust
To be successful in such a market context requires a thorough understanding and constant monitoring of consumer preferences.
Although high quality and trust in brands are impor tant, products have to be available at the right price point. The value for money perception in these markets, where income levels are relatively low, is critical.
Although the West African marketplace is changing quite rapidly, one characteristic of the local consumer remains the same; West Africans are highly brand loyal and trust in quality is very important. Specifically, safety in food is viewed as a key indicator of quality.
Value for money
A youthful market Leading the way of the new consumers is a generation in their 20s and early 30s who are optimistic about their futures. The main consumer group in West Africa is young, between the ages of 16-34, and accounts for 53 per cent of income. These consumers are confident that their incomes will rise and they have high aspirations and hopes for the future, and are willing to spend more.
An increased need for convenience foods As the economies develop and urbanisation rises, a number of lifestyle and demographic factors are driving increased on-the-go consumption of food and bever ages. With urbanisation reshaping people’s habits and lifestyles and calling for increasing work hours and longer commutes, West Africans are demanding more on-the-go convenience.
For many, particularly the young, meals are increasingly viewed as something to grab on the way to and from work.
A modernising retail trade structure Despite the domination of informal retail across West Africa, urban consumers, especially in the largest cities, are developing new tastes and demand sophisticated indoor market channels.
Digital versus traditional media Another trend developing among young West Africans is rising internet usage. Although incomes are highly differentiated, recent studies show that almost 60 per cent of urban African consumers are owners of smart phones, and 50 per cent often access the internet. With the widespread and growing usage of social media as well, the need for innovative new marketing initia tives is rising. However, the importance of traditional media remains high. Television is still the most frequently used and trusted source, but word of mouth is considered the most influential promotional tool in Sub-Saharan Africa.
In Focus: The rise of the West African consumer · Fan Milk Group · Annual Report 2012
FAN MILk a BEST-in-class EXAMPLE
Since 1960, the Fan Milk Group has produced and sold affordable frozen dairy and juice products directly to consumers through a unique street vending system. Through persistent leadership and innovation, we have adapted to the local environment and proven our business model is sustainable for long term growth.
Fan Milk has a strong consumer reach. With approxi mately 2,900 agents and franchisers and more than 25,000 vendors using branded bicycles, push carts and cooler-boxes to distribute, our products are able to reach a high number of consumers on a daily basis.
We are constantly improving our market position and with an average of 1.8 million products sold daily, Fan Milk is the market leader in frozen dairy in West Africa.
Fan Milk’s extensive value chain stretches through global sourcing, procurement, transport of raw materi als and high-technology production in our factories, to distribution of our products and allows for a high degree of control of every detail throughout the chain.
The following strengths and strategies are the reason we are in the position we are today.
Targeting urban growth clusters With direct access to 120 million urban consumers in some of the fastest growing markets in the world, selecting the right geographical areas to target is a key strategic consideration. Focusing our distribution around the main cities allows us to effectively capture a high volume of attractive consumer segments. Through bicycle, pushcart and cooler-box vendors, our distribution system allows us to specifically target these urban growth clusters, but also remain mobile and sufficiently flexible to reach relevant rural and suburban areas.
Control over route to market The average West African consumer is found out doors. The challenges this brings with it create the need for efficient and well-managed distribution with a high degree of flexibility, and our mobile vendor approach has turned into an iconic sight across West Africa. Over 90 per cent of our products are sold in the on-the-go channel.
Fan Milk Group · Annual Report 2012 · A best in class example
A unique value chain
With a large range of competencies including effective networking with suppliers, efficient production and laboratory testing, our expertise allows us to secure quality in each stage of the value chain. We keep our cold chain intact, seek innovative solutions and thereby, successfully market and sell our products to our cus tomers and consumers.
High quality standards Fan Milk is a household name and we strive to ensure that the brand is, and always will be, known for its high quality – quality in taste and quality in experience. The raw materials we source, the machines we use, and the products we manufacture all have to be of the highest quality. We are able to maintain this by auditing suppliers, using modern equipment, creating and main taining a hygienic production environment and auditing our B2B customers. In addition, three of our production facilities are ISO certified. Furthermore, our cold chain keeps our products frozen, throughout production, storage and delivery, until the consumer receives the product in the street.
WE ARE THE MARKET LEADER IN FROZEN DAIRY IN WEST AFRICA
Ensuring competitive prices Offering high quality products at prices that are attractive for most West African consumers is a result of effective global sourcing of raw and packaging materi als, highly efficient and cost effective production and distribution methods. The majority of our goods are sourced through Emidan, which keeps track of more than two hundred suppliers worldwide. In this way, the Fan Milk supply chain is fully optimised, and we enjoy discounts that are directly transferable to the price of our products.
Maintaining relationships with key stakeholders We create long-standing, mutually respectful relation ships and focus on being viewed as an ethical West African brand. As a result, we have won several awards and gained great respect within the business environment.
Efficiently managing talent The constant challenge to find skilled staff in West Africa is one that Fan Milk overcomes by offering some of the best training options to our employees. Our employees are our most valuable and important assets, and their knowledge and dedication to producing high quality products is of utmost importance to us.
Fan Milk employs passionate people, and we inspire them to be the front runners of knowledge in their field.
OUR EMPLOYEES ARE OUR MOST VALUABLE AND IMPORTANT ASSETS A best in class example · Fan Milk Group · Annual Report 2012
OUR VENDORS ARE AN ICONIC SIGHT ACROSS WEST AFRICA
FAN MILK CONNECTING WITH THE WEST AFRICAN CONSUMER
Lifestyles in West Africa are changing rapidly and a large young consuming class is emerging. Fan Milk is already meeting this change and the high expectations our consumers have of the food industry. Fan Milk is a household name and our products and our brand resonate with consumers. Our innovative products are easy to find in the marketplace and we exceed their expectations of quality, marketing and price points.
A unique distribution system Through a highly evolved network of agents and ven dors, our products are easily available and our vendors are an iconic sight across West Africa. As the face of Fan Milk, our vendors sell the Fan Milk products from their cooler boxes at the local markets, bus stops, sports venues, churches, schools, beaches, villages and on the streets. Their characteristically tuned horn, eye-catching uniform and the designs on our distribution units, make sure that consumers rarely miss an opportunity to buy our products.
The right price point Quality and brand are incredibly important, but they must be delivered at the right price point.
Price sensitivity is high, given generally low incomes. However, due to our ability to supply products that offer good value for money, Fan Milk consumers are found across all age groups as well as all socio-economic backgrounds.
Serving excellent quality Our quality standards are a big part of what sets us apart from our competitors, and we adhere to these standards in all aspects of what we do. We strive to ensure that the brand is, and always will be, known for its high quality – quality in taste and quality in experience. To us, selling an affordable product does not mean compromising on quality.
Products that satisfy demand Our products are individually branded, with their own special packaging, identity and advertising efforts, and the product ranges are customised for local markets, based on consumer feedback and sales development. Our customers are frequently on-the-go and regard our packaging as highly convenient for quick enjoyment.
Connecting with the West African consumer · Fan Milk Group · Annual Report 2012
Fan Milk and modern retail The city centres of some of the bigger cities are rapidly being modernised and this creates opportunities for new indoor sales channels as well as products targeting the more affluent consumer. Since Fan Milk has always catered for modern retail in the form of supermarkets, gas stations and restaurants, we know how to embrace this development and we have the products suitable for these channels. This means less demand for traditional Fan Milk out颅 door vending in these areas and instead calls for new approaches to capture on-the-go consumers. During 2012, Fan Milk Nigeria and Emidan jointly developed a mobile kiosk concept. The first kiosks were introduced to the market in early 2013.
Marketing Fan Milk Using a high volume of traditional media, including television advertisements and a large number of outdoor advertisements along with branded vendor uniforms and equipment, we focus on brand awareness.
Our marketing efforts include connecting with consumers to create positive experiences with Fan Milk. These include sponsored and promotional activities, visiting marketplaces to offer samples and using celebrity brand ambassadors. However, with the recent improvements on internet connectivity, we acknowledge the need for marketing efforts in digital media and we are beginning to make social media a part of our marketing strategy.
QUALITY IN TASTE AND QUALITY IN EXPERIENCE 28
Fan Milk Group 路 Annual Report 2012 路 Connecting with the West African consumer
CORPORATE SOCIAL RESPONSIBILITY
Fan Milk is determined to operate in a responsible manner and firmly believes that long-term profit and existence are linked to the way we do business, our respect for people and the environment. Fan Milk is committed to conducting its business in a transparent, as well as socially and environmentally responsible manner. In this regard, Fan Milk operates in accordance with international standards and the rele颅 vant laws of the countries in which we operate.
UN Global Compact
WE WISH TO CONTINUE TO PROMOTE AND DEVELOP OUR CORPORATE SOCIAL RESPONSIBILITY
human rights, labour rights, occupational health and safety, environment and climate and anti-corruption and can also be found on our website.
During 2012, in addition to building relations with local communities, philanthropy for disabled people, and more, we have especially focused on the following six CSR focus areas.
Fan Milk wishes to continue to promote and develop its Corporate Social Responsibility with respect to human rights, social matters, environmental and climate matters and in combating corruption. In 2010, Fan Milk International, therefore, joined the UN Global Compact and presented our first Communication on Progress (COP) report during 2011. In line with the requirements, Fan Milk International has published the COP report for 2012 to UN Global Compact; this can also be found on our website www.fanmilk.com.
1. Supply chain management
Fan Milk International advises all subsidiaries and relevant business partners of our policy and association with the UN Global Compact. Furthermore, all Fan Milk subsidiaries are advised to adapt and implement the declaration and the policies within their local sphere of influence.
2. Reducing energy and water consumption
Specific policies, including The Ten Principles of The United Nations Global Compact, have been defined for
We have a number of fundamental beliefs regarding the working conditions and the environment of employees. These include maximum weekly working hours, gender equality, freedom of organisation, minimum age for employees, environmental pollution, drag on natural resources etc. We work on communicating and implementing these beliefs across the whole of our supply chain and carry out frequent audits on selected key suppliers.
Producing and storing frozen products are very energy intensive activities and we constantly aim to reduce our carbon footprint. Some of these activities include reducing diesel consumption during electricity genera颅 tion, improving the insulation of our storage facilities and reusing waste water. Economical freezing options and solar energy are two activities we are currently exploring.
Corporate Social Responsibility 路 Fan Milk Group 路 Annual Report 2012
Addresses 3. Health and safety in the workplace
5. Fighting fraud, theft and corruption
The well-being, health and safety of the Fan Milk employees and close business partners are of utmost importance to us. Some of the health and safety measures we take include providing employee health care schemes, a daily lunch for staff, training on safety in the workplace, as well as training on hygiene and product safety.
We actively work against corruption and strict rules are applied to our business dealings. Through their initial training, our employees are made aware of this. Anticorruption policies are also projected to our suppliers as we explain our policies and requirement to enable compliance in our supply chain.
4. Reducing waste
More than 40 per cent of the West African population is below 16 years of age, and support of the education systems in developing countries is of utmost impor tance. We provide support in form of scholarships and donating school supplies to the school system.
Waste is a very real result of our production and the consumption of our products. To reduce the impact of waste in general on the environment, we have a special focus on two areas – solid waste and waste water. We aim to reuse our waste water in various ways, e.g. washing cars and trucks, gardening, etc. Along with providing information to the public and placing trash cans along roads and in schools, we also support large scale programs for waste collection and recycling.
Fan Milk Group · Annual Report 2012 · Corporate Social Responsibility
6. Supporting the education of children
In addition, Fan Milk Ghana annually trains more than 100,000 pupils in sanitary practices in order to promote a cleaner environment.
Fan Milk International A/S
FAN MILK PLC.
Fan Milk S.A.R.L.
Sofiendalsvej 88A DK-9200 Aalborg SV Denmark Tel.: +45 96 33 80 00 Fax: +45 98 18 93 22 www.fanmilk.com
Eleiyele Industrial Layout Ibadan NIGERIA Tel.: +234 (2) 2412032 Fax: +234 (0) 8034040727
Secteur 9, Lot 14 Zone Industrielle de Gounghin Ouagadougou 01 BURKINA FASO Tel.: +226 50340506 Fax: +226 50340507
FAN MILK S.A. emidan A/S Sofiendalsvej 88A DK-9200 Aalborg SV Denmark Tel.: +45 98 18 90 00 Fax: +45 98 18 93 22
Zone Industrielle B.P. Port 9130 Lomé TOGO Tel.: +228 (223) 7160 Fax: +228 (227) 0273
FAN MILK LTD.
Fan Milk S.A.R.L.
No. 1 Dadeban Road Ring Road North, Industrial Area Accra GHANA Tel.: +233 (302) 224421 Fax: +233 (302) 221951
04 BP - 1049 RFU-ILOT 4888 AKPAKPA/PLM face ISPEC Cotonou BENIN Tel.: +229 21374150 Fax: +229 21374151
FAN MILK CÔTE D’IVOIRE S.A. 31, Rue des Brasseurs Zone 3 C 1453 Abidjan 18 CÔTE D’IVOIRE Tel. : +225 21248676 Fax : +225 21258665
FAN MILK INTERNATIONAL A/S Sofiendalsvej 88A DK-9200 Aalborg SV Denmark Tel.: +45 96 33 80 00 Fax: +45 98 18 93 22 www.fanmilk.com