annual report 2016 - eroski · with the eroski foundation scientific committee to define new...

ANNUAL REPORT

2016

2016 Annual Report

letter from the Chair 6

letter from the Board of Governors 8

corporate governance 10

2016 highlights 12

“with you” business model 18

consumers 24

workers 32

stores 40

value chain 54

social change 66

2016 Annual Report

EROSKI | 2016 Annual Report | 76 | 2016 Annual Report | EROSKI

In 2016, EROSKI brought a strategic cycle to a close with a high rate of achievement for all its objectives.

The ordinary profits from our distribution business continued to see significant improvements in 2016, similarly to sales within the scope of consolidation, boosted by the “with you” business model that is being progressively expanded throughout the supermarket and hypermarket business network.

Restructuring operations of the food business also reached a high point during this strategic cycle. We established significant alliances that strengthen the company in business terms, met all of our financial commitments and, most importantly, improved our offer to our Client Partners.

As a result of network restructuring operations, we have principally focused on the North Zone, comprised of the regions between Galicia and the Balearic Islands and including these two territories. In these regions we have a market share of over 18%.

We also met our commitments to the financial institutions that back the company with a total reduction of financial debt of over 500 million euros, thereby progressing towards a more balanced financial horizon.

We consolidated our international and Spanish alliances and expanded their aims; these alliances are succeeding in their mission to enable us to offer consumers better value for money.

As part of the transformation that has taken place over the past few years, improvements to the business proposal aimed at our millions of customers, many of whom are members, have taken on particular significance; we now create customised offers (related to purchases, assessment, information and training) to promote healthy eating.

We are now launching a new strategic cycle that will see us examining our product range in greater depth as part of our quest for healthier, more sustainable food, offering products and services that make it accessible to all our consumers.

During this time we will progressively return to our previous rate of opening new, franchised and refurbished stores. The evolved “with you” model will be applied across these stores and we will also explore new formats, incorporating a multi-channel sales approach as standard in all designs to provide appropriate support as our customers evolve.

Throughout all the changes that have taken place over the last few years, and as part of the challenges we have set for the near future, the people who work at Eroski are always the real driving forces. Our cooperative culture has made it possible to negotiate difficult times with high levels of commitment and responsibility. The forthcoming cycle will find a way to extend and deepen cooperative values across the group, in the belief that this is the best policy for our Client Partners, our workers and the company.

Agustín MarkaideCHAIRMAN

Letter from the Chair

Agustín Markaide

letter from the Chair


EROSKI, as a consumer cooperative, has a mission to offer society goods and services that improve the quality of life, health and well-being of its consumers in an environment that offers the highest levels of quality and information at the best price, with a commitment to supporting sustainable consumption.

The new opportunities that are currently offered by modern technology mean that we can progress towards a more personal relationship between the cooperative and each of its partners, with customised offers that encourage healthy eating. In this respect, a significant landmark in 2016 was the launch of the “Ekilibria” programme, a pioneering programme that offers Client Partners a personalised, confidential, monthly report that compares their purchases against scientific recommendations for a balanced diet. It represents a ground-breaking innovation within our solid tradition of training and informing consumers.

We use World Health Organisation recommendations as a guide for the Nutritional Improvement Programme applied to our own brand products and during 2016 we eliminated 347 tonnes of sugars, saturated fats and salts from these items. Furthermore, we collaborate with the EROSKI Foundation Scientific Committee to define new targets in our commitment to promoting healthy eating habits.

Savings made by families, which reached 260 million euros in 2016, is an area that is also dictated by the new opportunities created by technology, meaning that today our Client Partners enjoy offers that are far more personalised than before. EROSKI Club now represents a large social collective based on a distinctive identity of being a driving force behind a cooperative project. Today, it offers personalised discounts that were once unimaginable and we will continue to strengthen this platform with new initiatives that give our Client Partners even greater advantages.

Our stores are, and will continue to be in the future, the key link between the two large EROSKI collectives: Consumer Partners and Worker Partners. Remodelling the “with you” model has also helped to reanimate the channels used to participate in the cooperative. Creating new ways for Client Partners to participate, and equipping the teams in every store with new self-management tools, ensures that each store is even better prepared to meet the specific needs of its own customers and its competitive environment, increasing customers' preference for shopping in our stores.

2016 concludes with solid foundations for continuing our work of adding value to society through our cooperative business activity, a different way of doing business as we have shown during this period. Our

collective project shares its business model with new franchised entrepreneurs and boosts trading that values local food production, a project that we will reinforce as we enter this new cycle of our strategic plan as part of our aim to contribute to a fairer, more cohesive and more sustainable society, with higher rates of health and well-being. This is our raison d'être, the reason behind the work by everyone at the Eroski Cooperative, because these are the values that must be retained in the Eroski of the future.

Leire Mugerza GarateCHAIR OF THE EROSKI BOARD OF GOVERNORS

FROM LEFT TO RIGHT: Oscar Goitia – Consumer PartnerCristina Gainza – Worker PartnerLander Beloqui – Consumer PartnerEdorta Juaristi – Worker Partner, Deputy Chair of Board of GovernorsLeire Mugerza – Member- Consumer, Chair of Board of GovernorsIgnacio Ruiz – Consumer Partner, Secretary of Board of GovernorsSonia Ortubai – Consumer PartnerGontzal Loro – Consumer PartnerIñigo Arias – Worker PartnerAna Isabel Zariquiegui – Member- WorkerAndoni Martinez Melgosa – Worker PartnerNerea Esturo – Worker Partner

Letter from the Board of Governors

letter from the Board of Governors


The Board of Governors is responsible for corporate governance, management and representation of the cooperative in accordance with the legal and statutory regulations and the agreements of the General Meeting. It is comprised of 12 members chosen by the General Meeting who hold their positions for four years, with the option of being re-elected. Half of the members are elected from the consumers' collective and half from the workers' collective. Among its functions, key tasks include appointing the Chair and Managing Directors of the cooperative, determining the Internal Regulations and approving investments. It holds monthly meetings with Senior Management. In 2016, in accordance with internal regulations, half of the Board of Governors was renewed. The Board brings together the audit and compliance committees, the investment monitoring committee, the appointments and remuneration committee and the executive committee.

The General Meeting is the supreme governing body that expresses the company's intent and is jointly comprised of 250 Consumer Partner appointed representatives and 250 Worker Partner appointed representatives. The election of members is ratified in the corresponding Worker/Consumer Preliminary Meetings and their mandate lasts for 4 years. Chaired by the Board of Governors, it is also attended by Senior Management and the Chair of the Social Board who

are all present in an advisory capacity only. Among its functions, key tasks include approving accounts, presenting and allocating results, approving strategic plans and annual management plans and amending the Articles of Association. An ordinary meeting is convened every year. In 2016, in accordance with internal regulations, half of the Member-Delegates in the General Meeting were renewed.

All Consumer Partners are called to the Consumer Preliminary Meetings and all Worker Partners are called to the Worker Preliminary Meetings. These meetings are informative in nature and establish a means of participating in the General Meeting.

The Social Board is comprised of 16 Worker Partners and is an advisory body within the Board of Governors for social and employment issues. Similarly, the Consumers' Board is comprised of representatives from the Local Consumer Committees and advises the Board of Governors on issues related to consumers.

EROSKI S.Coop. also has two supervisory bodies. The Appeals Committee is comprised of five members chosen from the General Meeting and it processes and resolves appeals submitted by members against decisions made by the Board of Governors and aspects included in the Articles of Association. The Supervisory Committee is formed by three members chosen by

the General Meeting and acts as a supervisory and regulatory body to ensure the smooth functioning of social organisations, audits and corporate governance.

Remuneration at EROSKI is allocated to work positions rather than the person holding the position, guaranteeing non-discrimination in its application. In accordance with the cooperative principle of internal solidarity, the remuneration range is from 1 to 4.7, between average remuneration and that of senior management. No positions that involve representation in the corporate governance structure are remunerated.

81% of members of the cooperative's social and governing bodies are women, and 50% of senior management are also women.

Corporate governance at EROSKI is regulated by the Good Corporate Governance Code and its communication policy is committed to accuracy and the transparency of information. Biannual and Annual Accounts, the Management Report and other financial and corporate reports are communicated to the National Securities Market Commission (CNMV) and published on our website.

The EROSKI S.Coop. cooperative is the parent company of the EROSKI Group.

PHOTO: General Meeting held on 15 June 2016

Corporate Governance

corporate governance


2016 highlights

2016 highlights

z


sales

consumers

6,051million € turnover

5,280million € net sales (before VAT)

281million checkout sales

260 million € savings made by consumers via offers and promotions

>7 millions of Client Partners who have EROSKI, CAPRABO, IF and FORUM SPORT cards, representing 79% of their sales

Best Customer Service, awarded for the fifth consecutive year

17,982 Client Partners contributed ideas to improve their “with you” store

workers11,352 are members 8,046 members of EROSKI S. Coop.

2,819 members of Hipermercados S. Coop.487 members via Gespa FORUM

33,162 workers

3,044 work positions in the franchised store network, a 6% increase.

68% of women are in positions of responsibility

+20%increase in training hours, up to a total of 210,000 hours for an improved “with you” service

2016 HIGHLIGHTS 2016 HIGHLIGHTS


stores

social change

suppliers

57 new openings

512 next generation stores

44 supermarkets7 sports/leisure stores3 petrol stations2 travel agencies1 cosmetics/perfume store

26 hypermarkets486 supermarkets

1,837total establishments

1,269 Supermarkets79 Hypermarkets*19 Cash & Carry60 Petrol stations*20 Opticians*160 Travel agencies52 FORUM SPORT sports equipment stores169 iF Cosmetics/Perfume stores9 Online stores

479 EROSKI/city322 CAPRABO159 EROSKI/center151 ALIPROX74 ONDA79 FAMILIA5 RAPID

>6 million visitors to consumer.es every month

187,783 participants in initiatives that support a balanced diet

20 years collaborating with food banks

12,386 equivalent yearly meals donated by EROSKI and its customers

Renewal of Certification SA8000 and adherence to the Global Compact

9,075 suppliers, of which 4,603 are businesses

>50% of commercial suppliers are small local producers

23,791local products, 2,727 new additions

2,784 agreements with SMEs and cooperatives to develop local agri-food products

* 25 hypermarkets pending transfer

through sales operation

2016 HIGHLIGHTS 2016 HIGHLIGHTS


The “with you” business model offers consumers the freedom to choose from a wide range of goods, specialises in fresh produce, opens up stores to local products and establishes a more personal relationship with Client Partners

“with you” business model


We care for your health

and well-being

You can tell we’re from around here

We give you a positive experienceYou save

money here

This is your store, we listen to you

We’re different, we’re cooperative

The “with you” business model: our guide through the transformation at EROSKI

You save money here

EROSKI Club offers significant savings without affecting the quality of its fresh produce, its commitment to local products and its wide range for greater freedom of choice.

• 260 million euros of savings made by consumers through increasingly customised offers and promotions.

• Over 7 million Client Partners who are EROSKI, CAPRABO, IF and FORUM SPORT card-holders.

• 79% of sales are to Client Partners.

• 250 big savings campaigns such as “We'll pay the VAT” “We'll refund the price of your shopping” “3x2 in Perfumes and Cosmetics” and a 25% discount on meat and deli products.

• We process over 30,000 different offers at the same time based on each customer profile.

• Over 2,307 million Travel Club points cashed in for over 1 million gifts and trips.

We care for your health and well-being

EROSKI’s commitment to healthy eating is one of its major hallmarks and can be seen in its own brand products, the breadth of its range, its promotion of a balanced diet, its specialisation in fresh produce and in the work of its Foundation.

• 2,006 own brand products with Traffic Light Nutrition Labels, the most transparent labelling in the market for the nutritional quality of food.

• We have removed partially-hydrogenated vegetable fats from our own brand products.

• We have removed parabens and triclosan from our own brand cosmetics and personal hygiene products.

• We have eliminated 347 tonnes of salt, fats and sugars from our own brand products.

• Our range of ecological fruit and vegetables has now expanded to include 150 different types, a 20% increase on the 2016 figure.

• We have 523 own brand gluten-free products, 25 lactose-free products, 239 low salt, 271 low fat, 43 low sugar and 451 products that are rich in fibre.

• Innovation: The “Ekilibria” programme provides a customised nutritional diagnosis by comparing in-store purchases with scientific recommendations for a balanced diet.

• 187,783 participants in initiatives run by the EROSKI Food School to encourage a balanced diet and healthy life habits, a 160% increase on the number of participants in the previous year.

• The EROSKI Foundation has published new findings as part of the Study on Eating Habits and the Nutritional Status of the Spanish Population.

Consumers' freedom of choice with wider product ranges was named as one of the outstanding features of the “with you” model by Client Partners. Our specialisation in fresh produce and a growing emphasis on locally produced food was also highlighted. These elements create a “with you” range that is clearly distinct and that has room for manufacturer's brands, our own brand and locally produced food alternatives. In the “with you” range, variety is one of our trademarks because a varied diet based on fresh produce is key to a more balanced diet.

Consumers' savings schemes are increasingly customised with offers that are tailored to each Client Partner profile based on the evolution of their consumer habits. In 2016, families were saved 260 million euros through our different offers and promotions via ever more personalised formulas. The over 7 million EROSKI Client Partners represent the very heart of our business strategy.

The “with you” store model continues to evolve. By expanding this business model we are also energizing the ways in which Client Partners participate in the continuous improvement cycles driven by self-management in stores, meaning that we can better adapt each of our stores to the specific expectations of its customers and its competitive environment. In 2016, approximately 18,000 Client Partners contributed their ideas to improve their “with you” store. The majority took part in face-to-face surveys or in group exercises with the workers in their regular store.

In 2016 we extended our network to 512 next generation stores, 26 hypermarkets and 486 supermarkets, and saw an important leap forwards in the preference shown by consumers for our stores.

The “with you” stores are the ideal location for forming relationships with Client Partners who are looking for a positive shopping experience and more personal treatment inspired by small details that surprise them.

Approximately 18,000 Client Partners contributed ideas to improve their “with you” store

WITH YOU WITH YOU


We're different, we're cooperative

Our corporate culture means that we do things differently at EROSKI. We have a pioneering socio-business model that makes us unique. Since it was founded, the cooperative's decision-making bodies have been comprised by its Consumer Partners and Worker Partners.

• “One store, one self-managed unit” is our guiding vision for greater Client Partner satisfaction and for employment quality through participation and responsibility.

• 11,352 Worker Partners who own the company where they work.

• 4,302 company management conferences with the Worker Partner and Consumer Partner collective.

• Board of Governors comprised of 6 Consumer Partners and 6 Worker Partners, chosen by the General Meeting for a period of 4 years.

• General Meeting comprised of 250 Consumer Partners and 250 Worker Partners. The parent company is governed jointly by the two communities that form EROSKI: the Consumers and the Workers.

We give you a positive experience

We search for inspiration to surprise our customers, applying the values of approachability, empathy and involvement that are inherent to our corporate culture, and we understand that innovation is a path that never ceases to surprise.

• 210,484 training hours for the professional training of our work teams, a 20% increase on the 2015 figure.

• 500 employees have studied at our Fresh Produce Schoolfor improved customer service.

• 155 submissions and third prize KREA awards to the best self-management initiatives by in-store work teams.

• 260 new own brand product launches, increasing the range to 4,464 items.

• Innovation: New, freshly chopped, ready to eat, fruit range in EROSKI stores.

You can tell we're from around here

EROSKI encourages a highly diversified production framework within the agri-food sector. This diversity is a key part of its contribution to the economy and to culture, healthy eating habits and the environmental quality of our surroundings.

• We sell 23,791 local products, produced in the areas closest to each of our stores; 2,787 of these products were new in 2016.

• 2,784 agreements with SMEs and Cooperatives to support the development of local agri-food produce, bringing together small producers and consumers, creating flexible sales management that adapts to microbusinesses, and collaborating in plans for their professionalisation and business growth.

• We sell local milk under the EROSKI brand in Galicia, the Basque Country, Catalonia and the Balearic Islands, certified under the “Sustainable Dairy Assurance Scheme” (SDAS), thereby offering consumers options that support the economy of their local area and its rural development.

• We develop collaboration agreements with organisations in our sector to boost local produce, Designations of Origin (D.O.) and Protected Geographical Indications (P.G.I.).

• 35 local campaigns implemented to promote food produced in the areas closest to our stores.

This is your store, we listen to you

We are always aiming for more personalised customer attention and all your opinions help us to improve. Thanks to our cooperative corporate culture, we recognise that diversity enriches us. We are highly sensitive to the linguistic identity of our customers and work to provide a service to them in their own language; this policy is even applied to the packaging of our own-brand food.

• “Best customer service of the year” for the fifth consecutive year.

• 422,666 queries answered by our Customer Services.

• 48-hour deadline to respond to customers' queries.

• 17,982 Client Partners have contributed their assessments, opinions and suggestions about our own brand products and the “with you” model.

• 214,000 Client Partners have used the app or website to manage their customised savings schemes.

• 27,000 new social network followers reaching a total of 248,000 followers.

• 21 Local Consumer Committees, comprised of Client Partners who debate, argue and define guidelines for the cooperative.

Do you know what EROSKI does for your health?EROSKI actively works for the health of its customers, helping them to follow a healthy, varied and balanced diet.https://vimeo.com/212719791

WITH YOU WITH YOU


We offer consumers new alternatives for healthier, more sustainable eating

consumersWE PLAY A KEY ROLE

consumers


The “with you” model has completely redefined our relationship with the consumer and has reinvented our identity as a consumer cooperative from a 21st century technology perspective.

There are over 7 million Client Partners who are EROSKI Club, CAPRABO, IF and FORUM SPORT card-holders and we place them at the heart of our strategy, nurturing a relationship that goes far beyond economic advantages and that opens up new ways of participating in the cooperative and sharing information and training that encourage healthy eating habits.

We accept the challenge set by our Client Partners to create more rational shopping with maximum quality for money in a more sustainable food chain that generates local wealth and boosts the value of diversity in our gastronomic culture.

EROSKI Club is also the basis for creating a more multi-channel approach. We are convinced that there will always be sound reasons for buying food in physical stores, and this will be closely linked to the shopping experience. We pay close attention to the growing use of online channels e.g. websites and apps, and are committed to a hybrid model of online shopping and the possibilities of collecting pre-prepared orders from one of our delivery points.

Our Client Partners demand that we provide maximum quality for money in a more sustainable food chain that generates local wealth and boosts the value of diversity in our gastronomic culture.

Over 7 million Client Partners

• 79% of “loyalty” sales to Client Partners.

• 260 million euros of savings for consumers, predominantly through personalised offers.

• In 2016, over 347 tonnes of sugars, fats and salt eliminated for improved nutritional content of EROSKI brand products.

• Over 15,000 interventions to guarantee food safety, including audits, microbiological and physiochemical analyses, and compliance with food technical files.

• We were the large-scale distributor with the best customer service for the fifth consecutive year. In 2016 we answered 422,666 queries made to our Customer Services.

• 17,982 Client Partners have contributed their assessments, opinions and suggestions about our own brand products and the "with you” model.

• 214,000 Client Partners have used the app or website to manage their customised savings scheme.

• 27,000 new social network followers, up to a total of 248,000 followers.

• 21 Local Consumer Committees, comprised of Client Partners who debate, argue and define guidelines for the cooperative.

Over the next few years, at EROSKI we want to be more competitive, sell more and “sell better”. We aspire to offer consumers a radically different proposition that helps them to follow healthier eating habits in their everyday life, and to feel part of our collective commit-ment to the sustainability of our planet.

At EROSKI we are enthusiasts of a gastronomic culture because societies insist on not trivialising the impor-tance of food obtain higher figures in terms of health and well-being. Our passion for healthy food is reflected in our next generation stores.

Achieving a closer link to our Client Partners is one of our main aims. Two years have passed since the launch of EROSKI Club and we have built a powerful tool that allows us to maintain more personalised relationships with each of our Client Partners, with savings schemes and new ideas such as customised nutritional assess-ment through our new “Ekilibria” programme, launched this year.

We will remember 2016 for the successful collaboration work on improving recipes in our gourmet EROSKI SELEQTIA range through tests performed by the Basque Culinary Center (BCC); we now have a collection of 177 gourmet foods.

Furthermore, the Nutritional Improvement Programme applied to our own brand products progresses year on year. In 2016 alone, we eliminated 347 tonnes of salt, fats and sugars from our own brand products.

2016 saw the high point of a plan that started years earlier to sell locally produced milk under the EROSKI brand in regions where we are a clear reference point: Galicia, the Basque Country, Navarre, Catalonia and the Balearic Islands. This reflects our commitment to supporting a diversified agri-food production frame-work and the development of the primary sector in the local areas around our stores.

We are progressing towards healthier, more sustainable food. We have succeeded in being the first certified distribution company that sells fresh fish with the MSC sustainability label. Another milestone that gives consumers a reason to visit our stores, the main aim of marketing for a new phase at EROSKI.

Eva UgarteDIRECTOR OF MARKETING

CONSUMERSCONSUMERS

Letter from the Director of Marketing


We are progressing towards healthier, more sustainable food.

Specialists in Fresh Produce

In 2016 we expanded our range of fresh produce by adding 580 new items to reach a total of 20,424 fresh food products on sale. All year round, we are stand out for the attention we pay to local production seasons.

NEW “EROSKI SELEQTIA” GOURMET RANGE

EROSKI SELEQTIA, our “gourmet” product range, celebrated its 10th anniversary in 2016 and we have recently regenerated the line.

We reviewed the recipes of the 177 “gourmet” products in the range using tests run by the Basque Culinary Center (BCC) and many have been improved in tastings in key areas such as texture, flavour, aroma, appearance or their ingredients. We have also used this anniversary as an opportunity to update its image.

The EROSKI SELEQTIA range increased its sales by 10% in 2016 and includes foods from 27 Designations of Origin and Protected Geographical Indications across Spain.

2016 saw the launch of “Ekilibria”, the new nutritional diagnosis tool for Client Partners.

2016 saw the launch of “Ekilibria”, a pioneering programme that uses new information technology to help consumers follow healthy eating habits.

EROSKI, as a consumer cooperative that has always been renowned for its work to train and inform consumers, has taken a new step forwards by putting advanced, customised nutritional diagnosis tools at the service of consumers and offering Client Partners a monthly report that compares their purchases with scientific recommendations for a balanced diet. This pioneering service includes customised recommendations, recipes and promotions that encourage healthy eating habits.

“Ekilibria” also has the support of the Spanish Scientific Society for Diet and Nutrition (SEDYN), the Spanish Diet and Food Science Society (SEDCA), the ‘5 a day’ Association that aims to promote the consumption of fresh fruit and vegetables, and the Familial Hypercholesterolemia Foundation (FHF).

Quality Assurance

EROSKI guarantees the quality and food safety of all the products on sale in its stores. This has been one of the bases of the company since its beginnings as a consumer cooperative and a principle that today is more relevant than ever.

In 2016, 290 suppliers were audited and, continuing the Quality and Sales Point Audits Plan, 12,586 microbiological and physiochemical analyses were performed to provide greater food safety. Furthermore, we ran checks on compliance with food standard files for 860 products.

290 suppliers were audited and 12,586 analytical controls performed to guarantee food safety.

Growth in consumption of ecological products

Our range of ecological fruit and vegetables now includes 150 different product types and 2016 saw a 20% increase in sales.

We also sell over 1,000 ecological food items, including dairy products, oils, cereals, wines and tinned food.

Foods from the Mediterranean diet

“With you” stores emphasise food categories that form the basis of the Mediterranean diet to offer consumers varied and balanced foods.

Our product range therefore includes over 20 varieties of select olive oils (including all the Spanish Designations of Origin), over 100 types of legumes (including the 9 D.O.), over 60 types of rice (including the 4 D.O.) and even up to 300 types of pasta.

Ekilibria, new pioneering customised nutritional diagnosis service.Programme that uses new technology to help consumers eat healthily.https://vimeo.com/202368293

CONSUMERSCONSUMERS


It helps you save

In 2016, we helped consumers make savings of 260 million euros. These savings were predominantly made through increasingly personalised offers and promotions.

Today we are capable of simultaneously processing over 30,000 sales offers that are differentiated by customer type. The aim is always to achieve customer satisfaction by generating significant savings and with greater overall efficiency in our operations.

DEUSTO/EROSKI Classroom

In 2016 we opened a DEUSTO/EROSKI Classroom as part of the University/Company Collaboration Programme.

The talent transfer agreement between EROSKI and the University of Deusto establishes a technological collaboration agreement between these two organisations for innovation projects aimed at maximising opportunities and business models that require large volumes of data to be processed to generate new solutions for customers.

Best customer service

For the fifth consecutive year, EROKSI received an award for having the best customer service in the large-scale distribution sector. The award was given by consultants Sotto Tempo Advertising who measure customer satisfaction across various sectors.

In 2016 we answered 422,666 queries made to our Customer Services. The company can be contacted via email and the various social networks in which it participates.

Participative management to improve our business proposal

Today, participation by our Client Partners for the continuous improvement of your “with you” store represents a constant force of innovation for business activity as it can be constantly adapted to the new expectations of customers in each store and the competitive environment.

In 2016, 17,982 Client Partners have contributed their assessments, opinions and suggestions about our own brand products and improvements proposed for their regular store.

Multichannel relationship

214,000 Client Partners regularly contact EROSKI via their own, specifically designed web space (www.eroski.es/club) where they can check the credit available on their card, obtain further customised discounts and find out how much they have saved to date.

Open to conversation

In 2016 we added 27,000 new followers to our social networks, up to a total of 248,000 followers: 199,578 followers on Facebook (7% increase), 48,857 followers on Twitter (42% increase). In total, we had over 1 million interactions with social network users, approximately 2,800 interactions per day.

The EROSKI Club programme is now two years' old and during this period it has completely redefined our relationship with the consumer and has reinvented our identity as a consumer cooperative from 21st century technology perspective Today it is a large social collective based on a distinctive identity of being a driving force behind a cooperative project and it places Client Partners at the centre of its business strategy.

The fundamental difference, that changes everything, is that EROSKI customers are also company members.

The profile of EROSKI members mainly consists of families with children who live at home and this group represents around 40% of the community. This profile uses the card most extensively across all the company's businesses, including the online supermarket. The second largest group is the over-65s, representing 25% of the total. These members are characterised by being preferred customers of their local supermarkets, by having a significantly lower purchasing volume but, in contrast, placing great importance on local products and nutritional quality, prioritising foods that are low in salt, sugar and fat.

We also have another customer profile (very young, recently left home, lives in single person dwelling) that is predicted to develop a growing importance over the next few years.

Client Partners represent 79% of sales

Two years since the launch of EROSKI Club

CONSUMERSCONSUMERS


We stand out for the high level of internal commitment to our collective project

workersWE ARE THE OWNERS OF THE COMPANY

workers


For a further year, the most characteristic feature of our internal culture is the high level of commitment to our collective project. We behave the way we do because we have our own identity, an identity that has developed over the years and that has its roots in an appreciation of the fact that we are owners of the company where we work.

In 2016 we had to navigate the departure of colleagues due to disinvestments in the hypermarket network. Each case has been handled with the utmost delicacy and with a responsibility to finding a fair balance between the parties involved. I would like to highlight these colleagues' integrity, professionalism and dedication during this process and preceding phases.

Over the past few years we have increased the resources invested in training people, thereby boosting the professional and personal development of our workers and encouraging cooperative work environments based on self-management, with an approach that emphasises the significance of feeling that you are an owner of the company where you work and a sense of responsibility to the collective project.

We will continue to explore this avenue, with further conferences on company management, in addition to the 4,302 conferences of this type organised to date, our “Fresh Produce Schools” that have been attended by

Letter from the Social Managing Director

over 500 people and run Butcher's, Fishmonger's, Deli Counter, Bakery and Greengrocer's training modules, and training for our store managers, who continuously help us to offer a better service.

I would also like to highlight the significant progress that has been made by the University/Company Talent Transfer Programme. We collaborate with numerous public and private universities, but I would particularly like to draw attention to the collaboration agreements signed with the University of Deusto and Mondragón Unibertsitatea, which focus on people training, technological transfer and the development of new value propositions for consumers.

Training all employees within the organisation to build a business proposal that satisfies customers is one of our strategic pillars for forthcoming years. The aim is to improve day after day.

EROSKI is a cooperative company that is comprised of two large communities: Consumer Partners and Worker Partners. The high level of internal commitment to the collective project is one of the most characteristic features of our corporate culture. We have our own, distinct, company model in which the workers are the owners of the company where they work under a participative management model. At EROSKI, 11,352 workers participate in the ownership of the company where they work.

At EROSKI, in line with the main cooperatives in the Mondragon Corporation, we have a more supportive wage scale with a remuneration range that ensures reduced differences between more operational positions and those in senior management with greater responsibility.

As a cooperative, any weighty decisions are debated and made in meetings representing the Member-Cooperatives, sometimes after holding extensive referendums in which all Worker Partners have the right to participate.

We are a model of a cooperative organisation that has shown great maturity and stability throughout its history. This history is based on the precedence of the collective over the individual, balancing the reality of the market economy with cooperative values and principles.

Workers are the owners of the company

• There are 33,162 workers, and 11,352 of these are members of the company where they work.

• Inn 2016, 311 new Worker Partners joined the cooperative.

• We dedicated 210,484 hours to the professional training of our work teams, a 20% increase compared to 2015.

• 68% of positions of responsibility are held by women.

• Our internal employment conditions support a work/life balance, with significant advantages for all workers.

• In 2016, 180 new workers joined our franchised store network to reach a total figure of 3,044 people.

Inigo EizaguirreSOCIAL MANAGING DIRECTOR

WORKERS WORKERS


Social inclusionIn 2016, EROSKI and GUREAK continued to support the first supermarket entirely managed by persons with disabilities, opened the previous year. The year closed with three supermarkets of this type open; they represent a reference point for social innovation by integrating people with disabilities into the workplace in franchised supermarkets, thereby helping to make this community visible in society, boosting their employability and emphasising the value of their skills. 40 people now work across the three supermarkets opened by GUREAK and EROSKI.

We are committed to peoples' developmentAt EROSKI, we view the personal and professional training of our work teams as key to progressing with the creation of high performance teams and a cooperative culture of self-management. In 2016, we dedicated 210,000 hours to training our work teams in professional qualifications, a 20% increase compared to 2015.

During 2016, 61% of workers took part in a training programme, and 470 workers (70% women) were promoted within their professional category.

Several programmes were run in 2016 to develop internal talent and professional training:

Franchise entrepreneurs

Our self-management cooperative culture perfectly matches the philosophy of entrepreneurs who are focused on creating their own company and are searching for support from distribution professionals and a trusted brand such as EROSKI.

In 2016, 3,044 people worked in EROSKI franchised stores, 180 joining this year.

Furthermore, at EROSKI we look for Worker Partners who want to have their own business; the cooperative supports and helps them to set up their own ‘with you’ store.

Self-management cooperative cultureThe “with you” commercial model instils greater levels of independence in teams of professionals working in each of the stores, with greater emphasis on new self-management tools.

A closer relationship between in-store teams and their Client Partners encourages a continuous improvement dynamic that means each store can be better adapted to the specific expectations of its own customers and to its competitive environment. The teams in each store, as owners of the company, participate in organising their work and have the independence to make their own decisions in the race to better meet their customers' expectations, at the same time as supporting a work/life balance for workers.

This advanced level of organisation and commitment by work teams is only possible in organisations with a high level of internal commitment, something that is inherent to the cooperative model.

The teams in each store have the independence to make decisions in the race to better meet their customers' expectations

EROSKI also collaborates with various programmes that work to integrate disadvantaged groups into the workplace. For example, in collaboration with the Red Cross in Aragon, 20 young people at risk of social exclusion were given professional training for work in a butcher's, fishmonger's or greengrocer's, and were also given customer service training.

Fresh produce school

In 2016 we consolidated the Butcher's and Fishmonger's training programme that was launched last year, started running initial classes on the Bakery and put the final touches to the design of the Deli Counter and Greengrocer's training programme Over 500 people attended the Fresh Produce School in 2016 and they received 67,000 hours of training.

SUMMA programme for managerial development

Created in collaboration with Mondragon Unibertsitatea, this programme aims to develop managerial skills and organisational management. It represents a fresh commitment to training as an engine that drives change and the construction of competitive advantages that are sustainable over time. The first class of around twenty Worker Partners will finish its training in 2017.

ORAIN Campus

During 2016, 545 people took part in this internal platform for training content and 15,822 hours of training were taught. The aim of the platform is to assist continuous training, particularly for managers and directors, and to encourage our own leadership style by aligning training with the needs of the business.

“With you” Customer Service Programme

In 2016, this programme organised over 10,500 hours of training for EROSKI workers. The aim of the programme is to train workers in key skills for an improved in-store customer service.

WORKERS WORKERS


A leader in equal opportunities

Work/life balance

As a cooperative organisation, EROSKI encourages workplace environments that permit workers to enjoy a work/life balance.

EROSKI also responds to the special needs of other personal projects in which its workers are involved and offers them the option of reducing their working day without any given cause while retaining the right to recover the full working day once the reduced period has ended, or offering voluntary and temporary leaves of absence, with job retention, for collaborative projects with NGOs or other personal development plans.

Furthermore, as a generally applied criteria for helping to achieve a work/life balance, continuous work schedules are set instead of split shifts that are less than 4 hours long.

Occupational health and safety

EROSKI's commitment to health and its worker collective is one of the brand's hallmarks.

To ensure occupational health and safety, EROSKI has its own Occupational Health and Safety Service established under the legal modality of a Joint Prevention Service that covers Occupational Safety, Industrial Hygiene, Ergonomics and applied Psychosociology.

In 2016, EROSKI continued the update launched in previous years and ran external audits on the risk prevention plans of the supermarket, platforms, headquarters, sports and perfume/cosmetics businesses and the company Vegalsa. Furthermore, to guarantee the risk prevention system was correctly implemented, internal risk prevention audits were also held on all businesses and, at each centre itself, scheduled inspections and emergency drills (with and without evacuations) were run and established action plans were monitored.

In terms of training, 72,000 hours were invested in basic risk prevention courses, specific training on work position risks and emergency responses.

Equality Observatory

EROSKI has run a permanent Equality Observatory for over a decade that ensures that the principle of equality is implemented throughout the organisation because we believe in the strength of people, in the transformational power of work and in equal opportunities for personal and professional development.

In 2016, we continued to develop this policy with 58 specific measures on equality, such as guaranteeing the correct functioning of the protocol established to prevent possible cases of workplace harassment and a confidential consultation service for referring any incidents.

Gender equality

Gender equality is embodied in the articles of association establishing EROSKI as a cooperative. 78% of EROSKI workers are women. We apply the principle of gender equality throughout all company policies, in all processes and across all levels of the organisation to guarantee express, tacit and manifest equal opportunities in both professional relationships and personal treatment.

EROSKI is the distribution company with the largest number of women in positions of responsibility, at 68%. Its Board of Directors is composed, on a parity basis, of three men and three women, and in the highest bodies of corporate governance in the cooperative, the Board of Governors and the Social Board, 64% of positions are held by women.

KREA Awards

The best initiatives of the year that are implemented under the self-management model by work teams in EROSKI stores receive a KREA Awards In 2016, 155 good practice submissions were received and 18 awards were given in the Customer Service, Involvement in the Social Environment and Team Work categories.

Internal communication

At EROSKI, internal communication has special significance because the workers and the owners are often one and the same person. More specifically, ownership of EROSKI is shared between 11,352 Worker Partners.

Internal communication is essential for decision-making in a cooperative and to drive forwards change and continuous improvement. We have several tools and different publications that provide information to all levels of the organisation, in addition to our own corporate intranet that can be used by all Worker Partners to access content of professional use and of interest to the company

During 2016, 60 internal information conferences were held, bringing together a group of over 5,000 Worker Partners to share, in a direct, approachable and participative way, the company situation and future plans for the cooperative.

We practice transparent internal communication because it is essential for decision-making in a cooperative and for driving forwards change and continuous improvement.

WORKERS WORKERS


We now have 512 next generation stores that offer an easier and more attractive shopping experience, with an increasingly varied range that encourages healthier, more sustainable eating habits

storesAT THE HEART OF OUR RELATIONSHIP WITH CUSTOMERS

To provide the most up-to-date image of the company, the business network data in this section do not include the hypermarkets that are pending transfer in the first six months of 2017.

stores


Stores inspired by our “with you” slogan

• EROSKI has a business network of 1,837 establishments, 1,427 in the food sector.

• EROSKI has 512 next generation stores, 26 hypermarkets and 486 supermarkets with a new business model inspired by the “with you” slogan.

• 50% of food sales are now in next generation stores.

• In 2016, we opened 57 new stores, the majority franchised stores.

• We launched a new app that reduces the time required for a weekly shop to 15 minutes.

• We now have 33 delivery points for online orders

• We established a new business model, the new RAPID retail brand of convenience stores

The accelerated transformation of stores in the network to the new “with you” business model means that we now have 512 next generation stores. They represent a third of our food business network and have been warmly welcomed by customers who have boosted sales in these stores by an average of 7%, reaching two digit growth in the fresh produce area.

Most refurbishments were focused in zones where we are market leaders and our retail brands are reference points in the market: the north and east of the Spanish peninsula, from Galicia to Catalonia, and the Balearic Islands.

In the remaining territories, we have driven forwards the development of our franchised store network, prioritising expansion into the following regions: Andalusia, Madrid, Castilla-La Mancha, Extremadura, Levante and the Balearic Islands.

In 2016, we gave a major boost to our multi-channel approach and now have 33 delivery points for online orders, under the options of “Click&Drive” for roads with circulating traffic and “Click&Collect” for urban areas, in addition to home delivery. We are progressing with a profitable business model that is inspired by a converging vision of and off channels that combines the use of both by the same customer.

2016 ends with an updated business network of 512 next generation stores, 26 hypermarkets and 486 supermarkets that offer customers an easier, more attractive shopping experience and that are highly specialised in fresh, local produce as the basis for healthier, more sustainable eating habits. They also provide more personalised customer service due to increasingly self-managed work teams in stores and the consolidation of EROSKI Club as a platform for building relationships with our Client Partners.

In 2016, including refurbishments and new openings, we added 173 establishments under the new business model inspired by our “with you” slogan, 9 hypermarkets and 164 supermarkets. During recent financial years, rather than just restructuring the network, we have implemented a radical turnabout in EROSKI stores as part of our search to set them apart from other competitors' brands, always offering more in terms of quality and customer service and improving the competitiveness of our prices.

We have a consolidated business network of stores in the north and east of Spain, from Galicia to Catalonia, many of which have been refurbished over the past three years. These stores have won us a solid market share of around 18% in these markets. Furthermore, in 2016 we started the process of converting 189 EROSKI supermarkets in the Balearic Islands into the “with you” sales model and this process will culminate over the next few years.

Letter from the Sales Network Managing Director

In 2016, we laid the foundations of future growth at EROSKI and will progressively resume the rhythm of opening our own stores to match the major boost that franchised supermarket openings have enjoyed over the past few years. In 2016, we also approved the expansion of a new, highly competitive convenience store model, the new RAPID retail brand; we will embark on expanding its network from next year onwards, working together with local franchised entrepreneurs. We have also advanced in our multi-channel approach with online supermarket websites and apps that have options such as home delivery, collection without leaving your car or from city centre collection points. We now offer 33 collection points for online orders.

I would like to take this opportunity to highlight the outstanding professional work, responsibility and commitment of the work teams who help to build EROSKI day after day. They are the real engines that are driving forward the changes we are experiencing at EROSKI. We are continuing to move forwards in the construction of our future.

Rosa CarabelBUSINESS NETWORK MANAGING DIRECTOR

STORES STORES


Next generation stores with increasingly varied rangesThe 512 next generation stores maximise EROSKI's new business policies to advance towards a radically different concept. This difference is characterised by an emphasis on healthier, more sustainable food, greater variety for consumers' freedom of choice based on renewed emphasis on fresh produce, a more developed gastronomic culture that values local products, and a more personal relationship with Client Partners, both in stores themselves and via new channels that are used to interact with the brand.

Basque Country

EROSKI originates from the Basque Country, where the company was founded 1969. Its business network includes 225 supermarkets, 21 hypermarkets, 16 petrol stations, 10 opticians, 86 travel agencies, 53 perfume/cosmetics stores and 20 FORUM SPORT sports equipment stores. Furthermore, it offers a home delivery service across the entire region.

In 2016, 600 new work positions were created, primarily as a result of adapting stores to the new “with you” business model that places greater emphasis on customer service, with new counters in the butcher's, deli counter, fishmonger's and bakery sections. 2016 also saw the opening of 3 new petrol stations and 3 new sports equipment stores.

Over 733,000 Client Partners, with 55,000 new members joining in 2016, represent 85% of sales in the autonomous community. EROSKI has over 10,000 workers in the Basque Country and over 70% are members of the cooperative.

EROSKI collaborates with over 2,000 suppliers in the Basque Country. It sells over 9,000 products and makes yearly purchases of around 600 million euros from Galician suppliers.

In 2016, EROSKI and its customers donated over 2,000 tonnes of food, representing the yearly food consumption of 3,000 people.

During the 2015-16 academic year, over 8,000 Basque schools participated in activities run by the EROSKI Foundation Food School.

Navarre

EROSKI opened its first supermarket in Navarre 45 years ago, in Alsasua. Today it has a business network of 81 supermarkets, 2 hypermarkets, 16 travel agencies, 3 petrol stations, an optician, 15 perfume/cosmetics stores, 4 FORUM SPORT stores and an online supermarket with a home delivery service across Navarre.

164,000 Client Partners are members of the cooperative, 17,000 new members having joined in 2016. In Navarre, EROSKI has 1,708 workers and approximately one thousand are members of the cooperative; one in eight members of the parent cooperative is from Navarre.

EROSKI has collaboration agreements with over 400 local suppliers, and of these 50 are own brand manufacturers. Over the past 5 years, the cooperative has exceeded 1 billion euros in purchasing, making it a vital partner in the sustainability of the agri-food sector in Navarre.

In 2016, EROSKI and its customers donate 202 tonnes of food via its “Zero Waste” programme and food collection campaigns, representing the annual food consumption of 306 people.

3,800 schools in Navarre participated in educational activities for healthy eating habits and a healthy lifestyle run by the EROSKI Foundation.

Aragon

In Aragon, EROSKI has a business network of 90 centres, including 56 supermarkets, 2 petrol stations, 5 travel agencies, 25 perfume/cosmetics stores, 2 FORUM SPORT stores and online stores. EROSKI has two logistics centres in the region that handle fresh produce and other foods.

In Aragon, EROSKI Club has 172,762 Client Partners with 21,000 new members joining in 2016. It has a work force of 1,176 workers.

EROSKI sells approximately 4,000 products from Aragon and, in 2016, the sale of fresh local produce increased by 12%, particularly in dairy, eggs, fruit and vegetables.

4,700 schools in Aragon participated in educational programmes run by the EROSKI Foundation on healthy eating habits.

Cantabria

EROSKI has 32 establishments in Cantabria, including 15 supermarkets. It also has a hypermarket, a petrol station in Castro Urdiales, 8 travel agencies 4 FORUM SPORT sports equipment stores, 3 iF perfume/cosmetics stores and an online supermarket.

It has a community of 73,128 Client Partners and 6,657 new members joined EROSKI Club in 2016. EROSKI has 549 workers in Cantabria, 61% of who are members of the cooperative.

Its commitment to local suppliers is demonstrated by the fact it sells over 1,300 Cantabrian products and collaborates with over 200 Cantabrian companies.

3,300 Cantabrian schools participated in the education programme for healthy eating habits and a healthy lifestyle run by the EROSKI Foundation.

La Rioja

In La Rioja, EROSKI has 13 supermarkets, a hypermarket, a petrol station, 2 FORUM SPORT stores, 7 perfume/cosmetics stores, and 7 travel agencies. It has 68,041 Client Partners and 509 workers; 67% are Worker Partners.

EROSKI works with around 200 local suppliers in La Rioja and sells over 1,300 local products, many with the “Foods from La Rioja” quality brand.

Over 900 schools in La Rioja participated in courses that are part of the healthy eating programme run by EROSKI in primary schools across Spain.

Do you know how long EROSKI has been in the Amara neighbourhood in San Sebastian?The EROSKI supermarket in Arco Amara in San Sebastian reopens following its refurbishment, with a greater emphasis on fresh, local products. https://vimeo.com/164063714

STORES STORES


VEGALSA - EROSKI has formed part of the EROSKI Group since 1998 and is the leading distribution business in Galicia. It also currently operates in the neighbouring communities of Asturias and Castilla-Leon.

CAPRABO was the first supermarket in Spain, founded in 1959 in Barcelona, and today is the EROSKI Group retail brand in Catalonia where it has 300 supermarkets, a hypermarket, a petrol station, 3 travel agencies, 7 perfume/cosmetics stores, a FORUM SPORT sports equipment store and an online supermarket.

Today, the EROSKI Group has 6,820 workers in Catalonia and over 1.2 million people regularly use their CAPRABO Customer card.

The EROSKI Group collaborates with over 1,320 Catalonia-based suppliers. 270 of these suppliers are agri-food SMEs and EROSKI sells over 34,184 of their products, showing clear support for a highly diversified agri-food sector.

CAPRABO has a mini-donations programme to guarantee “Zero Waste” in its stores. In 2016, it donated food equivalent to the annual consumption of 788 families and was backed by 250 local social work organisations.

Over 6,700 students participated in its “Choose Well, Choose Healthy” programme that teaches healthy eating habits.

Asturias

The EROSKI Group has 31 establishments in Asturias: 10 supermarkets, 1 cash and carry, 1 petrol station, 4 travel agencies, 10 perfume/cosmetics stores and 5 FORUM SPORT stores.

There are over 50,000 Client Partners of EROSKI Club in the autonomous community and 5,150 joined in 2016. In Asturias, the EROSKI Group has 580 workers, 44% of whom are members of the cooperative.

The EROSKI Group purchases from around 180 suppliers in Asturias, spending approximately 53 million euros per year.

Castile and Leon

In Castile and Leon, the EROSKI Group has 858 workers, 35% of whom are members of the cooperative.

EROSKI has 24 supermarkets, 1 hypermarket, 1 petrol station, 11 travel agencies, 15 perfume/cosmetics stores and 11 FORUM SPORT sports equipment stores. The EROSKI Club has over 147,000 Client Partners.

The EROSKI Group collaborates with 500 local suppliers and sells 2,415 regional products, with yearly purchasing of over 140 million euros.

In 2016, over 11,500 schools participated in various activities run by the EROSKI Foundation on healthy eating habits.

In 2016, in collaboration with its customers, EROSKI donated over 141 tonnes of food to deprived families in the autonomous community.

Galicia

In 2016, VEGALSAO-EROSKI celebrated its 60th anniversary as a reference point for Galician food distribution. Today, the EROSKI Group's business network in Galicia includes 312 establishments: 281 supermarkets, 4 hypermarkets, 6 travel agencies, 3 petrol stations, 18 cash and carries and an online supermarket.

It has 5,116 workers in Galicia with a community of 419,000 Client Partners of EROSKI Club.

EROSKI collaborates with over 600 Galician suppliers, 74% of whom operate in the agri-food sector. It sells over 3,000 products and makes yearly purchasing of around 400 million euros from Galician suppliers.

Over 38,000 schools in Galicia have participated in various activities related to healthy eating habits.

FROM LEFT TO RIGHT: Agustín Markaide, Chair of Eroski and Joaquín González, Managing Director of Vegalsa-EROSKI, during a press conference held to celebrate the 60th anniversary of the Galician company.

The Balearic Islands

The Balearic Islands is one of EROSKI's strategic regions. Following new openings, it now has 191 establishments across the islands, including its own and franchised stores. 22 of these stores now follow the next generation “with you” model and over the next year 18 more stores will be added to the model after their refurbishment.

In 2016, EROSKI opened its second petrol station on the islands and has expanded its online supermarket service to become the first to offer home delivery on the four islands.

In the Balearics, EROSKSI has a team of 2,441 workers and a community of 362,000 Client Partners after 76,000 joined EROSKI Club in 2016.

The cooperative's commitment to the Balearic Islands' agri-food sector is evidenced by its sale of over 1,200 locally produced foods and yearly purchasing of over 80 million euros.

In 2016, EROSKI and its customers donated 90 tonnes of food via its “Zero Waste” programme and food collection campaigns, representing the annual food consumption of 135 people.

Over 5,000 children in the Balearic Islands participated in various activities run by the EROSKI Foundation Food School.

STORES STORES


Andalusia

In 2016, EROSKI opened 8 new franchised supermarkets with total investment of over 1.2 million euros, creating 44 new work positions.

In Andalusia, EROSKI has 55 supermarkets, 9 hypermarkets, 6 petrol stations, 2 travel agencies, 17 perfume/cosmetics stores and an online supermarket.

In 2016, 32,450 new Client Partners joined EROSKI Club to reach a total of 260,219 members.

EROSKI sells over 5,000 locally produced foods in Andalusia, demonstrating a clear commitment to the diversity of food in the region. In 2016, EROKSI and its customers donated over 100 tonnes of food to deprived families.

Extremadura

In 2016, EROSKI opened its first supermarket in Extremadura, in Losar de la Vera, which can be added to a hypermarket in Cáceres, a travel agency and an iF perfume/cosmetics store.

In Extremadura, EROSKI has 107 workers, 70% of whom are members of the cooperative. The EROSKI Club has 35,000 Client Partners in Extremadura.

EROSKI collaborates with over a hundred suppliers in the region and sells around 600 locally produced foods.

Valencian Community and Murcia

In this Mediterranean region, EROSKI has 9 hypermarkets, a supermarket, 6 petrol station, 3 travel agencies, 9 perfume/cosmetics stores and 3 FORUM SPORT sports equipment stores. It has a community of around one thousand workers and 197,517 Client Partners after 30,245 new members joined in 2016.

EROSKI sells around 10,500 locally produced foods, adding 1,213 new items in 2016.

Castilla-La Mancha

In 2016, EROSKI opened two new franchised supermarkets in Castilla-La Mancha, generating 12 work positions. EROSKI has a business network of 4 supermarkets, 5 hypermarkets, 4 petrol stations, 3 travel agencies and an online supermarket home delivery service in Guadalajara and Toledo.

19,000 new Client Partners joined EROKSI Club to create a community of 130,000 members.

Having added 385 new foods from the region, EROSKI now has 5,300 locally produced foods on sale, a clear example of its commitment to the agri-food sector.

In 2016, EROSKI and its customers contributed to society by donating over 25 tonnes of food to deprived families, and 8,600 schools participated in educational activities run by the EROSKI Foundation to encourage healthy eating habits.

Madrid

In 2016, EROSKI reached a total of 10 franchised supermarkets in the Autonomous Community of Madrid. It also has an online supermarket service and a community of over 100,000 Client Partners of EROSKI Club after 10,000 new members joined in 2016.

Growth in franchisesIn 2016 we continued to expand our network of franchised stores with new 60 openings and total investment of 9 million euros, generating 180 new work positions. We anticipate that we will maintain this rate of opening stores, and expansion will focus on the regions of Andalusia, Madrid, Castilla-La Mancha, Extremadura and Levante.

We rapidly incorporated the successful initiatives that we developed in our network of next generation stores into the franchised network, aiming to achieve adequate shared profitability in a balanced relationship between the franchisee and EROSKI and to establish long-term relationships.

The “with you in franchise” programme has created a community of five hundred franchised businesspeople who receive specialised training from us in addition to customised services and advantages, detailed product information and advanced tools to maximise the management of their stores. The aim of the programme is to strengthen and improve the cooperative's relationship with its franchisees, and this aspect, in addition to the profitability of the business, has become the value that is most highly appreciated by the entrepreneurs who currently manage EROSKI franchised stores.

Employment

Our self-management cooperative culture perfectly matches the philosophy of entrepreneurs who are focused on creating their own company and are searching for support from highly experienced professionals in the distribution sector and a trusted brand. There are now 3,044 workers in the franchise network.

Financial support for franchised stores

EROSKI has several agreements with various banks to support current and future franchisees that offer advantageous financing conditions to open a new store and respond to the needs of its ordinary business.

Social innovation

EROSKI franchises are also an engine that drives social innovation. This year, in collaboration with the GUREAK group, we opened the third franchised supermarket that is entirely managed by persons with a disability. In 2015, we opened the first store of this type in Azpeitia, and the two new supermarkets are in Vitoria-Gasteiz.

Do you know the EROSKI franchises?EROSKI's relationship with its franchisees is the aspect, in addition to the profitability of the business, that is most highly appreciated by the entrepreneurs who currently manage EROSKI franchised stores.https://vimeo.com/218769542

STORES STORES


Commitment to a multi-channel approach

EROSKI has seen a 20% increase in customers using its online channel and this rise was driven by its refreshed, multi-channel approach. In 2016, several different initiatives were launched.

We worked towards converging our traditional and online businesses to offer consumers who want to use the on and off worlds interchangeably a solid shopping experience that is adapted to their needs.

EROSKI's online supermarket current offers home delivery services across the entire territories of the Basque Country, Navarre and the four Balearic Islands. It also covers large areas of the autonomous communities of Madrid, Catalonia, La Rioja, Cantabria, Galicia and Aragon, and the areas around the cities of Seville, Malaga, Guadalajara, Toledo, Caceres, Ceuta and Valencia.

We now have 33 delivery points for online orders

We ended 2016 with 33 delivery points for orders placed with the online supermarket. There are 18 in the Basque Country, 2 in Navarre, 4 in Galicia, 8 in Catalonia and one in Andalusia. 16 are “Click&Drive” points where customers collect their online order without needing to leave their car at locations close to main traffic routes and 17 are “Click&Collect” points in urban areas with high levels of pedestrian traffic where customers can collect their pre-bagged shopping and avoid queues and waiting.

These new collection options for online orders let consumers place their orders whenever they want via the website or app and collect them the same day, either in their own vehicle or by foot on their way home, and have been very well received. These new order collection services have helped the number of online supermarket customers increase by up to 20%.

New EROSKI Club app for Client Partners

In addition to the new app for online shopping, in 2016 EROSKI also simultaneously introduced a new EROSKI Club app that opens up a new channel that can be used to interact with Client Partners and that has advantages for both physical and online stores.

Among other functions, it can be used to check offers in your regular store, make shopping lists or find the closest EROSKI stores to the user's location. It is most frequently used to activate customised digital discount vouchers and to check offers, the balance of a user's money card or their Travel points.

The app was downloaded around 95,000 times in 2016.

New shopping app

In 2016, EROSKI introduced a new app for mobile phones and tablets that customers can use to do a weekly shop in just 15 minutes via new functions such as “My favourites”. In this section, customers can find all the products they have bought over the past three months (in both physical and online stores) and they can do their shopping by scanning a product bar code.

Orders can be placed up to three weeks in advance and are prepared shortly before delivery to guarantee maximum freshness of food. During this time, the new app lets users add products to orders that are being processed and change the day or time of the order delivery.

The app is free and was downloaded 95,000 times in 2016. It is available for Android and iOS operating systems with versions in Spanish, Basque, Catalan, Galician, English and German.

Expansion of online supermarket

In 2016, EROSKI expanded its online supermarket to Formentera, making it the only distributor to offer this service across all the Balearic Islands (Mallorca, Menorca, Ibiza and Formentera), and it includes both home delivery orders and delivery to port berths.

To match the range offered by the physical stores in tourism areas, in the Balearic Islands the online supermarket has a wide range of locally produced foods and a variety of international food.

Furthermore, in 2016 the EROSKI online supermarket expanded to the metropolitan area of Valencia. The first customers in Valencia have highlighted the quality of the fresh produce and the freedom of choice, with extensive selection of products from leading manufacturer's brands, our own brand and locally produced foods.

Madrid

Segovia

Valencia

Guadalajara

Toledo

Cáceres

Zaragoza

HuescaBurgosLeon

Malaga

STORES STORES


Diversified businesses

EROSKI TravelEROSKI Travel has a network of 160 offices, a website and a workforce of 453 people. In also has a division of 15 centres that specialise in business travel and organising congresses called TRAVEL AIR, which operates services across Spain.

EROSKI Travel forms part of the GEBTA (Guild of European Business Travel Agents) network, an exclusive consortium with over 850 points of sale in Europe. Since 2014 it has had a strategic alliance with Barceló Travel to strengthen the position of both companies in the market.

Forum Sport

FORUM SPORT closes 2016 with 52 establishments, 7 more than the previous year, and a presence in 10 autonomous communities, in addition to its online store that provides services across Spain. It has a solid loyalty programme with over 2 million Client Partners, representing 93% of sales.

iF perfume/cosmetics stores

2016 was a good year with significant achievements in terms of regenerating the business and a commitment to the most strategic stores. In 2016, iF perfume/cosmetics stores had 169 establishments.

Petrol stations

EROSKI added three new petrol stations in 2016 and plans to open up to 19 over the next few years in the regions of the Balearic Islands, Cantabria, Catalonia, the Basque Country and Galicia.

EROSKI petrol stations operate a constant savings policy, rapidly transferring fuel price reductions to consumers and always distinguishing themselves from their main competitors.

New RAPID retail brand for convenience storesEROSKI has established a new, highly competitive, convenience store business model under the new RAPID retail brand, its latest innovation in business formats.

These small stores are approximately 150 m2 in size and located in places with a high population density such as highly developed urban areas and tourism zones . The new RAPID stores stand out for having the greatest offer per square metre, responding to 800 different consumer needs with a range that includes 3,600 products at highly competitive prices. The full range in stores includes fresh produce, loose fruit and vegetables and pre-packaged meat and fish. Each store also has an oven to ensure it always has freshly baked bread on offer. The range of foods, drinks, personal hygiene products and perfumes/cosmetics consists of leading manufacturer's brands and EROSKI's own brand.

Store design is notable for the speed at which customers can complete their shopping, normally as they go to or return from work in urban areas, or at any time of day in tourism zones. The design is a response to the “lack of time” experienced by a public looking for convenience shopping, often due to unforeseen needs. The stores also have technological innovations to improve their energy efficiency.

During the design and pilot store phase, six RAPID convenience stores have been opened in Barcelona.

New franchise for small business owners

EROSKI aims to expand its new RAPID retail brand of convenience stores via franchises with small local business owners. Expansion will be simultaneously launched in Catalonia and the Balearic Islands, progressively advancing towards other metropolitan areas and coastal tourism zones.

The RAPID franchise is based on very close, frequent interactions with customers, where the shopkeeper directly manages their own business with the backing of highly experienced EROSKI professionals and a trusted brand.

Profit from the first RAPID stores has exceeded forecasts established in the viability plan. At EROSKI, we view the franchise as a long-term agreement with local business owners and provide them with full consultation services.

STORES STORES


We aim to create the most efficient value chain possible based on maximum customer satisfaction

value chain

value chain


We constantly innovate throughout our value chain with projects that cover negotiations with suppliers and their options when accessing raw materials markets, building a more personal relationship with our Client Partners and all commercial and logistics processes.

We aim to radicalise the different nature of our stores and to improve the competitiveness of our business in a highly competitive Spanish market. We want consumers to choose us because we offer them better options for healthy eating habits and more sustainable consumption, defining a value chain that is open to manufacturer's brands, our own brand and the vast diversity of locally produced foods in the nearby surroundings of each of our stores.

We continue to strengthen both our international alliances, representing the largest purchasing alliance in the world, and our purchasing alliances in the Spanish market. Today, this is a key aspect that boosts our competitiveness and improves the quality of life of our consumers via new savings options. In 2016, we helped families make savings of over 260 million euros through increasingly customised offers and promotions.

At the same time, we continued in our commitment to supporting diversity in the agri-food production framework and in 2016 added over 2,727 new items to our range, reaching a total of 23,791 foods produced in the areas surrounding our stores. Many of our customers now consider us their preferred brand for buying locally produced food. EROSKI and its customers share this commitment to drive forwards a local, sustainable and highly diversified agri-food sector.

VALUE CHAINWe improved our competitiveness

• We collaborated with over 4,600 agri-food suppliers, driving forwards diversification in the agri-food sector.

• We now have 114,390 items on sale in 2016.

• We introduced 2,727 new local products and now have 23,791 foods on sale that are produced close to our stores.

• We added 174 new small producers to our “SMEs/EROSKI Pledge” programme and now have 2,784 local suppliers.

• We launched 260 new own brand products, the result of innovation and the Nutritional Improvement Programme.

• We have 22 logistics platforms covering 360,000 m2 that handle over a million boxes every day.

• Improvements to the value chain over the past few years have led to a 27% improvement in our logistics efficiency.

The EROSKI value chain is orientated around providing every consumer better value, greater freedom of choice and lower prices. In 2016, we continued to develop a large number of projects that aimed to improve our competitiveness, constantly reviewing the definition of the processes we manage to deliver the best commercial offer to consumers and working on the continuous improvement of our daily operations.

More specifically, in 2016 we reviewed our shopping model and developed new abilities in our approach to defining our ranges, setting the most appropriate and competitive prices and managing the multiple promotions we offer our customers. In addition, we further developed the continuous improvement of our sales and supply processes, from the supplier to the consumer, guaranteeing that these abilities are fully applied across our stores.

Adapting the business proposal and consolidating our network of stores required restructuring our logistics and transport map. This restructuring helped us to achieve greater overall efficiency, by applying ranges that give customers greater freedom of choice, reducing unnecessary stock in stores and platforms, eliminating errors and reducing total operating costs. This has

Letter from the Resources Managing Director

ensured a business policy that involves a more personal bond with our Client Partners and that adapts to meet their needs, helping us to improve our customer service in 2016, once again.

Operating income has improved by over 120 million euros over the past four years, an outstanding level of progress. Thanks to this, following a highly challenging period, we are back on the path to profit, marking the start of a new phase. Furthermore, we have met all of our commitments to financial institutions to amortize debt and now have a stable financial horizon that will allow us to develop our strategy over the next few years.

Javier AmezagaRESOURCES MANAGING DIRECTOR

VALUE CHAIN VALUE CHAIN


Inspired by the “lean” method

We continue to move forwards in our implementation of the “lean” method across various commercial processes, achieving significant savings in terms of time and continuously improving key indicators in the range, price and promotion processes.

Innovations in the supplier collaboration framework

In 2016, we formed a new team that specialises in supplier collaboration projects, based on 10 action lines that start with demand forecasts and cover areas such as managing adding/cancelling items, promotion management, more efficient provisioning, receiving goods, administrative processes and information exchange systems.

Efficiency in the value chain to boost our competitiveness

We boost our competitiveness by offering the best value for money with an offer that stands apart for its contribution to healthy eating habits and more sustainable consumption. This commercial competitiveness is based on a highly efficient value chain that makes constant progress in its continuous improvement circles.

Our value chain is orientated around customer satisfaction with an increasingly personalised offer, greater freedom of choice and greater savings when shopping. The value chain is open to leading manufacturer's brands, own brand suppliers and a wide range of small local suppliers. We aim to create the most efficient value chain possible based on the satisfaction of our customers. These are confident steps towards a more profitable EROSKI that focuses on its strengths.

In 2016, numerous advances were made in improving efficiency. One particular highlight was the launch of Project Horizon. This innovative project synchronizes the provision of stores, platforms and suppliers that work to meet one target: in-store sales. In-store sales have the final say; the need for an item in a store is automatically passed along the whole value chain.

In 2016, we also introduced a new automated model for issuing store orders on the Elorrio (Vizcaya) platform, automating 50% of its traffic, and centralised our activity to the nearby Vitoria-Gasteiz platform.

The automated platform in Mallorca saw an increase in automated processes related to fruit and vegetable orders, and we restructured the transport of non-food products. This platform processed an average of 54,000 boxes per day and its 10,000 m2 installations handle all the fresh produce distributed by EROSKI in the Balearic Islands.

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SEGMENTED MARKETING

HOME DELIVERY

CLICK & COLLECT

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ONLINE WEBSITE APP

SUPPLIER PARTNER

SUPPLIER EROSKI

AECOC STANDARDS

CONTINUOUS ADAPTATION OF COMMERCIAL FORMATS

MANAGEMENT BY CATEGORY, SOLUTIONS FOR CUSTOMERS

ALLIANCES PURCHASING HEADQUARTERS

IN-STORE SELF-MANAGING TEAM

ADMINISTRATIVE MANAGEMENT

PRODUCTION

The EROSKI value chain

MANUFAC-TURER'S BRAND

SUPPLIER

LOCAL SUPPLIER

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NEW PRODUCT R&D

TRADE/MARKETING COLLABORATION

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Efficient logistics

Investment, restructuring the logistics map and automating processes in our platforms over the past few years have led to a 27% overall improvement in logistics efficiency along the whole supply chain.

Furthermore, a higher rate of automated processes helps to eliminate overexertion by workers and to prevent and reduce workplace accidents.

Map of logistics platformsEROSKI's logistics network is comprised of 22 platforms: 12 fresh produce, 9 food and 1 non-food. It also has 6 transit facilities. Its map of logistics platforms and facilities covers 360,000 m2 and provides highly efficient logistics coverage to the current business network, handling up to a million boxes a day.

The logistics platforms in Madrid, Elorrio (Vizcaya), Zaragoza and Mallorca have a high level of automation making it possible to increase the range of products to offer consumers greater freedom of choice and to shorten the time between picking and availability in stores for greater specialisation in fresh produce and in seasonal products in particular.

Supply chain processes

These processes are based on constant communication, a commitment to transparency and collaboration between manufacturers and distributors for better planning.

In 2016, we hit a significant milestone in improving the efficiency of our entire value chain. By exchanging know-how with our suppliers and working with advanced planning tools, we succeeded in synchronizing processes along the entire supply chain, from the producers to each of the stores, working together towards one sole sales forecast that is established by customer behaviour in each store and succeeds in synchronizing the next flow of goods to our logistics platforms and stores.

We are swiftly advancing towards a supply chain that diversifies the service model according to the forecast rotation of goods.

More sustainable transport model

The new transport model that was implemented two years ago has led to changes to all route planning, from suppliers to platforms, and local-level distribution to each to our stores.

This management system (TMS) optimises route planning and monitoring, improves the quantity of goods fitted into transport modes and reduces routes, driving time, kilometres travelled and fuel. This new transport model has also reduced CO2 emissions by 5.4 tonnes, a further example of EROSKI's commitment to reducing the environmental impact of its business activity.

A CoruñaKortederra

AgurainImarcoain

FRESH PRODUCE

FOOD

NON-FOOD

TRANSIT FACILITIES

Menorca

Mallorca

Ibiza

Malaga

Seville

Bailén

M50Ciempozulelos

Picasent

Murcia

Zaragoza AbreraCiencies

Zubieta

GasteizElorrio

Sigüeiro

Vigo



Cooperation agreement with DIA GroupWithin the Spanish market, we continued to strengthen the cooperation agreement we established with the DIA Group last year. The aim of this agreement is to find new efficiency techniques that are transferred to consumers through lower prices.

Certified social responsibilityWe are the only Spanish distribution company that has its Registered Office and Purchasing Centre certified with the SA8000 Social Accountability standard, which supports employment rights, corporate social responsibility and social dialogue, in addition to anti-corruption measures for supplier and contractor management.

ALIDIS, the largest European purchasing allianceThe ALIDIS international alliance represents the largest European purchasing alliance and is comprised of EROSKI, the ITM Group (France), EDEKA (Germany), COLRUYT (Belgium), CONAD (Italy) and COOP (Switzerland) who together, based on the value of representing independent companies, share a long-term strategic vision.

Its aim is to offer European consumers a wider range of products for greater freedom of choice and lower prices while expanding business opportunities for our suppliers.

Together, turnover by ALIDIS totalled 140 billion euros and it operates its business activity in 8 European countries (Germany, Belgium, Spain, France, Italy, Switzerland, Poland and Portugal).

The alliance also represents a meeting point for partners as they search for synergies through the exchange of knowledge in fields such as sustainable consumption, quality management, store formats and collaboration programmes with small local producers.

Environmental and social guaranteesEROSKI includes environmental guarantees in its product offer and collaborates with suppliers that have a responsible approach to the sustainability of natural resources.

WWF collaborates with EROSKI on various projects related to the sustainable use of fishing grounds, improving energy efficiency and the promotion of more responsible consumption.

EROSKI also sells products with wood sourced from sustainable forests with the FSC (Forest Stewardship Council) label. Our full range of kitchen/toilet rolls/ tissues, a garden furniture collection and a range of own brand stationery all have this label.

At EROSKI we collaborate with the Fair Trade certification initiative, an international certification system that covers products in the supply chain from the producer to the final consumer and guarantees compliance with social, economic and environmental Fair Trade criteria.

EROSKI was the first distribution company to market Fair Trade products in Spain and today it sells a range of coffee, cocoa, tea and sugar in addition to various textiles.

We are firmly advancing into a new stage that is focused on the competitiveness of our business activity, building a new EROSKI from our strengths that now has 512 next generation stores.

Remaining loyal to our mission as a consumer cooperative, we aim to offer consumers products that improve their quality of life, with a commitment to encouraging sustainable consumption.

We are renowned for contributing to a more sustainable agri-food sector, and offering a sales channel to thousands of small producers who have a high impact on employment levels, rural development and protecting natural environments. We want to continue to maximise this difference because we believe that diversity is a value that should shape our future.

In a highly competitive environment, where raw materials markets are global and the leading manufacturer's brands operate at a world level, we continued to consolidate ALIDIS as the largest European purchasing alliance, also strengthening our alliances in the Spanish market. In both cases, the aim is to improve efficiency, thereby offering consumers the best prices in the market, helping to increase their purchasing power. In 2016, we helped families make 260 million euros of savings via increasingly personalised offers and promotions.

I would like to highlight our collaboration in 2016 with the Basque Culinary Center (BCC) on relaunching SELEQTIA, the “gourmet” EROSKI own brand range, which celebrated its 10th anniversary. In 2016, all its recipes were reviewed in tests performed by experts at the BCC, the pioneering Gastronomic Science Faculty.

We will also remember 2016 for successful work on becoming the first distribution chain certified to sell fresh fish with the MSC sustainability label. It represents an endorsement of our renowned Sustainable Fishing Policy, which involves supporting fisheries with the most environmentally-friendly approach to the marine ecosystem, the use of sustainable fishing techniques and transparent labelling and communication with consumers. This is one step further in our proposal to offer new alternatives to consumers to encourage healthier eating habits and more sustainable consumption.

Beatriz Santos SALES MANAGER


Letter from the Sales Manager


First distributor certified to sell sustainable fresh fish with the MSC labelIn 2016, EROSKI became the first retail distribution chain in Spain to pass an audit by international organisation the Marine Stewardship Council (MSC) to be able sell fresh fish from sustainable fishing grounds.

Certifying EROSKI fishmongers represents an important leap forwards in the implementation of our Sustainable Fishing Policy which is committed to marketing fresh fish from fisheries that have the most environmentally-friendly approach to the marine ecosystem, the use sustainable fishing techniques and transparent labelling and communication with consumers. This is one step further in our proposal to offer new alternatives to consumers to encourage healthier eating habits and more sustainable consumption.

This certification is the result of a project launched in 2010 with WWF; the certification of EROSKI fishmongers has been progressive and it now has 348 certified counters and 6 fishing logistics platforms, in addition to 2,160 trained workers in these fishmongers. Over the next few years, we will continue to expand the MSC certification, so that EROSKI's more than 700 fishmongers are all able to sell certified sustainable fish.

In the forthcoming year, we will start to sell cod, Cantabrian anchovies and albacore tuna with the blue MSC sustainable fishing label and the cooperative plans to progressively add new species.

EROSKI Sustainable Fishing PolicyPreserving the seas and oceans, and protecting their biodiversity within a framework of the rational use of marine resources represents, one of the United Nations' Sustainable Development Goals (SDG) established in the 2030 Agenda for Sustainable Development.

At EROSKI, consistent with being a consumer organisation and socially responsible distribution company, we are committed to selling sustainable fishing products in the knowledge that this is the ideal value proposal to help offer consumers options for a healthier, more sustainable lifestyle.

Principles and commitments in the EROSKI sustainable fishing policy01. Sustainability of its commercial offer.

02. No trading illegally fished products.

03. Respect for minimum sizes and pro-active support for establishing larger minimum sizes than those currently in place.

04. Commitment to sustainable fishing techniques

05. Commitment to sustainable products and certificates, such as the MSC (Marine Stewardship Council) certificate for extractive fishing.

06. Commitment to associations and local suppliers closest to our stores.

07. Minimisation of environmental impact along the whole fishing supply chain.

08. Suppliers that comply with and respect the fundamental rights of fishing workers according to Convention 188 of the ILO on Work in Fishing and the SA8000 Standard for social accountability.

09. Transparent labelling and communication with consumers.

10. Listening to and collaborating with the entire fishing sector and participating sectors.

11. Providing information and training for consumers in the area of sustainable fishing.

12. Governance system, with effective control and audit measures, that consolidates the practice of this Sustainable Fishing Policy at EROSKI.

We drive forward the local agri-food sector in all its diversityEROKSI has 9,317 suppliers and of these, 4,603 are commercial suppliers. Over 50% of its suppliers are small local producers with who we have a purchasing and provisioning policy that is adapted to their scale and the particular nature of their product.

EROKSI drives forwards an agri-food sector that bases its sustainability on the diversity of its production framework as a key element for contributing to the economy, culture and the environment. Our cooperative convictions are what inspire us to make this commitment to diversity, create collaborative environments and work with a large number of suppliers.

In 2016, we added 2,727 local products to our range of foods produced in the areas surrounding our stores to create 23,791 unique items. Each has a story to tell about exceptional raw materials, unique locations and special production methods.

We continued with several continuous campaigns to valorise food through knowledge about foods prepared in the area and to re-introduce them as an extra option for the weekly shop because they are products that support the local environment and are more sustainable because they are produced closer to their place of consumption.

BCC EROSKI Saria Award

The BCC EROSKI Saria Award is organised in collaboration with the Basque Culinary Center and aims to recognise culinary creations that highlight gastronomic innovation with a local product. The award recognises the work of chefs who promote and use specific varieties that are part of the cultural and gastronomic wealth of every region in Spain.

We support a sustainable dairy sector

In 2016 we concluded a project that was launched several years ago and that aimed to offer consumers milk produced in their region, thereby offering clear support to sustainability in the dairy sector. This initiative represents a more advanced response to the pledge made by EROSKI last year when it signed the Stability and Sustainability in the Dairy Sector Value Chain Agreement introduced by the Ministry for Agriculture, Food and the Environment.

EROSKI bases its relationship with its dairy suppliers on trust, expressed through stable, long-term agreements that offer farmers stability through sales volumes for sustainability along the whole dairy value chain. EROSKI sells locally produced milk under the EROSKI brand in Galicia, the Balearic Islands and Catalonia, and in 2016 added the Basque Country and Navarre to this list; milk sold under the EROSKI brand is produced in Spain in all other regions. All our milk varieties sold with the EROSKI brand have the Sustainable Dairy Product (SDP) label.

Certifying the origin of milk and its traceability until it reaches the consumer is a further guarantee of product quality and consumers can trust that they are buying a product linked to their region and are thereby contributing to the sustainability of their nearby raw materials sector.

Do you know who won the 5th BCC EROSKI Saria Award?Winning chef Jesús Villarejo cooking his recipe “Cod, peas, roasted garlic and honey”, which he made at the Natural Chef Cooking School in Ciudad Real.https://vimeo.com/194328591

Would you like to know how we did it?EROKSI has been certified by the MSC to sell fresh fish with its sustainability label.https://vimeo.com/218591938



Contributing to a fairer, more supportive and more sustainable society with higher levels of health and well-being are part of EROSKI's mission as a consumer cooperative

social change

social change


Social change through business activity is one of our cooperative aims. EROSKI, as a consumer cooperative, is a collective project orientated around the consumer and society. This is why we develop activity in four areas that illustrate our commitment to society: consumer information, promoting healthy eating, sustainable consumption and action to support those people whose need is greatest.

Today, one of the largest problems we face as consumers is the dramatic change in our eating habits, which is leading to public health problems related to high rates of heart disease, diabetes, high blood pressure and excess weight or obesity. A balanced diet and healthy lifestyle are essential to levels of well-being in society at an individual and collective level.

Therefore, in 2016 we introduced the new “Ekilibria” programme that gives users a personalised nutritional diagnosis and additional information such as menus, recipes and recommendations for a healthy lifestyle. This pioneering programme puts new information technology at the service of users to help them to follow healthy eating habits. “Ekilibria” was a priority of the Consumer Partners who participate in the cooperative. It represents further progress in addition to other, now firmly established activities, such as the EROSKI Foundation Food School, which aims to give consumers and the younger generation clear, simple guidelines for eating a balanced diet and living a healthy lifestyle. “Ekilibria” also represents a step forwards along our long path towards training and informing users via the EROSKI CONSUMER platform.

The changes seen in EROSKI over the past few years have also touched on its capacity for contributing to society. Today, EROSKI is more prepared than ever to better contribute to a fairer, more supportive, more sustainable society with higher rates of health and well-being.

We are a collective project, open to society

• We celebrated 20 years of collaboration with the Food Bank. We donated over 8,200 tonnes of food, equivalent to the yearly food consumption of 12,386 people, thanks to our “Zero Waste” pledge and food collection campaigns

• EROSKI CONSUMER established itself as the leading method of communicating information to consumers with 200,000 downloads per day.

• Over 187,000 participants in activities run by the EROSKI Foundation Food School.

• In 2016, the “Eroski Circular Economy” programme succeeded in recycling 32,168 tonnes of cardboard, plastic, electrical and electronic appliances, batteries and energy storage devices, lamps and fluorescent lights.

• In collaboration with our customers, we succeeded in collecting 100,000 euros through various campaigns to support disadvantaged groups.

SOCIAL CHANGE SOCIAL CHANGE


la revista del socio consumidor

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Publicidad de los alimentos:¿realidad o fi cción?

Año XLI - Época IV - Nº 205FEBRERO 2016 • www.consumer.es

alimentación salud

Luz: un bien de lujoBebés con huella digital

En forma y sin salir de casaRelación sana de pareja

¿Comes tan bien como crees?Etiquetado de alimentos

bienestar


???alimentación salud

Año XLI - Época IV - Nº 206MARZO 2016 • www.consumer.es

Sabores con tradición

El biberón perfectoUn premio a la maternidad

Insectos para comerEl desayuno: el rey de las comidas

bienestar

Cuando el sueño paralizaInternet no es el remedio



Año XLI - Época IV - Nº 208MAYO 2016 • www.consumer.es

bienestar

Salud cardiovascular

en peligro

Purifi car para respirarPagar deudas: cuestión de estrategia

Estimular la memoriaDermatitis atópica

Mitos que no alimentanSeguridad en laslatas de bebida



Espacios públicos contaminados: ¿somos el problema o la solución?

Ciudades que roban años de vidaCompartir coche

Lágrimas que alivianJabones de elaboración artesanal

Hamburguesas vulnerablesConsejos para bajar el colesterol

Año XLI - Época IV - Nº 213NOVIEMBRE 2016 • www.consumer.es

bienestar

CONSUMER.ES

In 2016, our consumer information web portal CONSUMER.ES had 6 million visits a month, consolidating it as one of the leading online media outlets in Spain. A balanced diet, a healthy lifestyle, pets and infant care are, year after year, the most searched subjects. Furthermore, it has over 4,500 recipes with photos and videos of dishes, and the option of searching by ingredient or nutritional aspect.

In 2016, CONSUMER.ES had over 73 million accumulated visits and over 10,000 new members signed up for its information bulletins.

The internal editorial team at the EROSKI Foundation ensure it is non-biased and makes a valuable contribution to consumer information and training; the team extends to a large external network of expert collaborators on subjects such as economics, health, psychology and sociology.

EROSKI CONSUMER Magazine

The print version of EROSKI CONSUMER has been providing consumer information for over 40 years and issues 180,000 copies per month. Its studies and consumer surveys, the practical nature of its reports and advice for a healthier lifestyle and consumer habits are part of its great appeal.

Its leading reports published in 2016 were as follows:

• January 2016: Guide to buying pizza. In depth: new developments in nutritional labelling that go unnoticed.

• February 2016: Surimi and substitutes. Food advertising.

• March 2016: Drinking chocolate. Designations of Origin.

• April 2016: Bags of dried fruit and nuts. Food scares, who is looking out for us?

• May 2016: Bags of crisps. Cardiovascular health in figures.

• June 2016: Melba toast. Social networks and children.

• July/August 2016: Tinned tuna. Overweight and obesity, trends.

• September 2016: Legumes. Travel with rights, travel safe.

• October 2016: Ready-made pastry dough Nutritional labelling, a duty to inform.

• November 2016: Drinkable yoghurt. Littering, making the streets dirty.

• December 16: Elver. Eating frozen vegetables.

For consumer informationAt EROSKI we are convinced of the value of consumer information as a key element for defending and protecting consumers' interests. We also believe in the importance and power of the consumer, who can use their daily shopping decisions to condition practises in production sectors and distribution channels.

As part of our policy to train and inform as a consumer cooperative, we have several publications that reach 7 million readers each month.

Our publications reach 7 million readers each month.

Open to conversation

In addition to the EROSKI corporate profile on social networks, the editorial team at EROSKI CONSUMER is also open to conversation with our followers on Facebook, Twitter and Google+ and we have over 81,000 followers across these three channels (44,294, 35,841, and 1,313 respectively).

EROSKI Club Magazine

The EROSKI Club magazine is an exclusive publication for Client Partners and is issued monthly; it contains culinary information and recipes for healthy eating based on seasonal products. It also contains exclusive offers and promotions for Client Partners.



For healthier eating

6th Food School Conference

In 2016, the EROSKI Foundation celebrated its 6th Food School conference, under the heading "A Balanced Diet". Where are we and where are we going? What will nutrition offer us in the future? The conference aimed to address, analyse and debate the forthcoming challenges faced by our society in relation to nutrition and healthy eating.

Educational Programme on Food and a Healthy Lifestyle

The EPFHL programme run by the EROSKI Food School aims to make children of between 9 and 12 years of age, and their family environment, aware of the importance of eating a balanced diet and following a healthy lifestyle through teaching units that are offered free to all education centres in Spain. Nearly 200,000 school children in primary education centres across Spain have taken part in the Educational Programme on Food and a Healthy Lifestyle over its four years.

All pedagogic materials were prepared by a team of technical experts on nutrition and psychopedagogy and included active primary school teachers, in accordance with guidelines by the Ministry of Education. Furthermore, other organisations such as the Basque Culinary Centre, Unicef, WWF and the Spanish Heart Foundation have collaborated with this programme. Students learn to do a healthy food shop, are taught about the origins of foods and their properties, create balanced menus, etc. Over 1,300 workshops were run in 2016 and they were attended by 31,000 school children.

The programme has won numerous awards, including the NAOS award from the Ministry of Health and Consumer Affairs, the “El Chupete” award for creative quality and the values transmitted to children, the “Premio Ciudadanos” award in the category of Health and Quality of Life and the Sello Gosasun award from the Basque Innovation Agency.

Nutritional habits under examination

We support the study on Eating Habits and the Nutritional Condition of the Spanish Population (ENPE). This is the most thorough research ever performed in Spain and can be used to assess eating patterns and plan sustainable action that will lead to improvements in eating habits and lifestyles. Run by the EROSKI Foundation Food School, the ENPE Study saw participation from over 6,800 people in all the autonomous communities and produced an up-to-date diagnosis of the eating habits and state of health of the Spanish population. It highlighted the increasing prevalence of obesity across all age groups, reaching 61% in people between 25 and 64 years of age.

Scientific Committee

The EROSKI Foundation Scientific Committee is comprised of Spanish university professors, members of various associations related to the fields of health, food science and nutrition, and experts in gastronomy and the culinary arts. It represents an advisory body that defines EROSKI's and the EROSKI Foundation's medium and long-term strategy to meet their commitment to healthy eating. Decisions such as the implementation of nutritional traffic lights, eliminating partially hydrogenated vegetable fats and the plan to reduce fat, sugar and salt from our own brand products were made by EROSKI following consultation with the Scientific Committee.

Imagine Food Award

900 school children across Spain were entered for this award that aims to promote healthy eating habits in childhood. Aimed at students between 6 and 12 years of age, the competition awards the best drawings created on this subject.

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Do you know what conclusions were drawn by the 6th EROSKI Foundation Food School Conference?According to the ENPE Study “Study on Eating habits and the Nutritional Status of the Spanish Population”, 61% of the adult Spanish population is already overweight or obese.https://vimeo.com/190541074



Do you know the “Ugly Fruit” campaign?EROSKI ran a social awareness campaign on food waste to promote responsible consumption by selling “ugly” fruit and vegetables that did not comply with established appearance standards but that had the same quality in terms of flavour and nutritional properties.https://vimeo.com/188950697

“Zero waste” Pledge

In 2016, we celebrated 20 years of collaboration with the Food Bank. During 2016, EROSKI and its Client Partners donated 8,200 tonnes of food to disadvantaged groups. This is equivalent to the annual food consumption of 12,386 people. 5,600 tonnes corresponded to the “Zero waste” programme that EROSKI launched to guarantee that no food that is suitable for consumption is thrown away.

“Solidarity stars” campaign

EROSKI and its Client Partners have raised over €100,000 through the “Solidarity stars” campaign. This initiative was run over Christmas and, by buying a Christmas decoration for the symbolic price of a euro, customers helped to raise funds for three social initiatives: help for children, improving the quality of life of the elderly and assistance for refugees. The idea came from one of our Worker Partners and was a great success; the funds raised were distributed according to a vote held by the Client Partners who chose these three areas of social aid. Funds were distributed with the collaboration of three charity organisations: ACNUR, UNICEF and the Friends of the Elderly Foundation.

Social inclusion

For over a decade, EROSKI has collaborated with organisations that work for a more inclusive society, including ONCE, DOWN ESPAÑA and COCEMFE.

For a more cohesive society

“Ugly fruit” campaign against food wasteIn 2016, EROSKI collected over 800 tonnes of “ugly” fruit and vegetables as part of a campaign run in EROSKI stores to promote the consumption of these foods. “Ugly” fruit and vegetables do not meet established appearance standards but have the same levels of quality in terms of flavour and nutritional properties.

The aim of this campaign is to raise social awareness about food waste and to promote more responsible consumption.

Thirteen varieties of fruit and vegetables classified as second rate due to their appearance or size, but that had full nutritional and organoleptic quality, were offered to consumers with price discounts of up to 50%. Their origins were varied and although most were from Almería (courgette, tomato, pepper and aubergine) and Levante (orange, tangerine, lettuce and persimmon), the range also included apples from Lleida, carrots from Valladolid, garlic from Cuenca, potatoes from Álava and onions from La Mancha. The items that sold the most (in kg) were oranges, potatoes, tangerines and courgettes.

The awareness campaign had far-reaching effects; it also made an impact on the internet, with 1,347,353 impressions and 148,267 total engagements.



Por el medio ambientecada acción cuenta

AHORA ES EL MOMENTOCAMBIA POR EL CLIMA

Caprabo se suma al apagón contra el cambio climático

APAGA LA LUZ EL SÁBADO 19 DE MARZO DE 20:30 A 21:30#horadelplaneta horadelplaneta.es

Circular economyAt EROSKI we work based on the logic of the Circular Economy, which aims to recycle and reuse by closing financial flows and the flow of resources, reducing the input of raw materials and recovering waste. To achieve this, we develop inverse logistics processes, applied to our stores, platforms and suppliers, to ensure they are reused correctly and recycled to minimise waste. In 2016, through the EROSKI Circular Economy Programme, we recycled 26,465 tonnes of raw materials and 4,058 tonnes of organic waste. Furthermore, the EROSKI supply chain implements the use, reclassification and reuse of 47.8 million logistics packages in a circular system.

EROSKI stores are also collection points for unused goods for recycling, such as clothes, electrical and electronic appliances, batteries and energy storage devices, lamps and fluorescent lights.

*AIR CONDITIONING, ELECTRICAL APPLIANCES, TELEVISION, SMALL ELECTRICAL APPLIANCES, ETC.

RAW MATERIALS

26,465tonnes recycled

ORGANIC WASTE

4,058tonnes recycled

LOGISTICS PACKAGING

47,831,083packages reused

ELECTRONIC AND ELECTRICAL APPLIANCES

1,529 tonnes recycled

BATTERIES AND ENERGY STORAGE DEVICES108 tonnes recycled

LAMPS AND FLUORESCENT LIGHTS

8 tonnes recycled

CARDBOARD

24,334 tonnes

MEAT

550 tonnes

PALLETS

4,941,203 units

COLLABORATING COMPANY



PLASTIC

1,846 tonnes

OF SEAFOOD

1,814 tonnes

PLASTIC BOXES

42,889,880 units

POREX

275 tonnes

Earth HourEROSKI ran the ‘Earth Hour’ campaign for another year; this campaign is promoted by the WWF and supported by the United Nations and it raises awareness about the fight against climate change.


Ethical Management and TransparencyCode of ethics

Our code of ethics is the cornerstone of our daily management policy, and in practice it corresponds to the following action lines:

INCLUDE ethical management among the Directors' main aims.

COMMIT and CONTRIBUTE to the continuous improvement of Social Responsibility levels established by legislation.

VERIFY, using indicators, the ethical behaviour of the organisation to define areas of activity that need to improve.

SET TARGETS for improving Ethical Management and draw up and implement plans to achieve these targets.

TRAIN and INFORM, to an appropriate level, everyone involved in applying the management system and promote the application of Social Responsibility good practice.

INFORM, to an appropriate level, suppliers and contractors about the code of ethics, creating mechanisms to transfer knowledge about Social Responsibility.

RESPOND to any external parties (consumers, neighbourhood communities, the government, clients, suppliers, etc.) if they are interested learning more about our social behaviour.

COMMUNICATE, openly and effectively, with the company about the code, its regulation and compliance with its objectives.

Member of the Global Compact

For a further year, we have reconfirmed our membership of the Global Compact, an international initiative run by the United Nations. Its aim is to achieve a voluntary commitment from companies on social responsibility by implementing its principles, based on human, employment and environmental rights. EROSKI has signed the compact since it was first established in 2002.

SA 8000 Certification

We are the only Spanish distribution company that has its Registered Office and Purchasing Centre certified with the SA8000 Social Accountability standard, which supports employment rights, corporate social responsibility and social dialogue, in addition to anti-corruption measures for supplier and contractor management.

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annual report 2016 - eroski · with the eroski foundation scientific committee to define new...

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