Our Year in Numbers - 2023

Average Farmgate Price: USD 5,89 / kg

So let’s start with farmgate and FOB prices. Although we pride ourselves for not using the market and establishing prices directly with producers, the market still influences us. Most of our partners are farmer exporters who work with farmers who could also deliver cherries or parchment elsewhere, so we have to be conscious of what the market offers and match or surpass that price. Two years ago, the market was up, so so were our FOB prices. Contrary to the market however, our average prices last year did not go down. The one exception is Brazil, where economies of scale caused by a good harvest pushed prices down significantly. Thus, our average farmgate price is actually lower than last year because almost half of our coffee purchases come from Brazil, and because of improved farmgate price accuracy in origins such as Rwanda and Myanmar. Thank you, Madhu!

As our relationships deepen, we have more and deeper talks of what is actually needed to produce quality coffee in a responsible, regenerative way, and it’s strikingly clear that even with a high market, even with our directly agreed prices, margins for farmers are still extremely thin. It remains vital for us, therefore, to generate compassion and respect by showing in ever more detail the enormous amount of work done by our partners to bring these coffees to the market, We also need to keep investing in knowledge transfer between our partners, more efficient agroecokogy through regenerative premiums and the many projects we undertake directly with our partners. Our total impact deserves a website of its own - which is precisely what we are developing…

Sadly, most of our industry’s transparency reports end at origin, with the publishing of FOB prices or in rare cases, farmgate prices. But what of the company’ own income, expenditures, behaviour and structure? Transparency is not just about buying responsibly, it is about showing that we as a company make choices that are in line with the vision and mission. Given the appropriate context and explanations, numbers have the power to generate a tremendous amount of trust. Whether transparency shines positively or negatively on us, simply being able to account for all our actions openly is why you should take anything seriously that we claim.

Total Volume Imported: 514.741 kg

The most important observation about the volume we imported is that it stabilised completely this year, it only grew by 2% compared to 2022. Included in the graph below are all the imports of the 2023 harvest per origin, this includes Brazil and Peru that are not in our 2023 books and only arrived in January 2024.

Sales per Country.

Only one thing changed significantly compared to last year in this pie chart - the share of our public tenders segment which rose from 11 to 20%. This alone is the reason why despite stabilised volume, we still have a reasonable profit.?The biggest EU clients did shift around quite a bit, with most of our new customers coming from outside the Netherlands.

Total Revenue: EUR 3.697.442

As explained above, the main reasons for our revenue growth is not selling more coffee, but paying more for coffees in 2022 and growing in the public tenders segment.

Our net profit was also substantially lower: 102.924 as opposed to 158.534 euro last year. You may ask why we need profits as social entrepreneurs and aren’t happy just breaking even… The answer is to avoid credit and build equity.

All around us we see other good middlemen being swallowed by Big Coffee just because their profits cannot keep up with the rising cost of credit.?The coffee importers we looked up to when we were starting out in 2013 have all in effect become a mere specialty “branch” of Big Coffee companies, the very ones they originally set out to oppose. We are sure that they will still make positive impact, but we are equally sure that shareholder value will always trump impact for these companies now that they merged.

Therefore, one of our most important long term sustainability goals is to rely less and less on the financial sector, and more on 1) our own equity that is slowly but surely being built up by our profits and excitingly, 2) a growing community of likeminded social lenders who do not want to “own” us, understand our vision and entrust us with their money to make that vision reality.

Where We Got Our Working Capital.

So how did we finance our imports this year? A major difference in the graph compared to last year is that this summer, we extended our bank credit line to be able to account for larger peaks in our cash flow requirements. Even if we only have social lenders and equity to finance our coffees in the future, a credit line for these peaks will remain useful because we only pay interest for it as we use it - it’s basically the price for dropping below 0 on our bank account. But as described above, it’s not an instrument we want to lean on too heavily.

Like every year in the past, most of our working capital comes from our social lender #1: our CFO, Mathieu. The other two social lenders in this graph wish to remain anonymous and in 2024, we are to pay back our government loan completely. Through introductions by our former advisor Bas Clerkx and by our vision “twins” Grounded Ingredients, two new social lenders appeared like angels at the end of the year, putting the social lender count at five in total today. The aforementioned community of likeminded, vision-driven financiers has really started to form around us, and we will proudly announce these new lenders soon.

How We Spent Our Money.

Here you see all our expenditures in 2023. Compared to last year, the most significant change to This Side Up internally is its employee (and salary day) count. With Madhu on Impact, Renata on QC, Fernanda on design (doesn’t this letter look the part?) and Lara on samples, we have made important investments in our capacity to deal with challenges that fit the age and ripeness of the company. Moreover, This Side Up has become a more lively, diverse, interesting and exciting place to work this year, filled with new drive and a remarkably similar vision despite such diverse characters.

Wage Distribution

Last year, we lied and said that we paid 190 euro per day to all employees in 2022. That was a miscalculation. Actually, it was 162,50 euro, it was again in 2023 - and will be again in 2024, despite higher costs of living for all of us. Even though our markups will go up this year, it’s to cover increased operating costs only. Not adjusting our salaries for inflation is a choice that we made because of the increased pressure on our profitability last year. If, at the end of the year, there is a sizeable profit, we are working on a way to divide this profit into improving our equity position, paying back lenders and rewarding our value chain partners and ourselves fairly, equally and transparently for having accomplished this as a team.

Surprisingly, no one noticed this oversight last year. A tip for everyone reading this, just because it’s public and transparent, doesn’t mean it’s true… If you question any other numbers in this report, ask us for proof, call us out!

Who Owns This Side Up.

Nothing changed here since last year (Regenerative Circular Collective BV is Maarten’s company), however, we are seriously questioning the limited liability (BV) model as an accurate representation of our values and vision. One way or another, This Side Up is to become unsellable, an untradable trader. Thankfully, we live in a country where steward ownership is flourishing as a potential way to safeguard social enterprises’ visions and protect integer companies from selling out… We are excited to announce that we are exploring this route as well with some its most progressive proponents.

Highlights of the Year.

This report is our way of celebrating the numbers that define the success of our vision and the longevity of our impact. We hope that by setting this example, in the future, middlemen simply will not not be worth anyone’s trust without such openness. A huge shout out therefore, to our “Numbers Wizard” Mathieu, who always gives us ready access to these numbers and has been instrumental this year in realigning us all with them. There might have been less reason to celebrate another year of explosive sales, but instead we celebrate a year of much more refined planning tools and overall, a much better grip on how our company works.

Perhaps our biggest achievement is that: even in an unpredictable world that looks to be on fire in so many places, we no longer feel a victim to our success or failures, but a master of them. Nevertheless, numbers do not tell the whole story - here are some highlights that we celebrate along with our quantifiable results.