Hankering For Chocolate
Hello and good day!
Several years back, I want to call it 6 or 7 years ago, we tried to develop a product to sell in grocery stores. Unfortunately, we failed miserably in our attempt.
It was an excellent product, and it was a real shame to see the project crash and burn the way it did. We ended up having to eat our way through about 10,000 units worth of inventory. For the longest time, I had stacks of this stuff in a spare room in my house.
The product was 100% cacao mini squares. They were individually wrapped like Ghirardelli squares and the chocolate was nothing but cacao. Most chocolate companies couldn't pull off a product like this because their cacao doesn't taste good enough on its own. A 100% bar can be awful to eat if the cacao isn't of high quality.
But our 100% mini squares were exquisite.
We have a similar product in our shops now called 100% untempered cacao mass. This is chocolate that has been through the entire chocolate making process but hasn't been tempered and molded.
Anyhow, we invested in a manufacturing run of the mini squares. An industry friend of ours had just built a micro-manufacturing line for experimental products like ours. The idea was that companies could do an initial test run of new and innovative products and if they worked, he would move the manufacturing onto his bigger lines.
It was a cool concept, but it also ultimately failed, and he had to shut down that part of his factory. If those micro lines still existed, we'd make the mini squares again tomorrow.
After spending a significant amount of time and money bringing that product into the world, we finally had pallets of the finished product delivered and it was time to go out and sell.
I was in charge of the sales effort, and I went out into the world to talk to specialty grocery stores. I figured that stores who sold organic produce and made ethical claims about their food would be a natural starting off point.
I targeted 10 chains here in the Seattle area. Every single one kicked me back to a distributor. None was able or willing to buy directly from me. I asked for a list of distributors they bought from and lo and behold, they all bought from the same 2 or 3 distributors.
This I found very interesting. Each had their own brand and messaging and special value proposition for shoppers. But behind the scenes, they were all getting their products from the same source, a handful of specialty food distributors.
I called on these distributors and was able to set up meetings. Each of them was located in a big industrial park, with giant warehouses, loading docks, and long-haul trucks coming and going. No matter how shiny and beautiful the store you shop in looks, I promise you that every single product on every shelf was at one time sitting in a giant warehouse in the industrial part of your city.
A warehouse worker driving a forklift put big stacks of the food on a truck and when the truck arrived at the store, the food was wheeled in on a dolly. Somebody with a blade on their belt cut shrink wrap off a stack of your favorite product so that it could be stocked on shelves.
I went into an office to speak with a buyer and give them my pitch. All were very polite and interested, but ultimately all rejected me.
There were several problems in their eyes.
First, I only had the one product. It was much more efficient to buy from bigger companies that offered a larger variety. They could pile more onto a single purchase order.
Second, at that time, our product was considered to be very different. It would be more acceptable today, but just 7 years ago a 100% cacao product was considered a bit strange.
Third, and this is the most important, our price point was too high. One gal laid it out for me in clear terms. She pointed to her big warehouse. She asked me to imagine my favorite grocery store. All of that infrastructure is maintained by markups. She needed a markup and then she also needed to sell to the grocery store at a price the grocery store could make money on.
I'm a businessman and I have no beef with folks making money, especially if they are making people happy, which a good grocery store certainly does.
However, there is a forgotten person here. What about the cacao farmers?Actually, it doesn't only pertain to cacao farmers. It has to do with farmers of all sorts, but I am most familiar with cacao farmers.
The system is set up to push poverty back down the line onto farmers.
I went back to my office and ran the numbers. If I could have cut out the distributor and sold straight to the store, the price would have been reasonable for customers.
But if I could cut out the store too and sell direct, I could give customers our wholesale price which already encompassed paying more than 10 times FairTrade premiums to cacao farmers.
At that time, we weren't set up for ecommerce, so after being shut down by every distributor I spoke with, I had to drift away from the project and our family began the five-year undertaking of eating our inventory.
Distributors and retailers serve an important function in our food system. They curate and aggregate and manage logistics in a way that is miraculous. They provide wonderful convenience and variety.
This is all to the good.
However, they are also inherently set up to push low prices back on farmers.
Farms tend to be in remote areas. This is necessary because farming takes a lot of land. Farmers deal in perishable goods. If they don't sell the item shortly after harvest, it can rot and become worthless. This puts pressure on farms to sell to a buyer when the buyer is there.
Usually there are only a handful of buyers working out in a particular area and they all know the market rate, so it is very hard for individual farmers to negotiate higher prices. Farmers have no involvement further on down the supply chain and they are generally far removed from end customers.
The point of all this is to encourage you to buy from companies who do right by farmers when you can. It isn't always convenient.
It's getting hot out and having us ship your chocolate is going to become more and more challenging over the next few months.
We have the nut butters now which ship well in heat, but still. Maybe you don't want nut butters. Maybe you want your favorite chocolate product from us.
If you are hankering for chocolate, please look for a local company that does right by cacao farmers. And you might as well consider whether you can buy some of your other favorite products from a good company who cuts out middlemen.
Basically, if it is in a big grocery store, that alone tells you that the product came through a system that puts a lot of pressure on farms. It inherently must.
Anyhow, I am running out of steam and space for now.
Thank you so much for your time today.
I hope that you have a truly blessed day!
Adam
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