I put together this brief video a few weeks ago about our other business, The Cocoa Pod. We had no idea this item would be such a hit and just by chance itĀ“s really begun to garner interest. We take fresh cocoa pods (aka cacao pods), have them sun-dried and carefully cared for, and finally gently rubbed and polished. They are a beautiful item and can be used in chocolate shops, homes, coffee shops, etc.
Aequare Chocolates gets frequent inquiries as to why we’re not organic. It’s not because we don’t want to be, or don’t support organic. It’s because we simply can’t, for all practical purposes, be organic.
First off, all organic chocolate actually produced here in country is shipped abroad and almost none of it is for sale here. It’s shipped abroad directly by its producers because there is a market for it abroad. Consumers in North America and Europe, as well as many other places, have the disposable income that allows them the choice and provides them the ability to choose between organic or conventional products. Here in Ecuador, personal income levels are not high enough and consumption patterns are not adapted to supporting organic products.
Were the local manufacturers of organic chocolate to try and sell organic chocolate here, they’d probably go broke. Most consumers would not see the value in paying a higher price for an organic product. It would have no additional recognized value in the local market and simply would not sell for a higher price. Organic producers would be forced to compete on price alone, and they would lose money.
Since we don’t actually make our own chocolate, and don’t have the volume needed to have someone process organic beans into chocolate for us locally, we can’t make organic chocolate here. We have approached two of the companies that do make certified organic chocolate about purchasing organic couverture from them. One is a large contract manufacturer and simply can’t sell us what organic chocolate they produce because the production is for another company’s product that is shipped abroad. The other offered to sell us couverture, but at a price that was so high it would be impossible to make money from.
Our main supplier of chocolate, who is also the grower of the beans, uses minimal amounts of pesticides and fertilizers on the cacao plantations he manages. This is the case for most cacao growers in Ecuador; the majority of beans come from small landowners who usually can’t even afford pesticides or fertilizers, and cacao is basically a gathering activity from plants that are growing in a semi-wild state on their properties. To become certified organic is a lengthy, costly and complicated process that the majority of growers probably can’t afford. In no way do we mean to belittle the value of organic; but the certification process can be more exclusive than inclusive.
You can already see why we can’t make organic bars, and for many of the same reasons, organic confections. We can’t even get the most important component, the organic chocolate, to start with.
Beyond the chocolate, which is difficult enough to obtain, many other organic ingredients are simply not available in Ecuador. Let’s start with sugar. The local manufacturers or organic chocolate temporarily import their organic sugar from abroad. Temporary importation is a very complex, bureaucratic, and costly process. Temporary importation allows the user of the product to avoid paying duties on it by guaranteeing the product is going to be shipped out of the country again within a certain time frame. Since it’s only coming into the country as an input for a specific product that is destined for export, no duties are levied on it. This also means that it’s not for sale on the open market.
Organic dairy products are non-existent in Ecuador. While for practical purposes many dairy products could be considered “organic” because of the non-industrialized nature of most of the dairy industry here, that’s obviously not good enough for consumers in industrialized countries looking for an official seal of approval. So getting organic cream and butter in Ecuador with an internationally recognized organic seal?…forget it.
Then there are other items that go into our products, such as fruit purees, citrus zests, and essential oils, most of which are sourced locally but very few of which are organic, with the exception of the lemongrass oil from FundaciĆ³n Chankuap used to flavor our lemongrass bars.
So due to costs, volume constraints, regulations, and lack of availability of organic ingredients, it’s difficult if not impossible to do organic confections here in Ecuador. Finally, making 100% organic chocolate, as well as confections, is not compatible with our direct trade efforts. But more on direct trade in a later post.
This op-ed piece in the NY Times today sure got me thinking. It makes a lot of points relevant to Ecuador.
Not that Ecuador is a magnet for immigration, even if it did open its doors. However, if Ecuador were to overcome a few minor obstacles-lack of a transparent, non-politicized judicial system, arbitrary and whimsical interpretation of laws, general lack of political and economic stability, protectionist policies, etc. etc-it could attract investment, which it desperately needs. As it stands, the current policies of CorreaĀ“s government only seem to perpetuate EcuadorĀ“s image of a country where arbitrariness, uncertainty, and fear of the unknown dominate.Ā
The one point that resonated with me most from the article, however, was this, fromĀ Ā Subhash B. Dhar, a member of the executive council that runs Infosys, the well-known Indian technology company that sends Indian workers to the U.S. to support a wide range of firms:
Do you know that for an Indian company, it is still easier to do business with a company in the U.S. than it is to do business today with another Indian state?
The same has been my experience in Ecuador. It is easier for me to do business with a company in the U.S. than it is to do business with a company in Ecuador. Why is this?
First, since there is almost a total lack of third-party credit providers (i.e. banks, credit card companies), everyone here operates on credit. All my clients want 15 days, 30 days, or more, and the 15th or 30th day comes and goes, and they still often donĀ“t pay. They donĀ“t pay simply because either the boss isnĀ“t around to sign the checks (electronic transfers are rarely used here, and thereĀ“s too much distrust to allow anyone but the business owner the authority to transfer funds), or they donĀ“t have the money, or they need just a few more days for whatever reason. If they donĀ“t pay, or donĀ“t pay on time, itĀ“s almost impossible to charge and collect on interest, because there is no judicial system to back up contracts and agreements.
Second, because of the high duties and tariffs paid for imported goods, many of the products clients might want are priced out of reach of the local market. There are a few clients who recognize and will pay for quality and uniqueness; but most want what is the slogan for doing business in Ecuador-it has to be ĀØbonito, barato, y bastanteĀØ. That would be a attractive, cheap, and a lot, the second factor being key. The only factor most people/businesses pay attention to here is price. Not value, not uniqueness of the product, not packaging, but price. For our business, this means that while some of my inputs might have a higher cost here than elsewhere, these costs are still offset by the overall lower cost of doing business here, making my product competitive in the U.S. market, where quality, value, and packaging are all parts of the mix that makes our products unique.
Finally, despite a few onerous bureaucratic hoops that I have to jump through to ship a product out of the country, it’s no more difficult, if not easier, than delivering a $200 order to somewhere in Quito, collecting payment, and making sure the client is happy. Customs/freight brokers take care of all the red tape for a reasonable cost, my U.S. based clients pay 50% up front and 50% on delivery with no questions asked, and I ship an order 10x or 20x or 40x the typical order placed here.
Another good point from the article mentions the dangers of protectionism. As is not unusual in this part of the world, Ecuador has now implemented further protectionist measures, with the aim of protecting the dollar, by limiting imports. While preserving the dollar, which has brought unprecedented stability to the economy here, may be worthwhile, the side effects of this policy will only increase prices locally and hurt business. Case in point: recently, a property next door to my business was purchased by the rep for a foreign tire brand. He was going to open a new tire location based on his agreement with the company. Soon after the purchase, Correa implemented policies putting quotas on the import of certain items. Due to the quotas, it’s no longer cost effective for this man to import tires, and he had to shutter his plans to open the new location. It goes without saying, jobs are lost, sales are lost, the cost of tires (and so many other goods now limited by the quota system) are going up, and this is being repeated throughout the economy in various sectors.
Aequare Chocolates recently completed its first export transaction successfully. We produced a co-branded box for a U.S. based client, Ms. Elizabeth Pitcairn. The project involved the design and printing of a 20 piece, half-pound box of gourmet filled chocolates, as well as the production of the chocolates themselves.
We used a local designer who also happens to be the in-house designer for the printer we also use; we had used him on other projects and his skills and creativity were really top notch. Besides, it was much easier to work with a designer already in-house with an excellent printing company, as it made coordinating all the work much easier. He also produced a stunning four page mini brochure which included information about Aequare as well as photos and descriptions of the chocolate pieces.
I had never been so closely involved with printing before and was able to visit the printer the day they planned to run the press. The press is a huge machine probably two meters wide, one and a half meters tall, and at least 15 meters long. They had several copies run off for me when I got there to inspect under the light table. I asked for some minor adjustment in the color to be made…of course,this is not a machine that you can just run off one copy at a time, so they had to spit out maybe another twenty or thirty prints before the actual color change was noticeable. I signed off on it and it was a supposed go.
But because of the complexity of the box shape, there were some delays and I later learned from my sales rep they had to rerun the whole printing. IĀ gathered they had overlooked something in the design that required them to reprint. And since the box consists of five separate pieces of paper, each one had to be hand assembled, which delayed the delivery by several days.
We also used a local plastics company to design and produce the thermoform trays which hold the chocolates with in the boxes. They were able to produce an excellent quality tray as well as form-fitting plastic sheet which covered the tray before the box was closed.
Despite this being our first major project for export, weĀ it done in time and out the door smoothly, with no major hitches in shipping despite the product going out the day before Thanksgiving. We used Ā very competent customs/freight brokers on both ends; our local broker took care of all the paperwork and bureaucracy and got it on the plane. Once the shipment arrived in Houston, our US broker took over and got it smoothly through customs and to the client’s door. Shipment time is usually between 3-5 days.Ā
If you are interested in a custom co-branded product or simply our stock packaging, in 6, 12, or 21 piece boxes, please do not hesitate to contact us via www.aequarechocolates.com. Currently, we do not offer a private label program. We will be happy to discuss your project with you, pricing and promotional programs, shipping, and any other details or concerns you may have.Ā
To see and purchase the violin box, please see the links below.
Today I am starting to feel like I’m in limbo again, waiting for our stuff to get out of customs. I can’t start a lot of my work without much of my equipment, which is still in the container. We are also paying rent for our house which is sitting empty, and has been for the past ten days. And while the food is good and the accomodations comfortable at my in-laws, it will be a real treat to cook again with my own pans and ingredients, sleep in my own bed, and give the kids their own rooms. We got the report on the container inspection over a week ago; they opened over 100 boxes and everything was declared in order, so no problems there. Just hope that nothing has gone missing in the container, as things sometimes do.
Over a week ago our stuff was supposed to be released from customs in Guayaquil and sent up here. The moving agent here, who has been exceptional at keeping us updated and unfailingly polite, had told us we would surely have our stuff out by the 9th of June. The 9th came and went, it was supposed to come next Monday. The paperwork still wasn’t finished to release it. Then Thursday last week it was supposed to be released, but someone in customs made a mistake with my wife’s passport number or some other piece of data. It was not a simple matter of correcting the mistake, but redoing all the paperwork and resubmitting for signature to the head of customs. And it takes at least 24 hours to get his signature.
Maria called the agent this afternoon, and he gave us the good news that, barring an act of God, the container should be delivered tomorrow morning. It’s currently waiting to be loaded onto a truck in Guayaquil and shipped up here, which will take overnight.