March 28, 2009
For readers that know me personally, they will know I am from Solana Beach. And a few months ago, the City of Solana Beach and a local non-profit joined forces to preserve some pristine land in Ecuador. You can read more below, as mentioned in the local press in spanish as well as in the Del Mar Times.
http://www.elcomercio.com/noticiaEC.asp?id_noticia=265523&id_seccion=8
http://www.delmartimes.net/news/253995-solana-beach-votes-to-protect-ecuadorian-tropical-forest
March 12, 2009
It wasn’t like we had never heard of this happening. But coincidence (or was it?) and a number of factors converged in an almost uncanny way, that made us victims of a common scam pulled off here in Ecuador. The scam basically involves people dressing up as officials of some agency or another and coming to “inspect” or check out your business.
Friday last week we had called our contact in the Ministry of Health to have our health permit renewed. He said he’d show up on Monday, and as usual, he didn’t so we expected him for Tuesday. Tuesday two gentlemen came knocking at the door, dressed in suits, with those kinds of folders you get at a seminar with logos emblazoned on them. They said they were from the Ministry of Health and if memory serves me, on the part of Sr. Carrera, our contact in the Ministry. This is where things get doubly suspicious already.
They came in and immediately told us our permit was out of date and since we had let it expire-we were under the impression there was a grace period from our original contact-and that to renew it we would first have to pay a $1,000 fine, which is a legitimate amount based on the schedule of fines the Ministry is authorized to issue. They poked around a bit, pressured us, and finally settled on a much smaller amount, paid in cash there and on the spot, to not fine us, as long as we promised to go get our papers in order ASAP.
They had a number of official forms from the Ministry of Health as well as the logo-emblazoned folders. When we mentioned that we had just called our contact, Sr. Carrera, to come renew our papers, they told us, indignantly, that he was not authorized to be doing what he was offering and they would be looking into his activities and sanctioning him appropriately.
After they left, we had the growing suspicion that we had been duped. Putting together all the stuff they said and details, we felt like we were in a hall of mirrors. They knew everything, and they even seemed to know Sr. Carrera, our original contact, which lent them legitimacy. But since Sr. Carrera, and the whole system, functions in such a corrupt way, it was impossible to tell who was who. We decided we’d call Sr. Carrera.
He immediately told us we’d been duped and that he knew of these two pulling this scam, since, as I mentioned at the beginning of the post, this is not an uncommon scam in Ecuador. Of course, he’s pulling his own scam too since everything works on such a corrupt level here, but there is not much we can do about that. We were left wondering, given some of the uncanny coincidences, if even he had been in on the whole thing, sending these two first as part of a scam to collect money, then assuming we would call him to help us out of the jam, and collecting yet more money for his fees for processing the permit.
Since this unfortunate event, we’ve instituted an appointment-only policy for visitors, unless they are a known and frequent customer. All visits from “government” authorities will be denied, unless they have been vetted first and then arrive on-time for a scheduled appointment.
March 1, 2009
Last weekend we headed out towards the town of Cayambe, about 45 miles north of Quito. The “fabled” castle we went to see, located just past the turn-off towards Hacienda Guachala, is well-known by many locals, and is far off the beaten path. It’s not fully completed and has been under construction for 10 years. Supposedly, the story is-like so many others-that the owner has run out of money without being able to finish construction. The owner, by the way, is a dentist from Loja, one of Ecuador’s southernmost provinces.
It’s not actually open to the public, but if you know the way up the cobblestone road to the gate and you offer the lady gatekeeper a couple of bucks, she’ll let you in. When we were there, at least 20 or so more visitors were also there too; the owner should finance construction by charging to come see it.
It’s a gaudy, ostentatious attempt at something like the Palace of Versailles, with a bunch of frightening and egregious Greco-Roman sculptures scattered throughout the grounds. These include a large chariot with horses, nymphs playing in fountain, Poseidon, Mermaids, Centaurs, and others.
Inside the unfinished main building, which is supposed to become a hotel, there are nude sculptures in the greco-roman style. But what really makes absurdly bad statues even worse, is that they are made of concrete and then painted in some olive green paint. The bodies are totally disproportionate and the detail leaves just a bit to be desired.
The buildings are located on several acres nestled back in the woods, which are increasingly rare in this part of the world. The whole place, despite not being abandoned, has that spooky, something-hiding-in-the-shadows feeling. The buildings are fully constructed, but there are no windows, handrails on the staircases, or finished floors, and the empty buildings echo. Birds are nesting in the cornices of the buildings, and trash lies scattered in some of the far corners of the rooms. Construction materials like wood, wire, steel rebar, and other items lie scattered about and the pace of deterioration is definitely outpacing construction, so it’s looking more old than new. Moss grows on the stairways at the building entries.
At the back of the property is an abandoned house with some interesting plants growing on the roof, and an area that looks like it’s been untouched for 50 years. Wildflowers grow abundantly, the grass is nearly waist high, and an adobe wall slowly crumbles away from the wear of rain and wind.
February 12, 2009
We decided to go with biodegradable polypropylene bags for the bars. The place making them would make no less than 30,000 units for us, so we’ll have stock for a while, but it was still the cheapest option, given all the constraints.
It would seem there is a huge market here for small runs of customized items, and yet no one is serving it. The problem is, the market is huge if you can produce hundreds or even thousands of different types of items. But of course, that means producing across a broad spectrum of industries, which makes it, from an investment perspective, impossible to service this market. But there is no large market for small runs of only one certain type of item.
The perfect case in point is our business-we desperately need confectionery packaging. In the US, there is a whole sector dedicated solely to packaging for confectionery items, because the confectionery industry is big enough that it can support such an industry. Hundreds or thousands of small shops create the demand that makes viable such a sector. Here, unfortunately, it’s just not so.
And because of high tariffs, protectionism, and lack of free trade and integration with surrounding countries who do produce such items (i.e. Colombia), there’s just no way to achieve the economies of scale needed to bring these items to the country at reasonable cost.
In sum, what we’re discussing here is the total lack of any kind of “long tail” for almost anything here. In part, it’s due to lack of demand since we are talking about a population that can not truly be considered a “consumer society”, as well as a population that in the majority is poor. You can find the mass-produced, most basic items to fill your everyday needs, but not those hundreds of thousands of specialized items only massive economies populated by people with discretionary income and highly specialized needs and tastes want.
February 12, 2009
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 Correa´s government only seem to perpetuate Ecuador´s image of a country where arbitrariness, uncertainty, and fear of the unknown dominate.
The one point that resonated with me most from the article, however, was this, from 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 don´t pay. They don´t pay simply because either the boss isn´t around to sign the checks (electronic transfers are rarely used here, and there´s too much distrust to allow anyone but the business owner the authority to transfer funds), or they don´t have the money, or they need just a few more days for whatever reason. If they don´t pay, or don´t pay on time, it´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 ¨bonito, barato, y bastante¨. 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.
January 28, 2009
We’ve been trying to find packaging, boxes, and other stuff we need for export, and as is so typical here, you either can’t find what you need, or you have to order 100 gazillion units of it if they do have it. We have been searching high and low, first off, for foil-backed paper for wrapping chocolate bars. No one, I mean no one, has it, we’ve called all the printers in basically the whole country who might have it. We found one place with something that might work, but the price is 3x what it is in the US, so even after importing it, it would still be cheaper. We found another place that has it, but the minimum order was 100,000 units.
So then we started looking into metallic polyproplyene, but this is the stuff for machine wrapping. You see it on chocolate bars in the supermarket, it’s the stuff they put on granola bars, snack bars, individual cookies, and numerous other food products. And no one would sell us less than 500 kilos of the stuff. What would we do with 500 kilos (1100 lbs.) of polypropylene? I’ll let you know how I solve this one.
January 26, 2009
My friend, well-known cocoa grower, and professional “catador” or bean taster has recently begun producing a new 55% chocolate. He purchases beans from around the Quevedo region and works with the processor on the production of the chocolate. We’ll be using this new single origin chocolate in many of our finished confections, as well as producing a bar from it for sale in the US, that we hope to make available in the coming months.
I’m also working with and reaching out to a small non-governmental organization who buys beans from small producers throughout the country. Like so many businesses here, they won’t tell me a lot about who’s processing the cocoa for them into chocolate, but the first samples they sent me last month were excellent, though a bit too sweet for the flavor profile I’m looking for. I’ve found that when arriba beans are done right and roasted at lower temperatures, you can end up with a really sweet chocolate at 55% cocoa solids, or even 70% or higher, such as some of the bars from Republica de Cacao-which is actually made by Confiteca, an Ecuadorian company that mostly focusses on producing sugar-based sweets.
I had a discussion recently with my friend Alex Morozoff of Cocoaroma magazine regarding the quality of beans. There are many who would assert that beans from small producers are of higher quality-I’m not sure of the arguments behind this position. However, one of the arguments made is that many small producers use little or no pesticides and basically gather cacao beans from the wild; if you drive around Ecuador enough, you can see that this is definitely true. Basically, without any conscious effort on their part, they are harvesting what amount to organic beans.
There are all kinds of areas throughout Ecuador where you may have a family living in a bamboo house on small plots of land, usually 10 acres or less, and there just happen to be some cocoa trees growing there. They are gathered seasonally and sold to brokers/buyers who are often located in the larger towns along some of the main highways. The argument against the quality of such beans is that these small “gatherers” often have little knowledge of drying or fermentation, and thus good beans are often rendered into poor quality ones due to improper post-harvest techniques. You’ll often even see small batches of beans (like no more than just a few kilos) being dried along the highways, where trucks and buses spewing out nasty diesel fumes are often passing by.
One of the arguments against large growers is that they are mono-cropping, thus damaging the natural habitat. Of course, this may have nothing to do with the quality of the cacao. Another argument is that they may be using pesticides more heavily. On the other side, however, larger growers often have better facilities for drying and fermenting, and more control over, and knowledge of, proper post-harvest techniques, resulting in a better final chocolate product.
We’ll continue to discuss and explore this topic, as well as our linkages with local organizations, growers, and manufacturers, in the future.
January 24, 2009
We spent the last two weeks split between Northern and Southern California, meeting with potential clients, working on launching our website, logistics and other issues.
I attended the Fancy Food Show in San Francisco last week. There is a lot of chocolate out there, and a lot of fancy packaging especially. It’s heavy on the attention-getting factor, with a lot of pop, shine, and glossy finishes. Personally, for our products we’ve tended towards a more subdued look that reflects the natural qualities of our products; I know aesthetics and looks often sells the product, but my personal philosophy is that it’s what’s inside that really counts. There’s no greater disappointment than beautiful packaging with only a mediocre product inside.
Jeff Davis of Food Fete graciously invited me as a guest to the Food Fete, which is held separately from the Fancy Food Show but at the same time each year. I entered a beautifully decorated event venue, with several already known small companies making speciality foods as well as a number of newcomers to the scene. The atmosphere was laid back, festive, and casual. I was able to meet and chat with several members of the food press, mostly from the online world, as well as meet several small company owners and hear their stories. There’s a nice writeup about it
In Southern California, I met with an independent coffee roaster based in San Diego who has taken great interest in the Aequare line of chocolates. His is the kind of venue we’re looking to sell our chocolates in; small, independently owned shops who have a story of their own, and can appreciate ours.
December 21, 2008
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. I 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, we 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 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.
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.
To see and purchase the violin box, please see the links below.
https://www.metzlerviolins.com/p-220404-red-violin-chocolates.aspx
November 27, 2008
A few weeks ago I posted an ad for chocolate classes on the bulletin board available in a certain mall here. This mall is known for its few exclusive shops and restaurants. They have a board where you can post homes for sale/rent, items for sale, etc. To get your ad up, you pay $5. Initially, they were very hesitant to put it up-there’s an ice cream store in the mall that also sells chocolates, and our small ad could be competition! As long as we were not selling chocolates, and we had to reassure them several times we were NOT advertising the sale of chocolates, it would be ok.
It’s not unusual here that there is an attempt by businesses to maintain a stranglehold monopoly on their slice of the pie. In the case mentioned above, the owners of the mall are also the owners of the ice cream/chocolate shop, so they can write their own rules. But you’ll also find malls where they won’t allow a competitor in because that might make the existing tenant unhappy, and create the dire threat, the terrible evil, the menace, of competition!
