Wednesday, June 5, 2013

Camino: Fair Trade, Organic Chocolate and Sweets


In 1999, three young Ottawa entrepreneurs decided to set up a new business. They had worked overseas and were concerned about the ways in which conventional businesses exploited farmers in many countries around the world. They wanted to provide Canadian consumers with an organic, fairly traded alternative.

Because they had chosen to work with producer co-operatives, they established themselves as a worker co-operative, and La Siembra Co-operative was born with the launch of Canada’s first Fair Trade, organic hot chocolate – Cocoa Camino.

Getting Started
La Siembra’s first year in business was pretty crazy. They were able to source cocoa and sugar for the hot chocolate from two co-operatives in Costa Rica, so they had the raw ingredients. They also had a market as right from the start they were able to supply natural health stores via distributors. But the hot chocolate was being packed in a church basement by volunteers, and they used bicycles to deliver the product to Canada Post to be shipped out across the country.

By the end of their first year, they had sold $44,000 worth of Cocoa Camino and were being asked to provide more products.

The original owners knew they had a good product; however, they were tired from working full time and starting a new business, and they sold La Siembra to second-generation owners. La Siembra would continue to be responsible for sourcing the raw ingredients and marketing the finished product, but they hired a manufacturing company to blend and pack the hot chocolate. They also began to explore ways of diversifying their product offering.

Chocolate Bars 
In 2002, La Siembra launched its first chocolate bars. This took their business to the next level and they grew by 423%, becoming a million dollar company.

“There weren’t many good, organic, fair trade chocolate products at the time, so they were well received,” explains Jennifer Williams, Chief Executive Officer for La Siembra.

La Siembra has continued to increase its range of products. They now offer over 80 different items, including chocolate and candy bars, coffee, chocolate chips, baking chocolate, cocoa powder, sugar, and hot chocolate.

La Siembra staff with farmers in Peru

Strength in Partnering 
La Siembra partnered with a chocolate bar manufacturing company that had experience sourcing fair trade, organic ingredients and that specialized in consolidating smaller orders from different companies. This meant that La Siembra didn’t need a manufacturing plant or lots of equipment. As a result, they could launch new products without having to restructure their plant or buy new equipment.

Jennifer says that very little chocolate is actually manufactured in Canada as all the fine chocolate comes from Europe. Companies may state that their bars are made in Canada, but they are usually bringing in chocolate manufactured in Europe and molding and packaging it in Canada. There may be a few companies that bring in cocoa beans, but most don’t.*

Over time, the producer co-operatives that La Siembra works with have benefited from fair trade prices and premiums, and an increasing number have started investing in the processing and manufacturing. La Siembra was quick to support in-country manufacturing. The chocolate chips, baking chocolate, chocolate-covered treats, candy bars and brown sugar are now all manufactured in Peru.

Diversification and Branding 
In 2011, La Siembra launched a line of Camino juices. Fair trade juice was one of the top-selling fair trade products in Europe and producer cooperatives were desperately seeking markets for their tropical fruits. Unfortunately, Camino juices were short-lived. Retailers were receptive, but consumers were slow to purchase them.

Consumers have a good understanding of the importance of purchasing fair trade chocolate, but they didn’t understand the importance of purchasing fair trade, organic fruit juice. “We should have anticipated this and done a year-long campaign on why fair trade fruit is important,” says Jennifer. “Our brand didn’t carry us.”

La Siembra realized that they were known for their chocolate products and decided that in future they would focus on sweets and treats. “We might launch a new product – quinoa, for example – in the future, perhaps under a new brand, but this was a year for recouping,” says Jennifer.

La Siembra is currently focussed on two lines of products. The baking line includes chocolate chips, cocoa, sugar and baking chocolate, while the direct consumption line includes hot chocolate and chocolate and candy bars.

In growing their product line, they try to respond to market pressures: “What else can we do that the market is looking for?” They also consider what products people consistently buy and for which they would appreciate a fair trade alternative. They sold chocolate Easter bunnies for the first time this year and will be selling fair trade candy canes and boxed chocolates this coming Christmas.


Future Plans
Jennifer says that Camino is exploring various new product options for the future. Their current cocoa powder is alkalized and there are concerns that this decreases the nutritional value, so they are looking into a natural cocoa powder. They also hope to produce dairy-free hot chocolate and a broader line of seasonal items for Christmas and Easter.

Worker Co-operative
La Siembra currently has 12 staff, 10 of whom are worker-owners. Employees don’t immediately become a worker-owner. They have a minimum of nine months to make sure it’s a good fit and can then apply to become a member. After 14 months they are obliged to apply to become a member.

A three-person board is responsible for governance and oversees the company’s fiduciary and legal responsibilities as well as establishing the company’s long-term vision and mission. The board only includes worker-owners. Senior managers report to the board and cannot sit on it.

“Co-operatives are a challenging model, particularly worker co-ops,” Jennifer says. “We’re a small multinational running a complicated business. It’s increasingly challenging to run such a complex business without a board that has external expertise.

Investing in La Siembra 
La Siembra has always relied on investors who purchase shares in the business and receive dividends in the company profits. The co-operative currently has 110 investors from across Canada with an average investment of $10,000. Investments can be held in RSPs and investors are asked to maintain their investment for at least five years to minimize administrative costs.

Investors are critical to La Siembra’s operations as the co-operative purchases producers’ whole harvest and don’t run a just-in-time inventory. Financing from investors also provides pre-harvest financing for farmers who need an advance prior to harvest and helps to cover the cost of developing and launching new products and expanding into new markets.

La Siembra reports directly to investors. Investors don’t have a voting share, but stakeholder opinions are given serious consideration. Worker-owners also invest in the company.

Cocoa farmers in Peru

Making a Profit 
Two factors have played a key role in La Siembra’s success. First of all, they have a strong distribution system and their products are now in over 3,000 retail stores. Secondly, outsourcing production has meant that they could focus on growing products and didn’t have to keep upgrading their factory.

There has been a downside to their model as well. Their product goes through many different parties, each of whom take a share of the proceeds, so La Siembra’s profit margin is tight, particularly as they try to keep the consumer price reasonable. Despite their success, the company currently has a deficit.

“We grew so fast and had to expand so fast that we couldn’t maintain our original profitability,” Jennifer explains. “The owner of another mission-based business recently told me that it took them 14 years to be sustainably profitable. I wish I’d had that perspective sooner. In order to balance mission, sustainability and ethics, your business needs that long-term perspective.” Jennifer says that the company should be profitable from this point forward as the scale of their operations is advancing them beyond the break-even model.

Find a Store
Camino products are available at the following Saskatoon retail stores:
Dad’s Organic Market
Herbs ‘n Health Foodport
Sangster’s Health Centres
Steep Hill Food Co-op
Ten Thousand Villages
The Better Good

*One of the exceptions is Beanpod Chocolate in Fernie, BC. Their website states that they are the only Bean-To-Bar company in Canada that makes chocolate the traditional way. The website also states that they believe in ethical business practices, “shake the hands” of their farmers, and adhere to stringent environmental and sustainable practices.

No comments: