Cheaper Ingredients

After the son of a famous chocolatier took over his mother’s multi-generation business, he called in his CFO and looked at the numbers. “Hmm, why are we spending this much on cocoa butter?” he asked. “If we get it from Côte d’Ivoire instead of Peru, I think we can cut costs by 15%.”

Of course, chocolate is a taste-sensitive business, and so, before making the change, the new CEO ran a test with a focus group of existing customers. They swapped the Peruvian cocoa butter for Ivorian product, and consumers liked the chocolate just the same. Pleased with the results, they kept the cheaper ingredient, and moved on.

The next time the CFO was in the CEO’s office, once again, his boss looked at the numbers. “Why are we using brown sugar from Paraguay? That’s so expensive! If we buy the normal kind from Brazil, I think we can save another 7%.” Once again, they ran a taste test, consumers still loved the product, and they kept the cheaper ingredient.

Given his success in bringing manufacturing costs down, the CEO steered the course. He changed the source of their milk and cocoa mass. He imported nuts and cinnamon from far away instead of continuing to buy from local suppliers. And month after month, quarter after quarter, costs came down, and profits rose — until, one day, sales started plummeting.

A down week became a down month became a down quarter. The average review score went from 4.8 to 3.7. “This used to be great chocolate, but for some reason, it now tastes like sand,” a chocolate influencer issues his crushing verdict on Instagram, demonstratively tossing a bar into a literal sandbox. That year, the company lost half its revenue, and much more of its profits.

Unable to spot an obvious reason for the sudden downturn, the CEO dug into the marketing, sales process, and inventory management. He revisited every ingredient and re-read every focus group report. In the end, he couldn’t find anything.

One night, after spending a good amount of time sitting at his desk with his face buried in his hands, he watched the movie Chocolat, something he hadn’t done since he was a little boy. Seeing a young mother try to build a life for her daughter while making a special kind of art in her chocolaterie, he finally learned a lesson his own mother could have simply told him had she still been alive: The best things in life are more than the sum of their ingredients — and sometimes, that little bit of “extra” that makes the magic is impossible to measure.

The next morning, he picked up the phone, called his old suppliers, and went back to his mother’s recipe. Within less than a year, the family business’s reputation and earnings were restored to their former glory, ready to expand into a new era with the same, age-old set of ingredients: High-quality cocoa mass, fresh milk, Peruvian cocoa butter, Paraguayan brown sugar, and, most of all, love.

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This post was previously published on Niklas Göke’s blog and is republished on Medium.

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Photo credit: iStock