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Taza Cultivates Channel Relationships with Chocolate

NEW ERA UNIVERSITY


No.9 Central avenue New Era Quezon City
College of Business Administration

“Video Case 8: Taza Cultivates Channel Relationships with


Chocolate”

A Case Study
In partial fulfilment of the subject

Market Management

Cao, Michael John T.


Fechalin, Lyzza A.
Limjoco, Nadine Kate D.
Villanueva, Ivee May C.

Dr. Daniel E. Hebron


Taza Cultivates Channel Relationships with Chocolate

Taza Chocolate is a small manufacturer of stone-ground organic chocolate


made in classic Mexican Tradition. The company markets most of its products
through U.S. retailers, wholesalers and distributors. Individual customers around
the globe can also purchase Taza chocolate directly from Taza website and local
customers can visit company’s food truck or factory. The case presents the different
marketing challenges from each form and method of distribution.

Taza also seeks to build positive relationships across the entire supply chain.

HISTORY
In its origins, cacao relied heavily on the slave trade to fuel its ever-increasing
demand (Martin, 2018). Despite the abolition of slavery in the mid 19th century,
the modern day chocolate industry is still riddled with inherent ethical issues. In
response to the persistent pervasiveness of injustices within the industry’s process,
bean-to-bar brands have proliferated as a potential solution with a commitment to
both the ethicality and culinary aspects of chocolate production; Taza Chocolate in
Somerville, Massachusetts typifies one of these companies striving to produce
delicious chocolate through ethical practices and a high degree of production
transparency. Founded in 2005 by Alex Whitmore and Kathleen Fulton, Taza
Chocolate produces “stone ground chocolate that is seriously good and fair for all”
(Taza, 2017). Taza acts as an all-around ethical, socially-conscious and purpose-
driven business.
Taza Cultivates Channel Relationships with Chocolate

Taza’s company culture is driven by its founder, who prior to opening his own
company “apprenticed with Mexican molineros, learning their ancient chocolate-
making secrets” (Taza, 2017). Taza offers an easy application process opening up
more opportunities in making an effort to get natives from the countries that it
sources its cacao from involved in its business processes.

Taza, meaning “cup” in Spanish, is reminiscent of the way Aztecs


ritualistically consumed chocolate in liquid form using specially designed cups or
vessels for this purpose (Coe, 1996). A nod to its rich history is also found in its
design and packaging displaying a cacao pod and its signature mold in the form of
the Mexican millstone, a stone that is traditionally used to grind chocolate.

“Taza founder Alex Whitmore took his first bite of stone ground chocolate
while traveling in Oaxaca, Mexico. He was so inspired by the rustic intensity
that he decided to create a chocolate factory back home in Somerville, MA.
Alex apprenticed under a molinero in Oaxaca to learn how to hand-carve
granite mill stones to make a new kind of American chocolate that is simply

crafted, but seriously good. In 2005, he officially launched Taza with his wife,
Kathleen Fulton, who is the Taza Brand Manager and designed all of the
packaging.
Taza Cultivates Channel Relationships with Chocolate

Taza is a pioneer in ethical cacao sourcing. We were the first U.S. chocolate
maker to establish a third-party certified Direct Trade Cacao Certification
program. We maintain direct relationships with our cacao farmers and pay a

premium above the Fair Trade price for their cacao. We partner only with
cacao producers who respect the rights of workers and the environment.”
(Taza, 2017

CHOCOLATE MAKING EQUIPMENT

Taza uses antique equipment. The chocolate making equipment were


bought in Germany and refurbished in Italy. When they eventually move to the first
floor and consolidate their operations, they want to maintain the same machines
to preserve the traditional way of making chocolate.

Taza chocolate making process is unique. Taza chocolate is stone ground and
minimally processed, and no conch is used. They use authentic Oaxacan stone mills
instead of steel refiners to grind the cacao. Due to the imperfect surface of a
granite millstone, unrefined cacao particles and sugar granules remain in the
finished chocolate.

They roast, winnow, grind, temper, and mold their chocolate in house and
by hand. They use exclusively organic and sustainable ingredients to craft their
chocolate.
Taza Cultivates Channel Relationships with Chocolate

The First step is roasting in this mid-century, candy-apple red Barth Sirocco
200 cacoa roaster.

Then beans are Winnowed (Winnowing is the process of removing the shell
and germ from the cacoa bean and breaking it into cacoa nibs. This machine was
found in a candy factory in the Dominican Republic. It took half a dozen men five
days to disassemble it. If purchased new today, it cost about half a $million.

Next, the cacao nibs are ground into cocoa liquor using authentic Mexican
stone mills that is sourced from Oaxaca. This machine uses hand-hewn granite
millstones to grind the cacao into a grainy paste.

The liquor is then combined with sugar and either reground or refined in the
stone refiner for about a day, depending on the final chocolate They’re making.

Next comes the crucial stage of tempering. Tempering refers to the precise
raising, lowering, and raising of the temperature of liquid chocolate to develop and
align the crystals in the chocolate to give it the right mouth feel and snap. They use
a relatively small tempering machine at the moment: the Sollich Minitemper
200FD.

Finally, the chocolate is precisely dosed into molds using a ring depositer.
The molded chocolate bars are dried in our custom drying room and demolded
onto sheet pans. Then, every single bar and disc is wrapped by hand, and packed
into recyclable display boxes awaiting shipment around the country and world.
Taza Cultivates Channel Relationships with Chocolate

CHOCOLATE SUPPLY CHAIN

Millions of hands spanning multiple continents are responsible for the


production of the key ingredient in this beloved treat, but most consumers don’t
have a sense of the complex intricacies of the supply chains involved in chocolate
and the economic realities of the farmers who grow the crop.

The chocolate supply chain begins with the cultivation of cacao pods. After
cacao cultivation, the pods are harvested and the seeds and pulp are separated
from the pod. The cacao seeds are fermented and dried before being sorted,
bagged, and transported to chocolate manufacturers. The cacao beans undergo
roasting, husking, grinding, and pressing before the product undergoes a process
called “conching,” in which the final flavors develop (Martin, 2018). Differences in
the execution of each step influence the ultimate taste and consistency of the
chocolate product.

Today, approximately two million independent family farms in West Africa


produce the vast majority of cacao. Each farm, between five to ten acres in size,
collectively produce more than three million metric tons of cacao per year (Martin,
2018). While some of the farms grow crops like oil palm, maize, and plantains, to
supplement their income, the average daily income of a typical Ghanaian cacao
farmers is well under $2 per day.
Taza Cultivates Channel Relationships with Chocolate

The commercial process of purchasing cacao usually involves the farmers


selling to intermediaries, who subsequently sell to exporters or additional
intermediaries. With each middle-man adding their own profit layers, the supply
chain lengthens as well the opportunity for the corruption and exploitation of the
growers and farmers.

In response to the social and economic injustices associated with the cacao
supply chain, various organizations have been established with the common
mission of improving ethical and corporate responsibility of global cacao practices.
Many of these organizations have established criteria for certifications with the
goal of enticing companies to comply with specified ethical requirements in
exchange for public acknowledgement for doing so.

“Fair Trade,” a designation granted by the nonprofit of the same name,


stands out as a recognizable stamp on many shelf-brands. Self-defined as an
organization which “enables sustainable development and community
empowerment by cultivating a more equitable global trade model that benefits
farmers, workers, consumers, industry and the earth,” Fair Trade certifies
transactions between U.S. companies and their international suppliers to
guarantee farmers making Fair Trade certified goods receive fair wages, work in
safe environments, and receive benefits to support their communities (“Fair Trade
USA,” 2017).
Taza Cultivates Channel Relationships with Chocolate

Yet, while in theory Fair Trade seems to address many issues the cacao
farmers face, critics of the certification point out there exists a lack of evidence of
significant impact, a failure to monitor Fair Trade standards, and an increased
allowance of non-Trade ingredients in Fair Trade products (Nolan, Sekulovic, & Rao
2014). So, while in theory certifications like Fair Trade offer the potential to
improve the cacao-supply chain by ensuring those companies who subscribe to the
certification meet certain criteria, the rigor and regulation of the criteria remains
heavily debated.
Taza Cultivates Channel Relationships with Chocolate

ESTIMATE OF GREENHOUSE GAS EMISSIONS

From October 2008 to September 2009 Taza consumed 61,805 kilowatt


hours (kWh) of electricity, based on the aggregated readings from their three
separate utility meters. The organization can apply the greenhouse gas
conversion factors for ISO New England of 0.000371 metric tons of carbon dioxide
equivalent (MTCDE) per kWh of electricity (ISO-NE, 2009) and the standard
conversion rate of 0.00532 per therm of natural gas (US-EPA,2009) . Taza does
not pay their gas bills directly, but they can estimate their usage based on the
average natural gas intensity from the 2003 US Department of Energy Commercial
Building Energy Survey, which is 23 cubic feet of natural gas per square foot of
space for warehouse buildings. Based on the conversion factors above and the
estimated 5,500 square feet of existing building space, Taza emitted roughly 22.9
MTCDE from electricity and an estimated 6.7 MTCDE from natural gas. During the
same period of time, Taza produced 55,424 pounds of chocolate, resulting in a
greenhouse gas (CBECS,2003). emissions rate of 0.000534 MTCDE per pound of
chocolate, or roughly 1.068 pounds of CO2 equivalent per pound of chocolate.
Taza Cultivates Channel Relationships with Chocolate

TRADE

In contrast to Fair Trade, an alternative type of product sourcing that is


growing in popularity and reputation is that of Direct Trade. Different from the
traditional supply chain process, ‘bean-to-bar’ companies offer this as a potential
solution for the injustices in the cacao industry. By cutting out the middle-men and
working directly with cacao farmers, these small chocolate companies commit
themselves to the highest ethical standards and quality (Shute 2013). The goal is
that this bean-to-bar “pipeline will make for more ethical, sustainable production
in an industry with a long history of exploitation” (Shute, 2013).

While providing some oversight on ethical practices, Fair Trade’s supervisory


capacity does little to create a relationship between the farmers and the ultimate
producers or to eliminate extraneous intermediaries diluting profit from both
parties. Additionally, achieving a Fair Trade certification costs between $8,000 and
$10,000, whereas Direct Trade costs the chocolate bar producer nothing.

This direct connection, allows the buyer and farmer to communicate fair
prices, ensuring that the cacao farmers receive fair wages, working conditions, and
support (Zusman, 2016). Furthermore, the transparency associated with the bean-
to-bar process motivates the companies to keep up to date on ethical practices,
and encourages the cacao farmers to take extra care the cultivation of their beans.
Taza Cultivates Channel Relationships with Chocolate

Taza sources its cacao from its “Grower Partners” in the Dominican Republic,
Bolivia, and Haiti. Taza provides a detailed profile for each of its cacao producers
which features information including the country region, number of farmers,
duration of partnership, tasting notes which contribute to the terroir of their
chocolate, history of the region, and pictures of the farmers with Taza employees.
The thorough information Taza provides truly puts faces to the names of the
farmers and displays Taza’s direct and personal engagement with their cacao
producers.

Alex Whitmore, an innovator of the bean-to-bar movement founded Taza


with a commitment to “simply crafted, but seriously good chocolate,” and as “a
pioneer in ethical cacao sourcing” (Organic Stone Ground Chocolate for Bold Flavor,
2017).

The mission of Taza Chocolate is “To make and share stone ground chocolate
that is seriously good and fair for all” (Taza, 2017). In the dual parts of their mission:
“seriously good” and “fair for all”, Taza has become a leader in using the quality
and ethicality of their products to empower and respect those often overlooked
workers at the very front of the supply chain. Looking first at quality, Taza has seen
success as a maker of “seriously good” chocolate (Taza, 2017). Their products are
now available all over the country and internationally, in specialty, natural and gift
stores. Fine restaurants have used Taza Chocolate in their kitchens and numerous
major food publications have featured the company. But these are just outward
indicators of what goes on behind the scenes. For one thing, their “seriously good”
Taza Cultivates Channel Relationships with Chocolate

chocolate seeks to remain true to its cacao origins and acknowledge where it comes
from through proper and authentic taste. While other chocolate makers may do as
they please to conform to the tastes of the consumer masses, Taza Chocolate caters
to the genuine recipes and processes of the geography and culture within which it
was conceived.

In addition to publishing their Direct Trade Program Commitments, Taza


provides access to their transparency report, cacao sourcing videos, and their
sustainable organic sugar. Seemingly, Taza exemplifies the archetype bean-to-bar
company.

Taza chocolate products carry five certifications to ensure safe labor


practices as well as organic ingredients, whose integrity is guaranteed by having
their “five Direct Trade claims independently verified each year by Quality
Certification Services, a USDA-accredited organic certifier based in Gainesville,
Florida” (Taza, 2017).

“Taza is big on ethical cacao sourcing, and is the first U.S. chocolate maker to
establish a third-party certified Direct Trade Cacao Certification program,
meaning, you maintain direct relationships with your cacao farmers and pay
a premium above the Fair Trade price for their cacao.” (Taza, 2017)

In its Transparency Report displayed below, Taza even discloses what it pays for its
cacao beans.
Taza Cultivates Channel Relationships with Chocolate

DIRECT TRADE PROGRAM:

1. Real Relations
2. The Best Cacao
3. More Money for Partners

KEY INDICATORS

- 1,608 farmers benefited


- 643 female farmers benefited
- 3703 hectares of organic farm production
- 100% cacao grown from agroforestry systems
- $ 1,236,476 is paid for cacao
- 391 metric tons of cacao beans purchased
Taza Cultivates Channel Relationships with Chocolate

Bean-to-bar chocolate companies appear to be a viable potential solution,


albeit slow and on a more micro level, to addressing the issues in the cacao-
chocolate supply. Because currently the consumer base does not seem to possess
a critical awareness of different certifications, the bean-to-bar companies must
continue to pioneer more moral standards until enough customers catch up and
until demand forces the bigger chocolate vendors to take a similar approach. Until
then, tackling the exploitation embedded in the cacao-supply chain falls exclusively
on the shoulders of the chocolatiers equally loyal to both chocolate and social
responsibility.

Taza Chocolate is undoubtedly making large efforts to be a part of the


solution rather than a part of the problem. Rather than allowing consumers to
blindly focus on the end product of the chocolate itself, Taza encourages
consumers to acknowledge the environment and culture from which the chocolate
originates. Often forgotten farmers and food artisans are brought to the forefront
instead of being relegated to the archives of unseen histories. Indeed, Taza gives
growers “an alternative to producing low quality cacao for unsustainable wages”
(Taza, 2017). Taza’s operations may still be in its nascent stages, but it is exciting to
see even a small company lead the entire chocolate industry towards a more ethical
and sustainable future.
Taza Cultivates Channel Relationships with Chocolate

PRODUCTS

Chocolate Origin Bars:


Chocolate
The Amaze Bars: Mexicano
Covered Treats Minimally
Stone ground Gifts and Discs: Rustic,
(Covered in processed
chocolate combined Collections organic dark
stone-ground stone
with other flavors Mexican style
dark chocolate)
chocolate discs ground bar
Wicked Dark Almonds Oxacan Sampler Cacao Puro 70%
Dark
Dominican
Republic
Cacao Crunch Cashews Chocolate 85% 80% Dark
Mexicano Super Dark Dominican
Sampler
Republic
Coconut Hazelnuts Chocolate Chipotle Chili 87% Dark
Mexicano Bolivia
Classic
Collection
Coconut Almond Amaze Cinnamon
Bar Trios
Espresso Buzz Coffee

Maple Pecan Guajillo Chili

Deliciously Dark Salted Almond


Taza Cultivates Channel Relationships with Chocolate

Raspberry Crunch Vanille

Sea Salt Almond

Tofee, Almond & Sea


Salt
Seriously Dark

Wicked Dark w/
Coconut
Wicked Dark w/ Ginger

Wicked Dark w/
Toasted Quinoa

PRODUCT FACTS

- Coarse Texture & Intense Flavor


- Mainly wholesale products
- 6-12 month shelf life
- “premium brand”
- Specialty, Natural food stores & online
Taza Cultivates Channel Relationships with Chocolate

TARGET CUSTOMERS

- Wealthy
- Organic Consumers
- Community Oriented
- Urban Area
- Adventurous Consumer
- Well Informed
- Ages 24-35
Taza Cultivates Channel Relationships with Chocolate

SWOT ANALYSIS

Strengths

- High Quality

- Direct Trade

- Wholesale/Distributor Relationship

- Face – to – Face Farmer Relationship

Weaknesses

- Price

- Limited Availability

- Small Target Market

Opportunities

- Expanded Internationally

- Increase Promotions

- Increase Availability

Threats

- High Competitors

- Potential of new Entrants

- Competitive Pairity
Taza Cultivates Channel Relationships with Chocolate

PROPOSED ALTERNATIVES

Alternative #1: Stay the course

PROS:
- Retain the Image of being a “Premium Brand”
- Ensure High Quality Ingredients

CONS:
- High Price
- Limited Target Market
- Less Brand Awareness
Taza Cultivates Channel Relationships with Chocolate

Alternative #2: Ship Internationally Especially in U.K.

PROS:

- Larger Market
- Receptive to Organic & Ethical Chocolate
- Low Barriers to Entry

CONS:

- More Employees
- Big Competitors
- Brand Promotion Cost
Taza Cultivates Channel Relationships with Chocolate

Alternative #3: Increase Brand Awareness

PROS:

- Draw in more Customers


- Low Cost

CONS:

- Could possibly lose niche market


- Expanding to more states would be expensive
- More Staff
Taza Cultivates Channel Relationships with Chocolate

Alternative #4: Decrease Price

PROS:

- Increase of Product Demand


- Higher Turn Over
- Increase in Sales

CONS:

- May hurt your brand equity


- Decrease Product Quality
- Decrease in consumers in because the product may no longer carry
its prestigious statement
- Increase in Competition
Taza Cultivates Channel Relationships with Chocolate

RECOMMENDED COURSE OF ACTION

1. Brand Awareness with the help of bloggers and/ or Social Media


Influencers
2. Ship Internationally in United Kingdom as they were known to be
one of the Highest Chocolate Consumer
3. Introduce Product Through Samples and Special Events.
Taza Cultivates Channel Relationships with Chocolate

Questions for Discussion:

1. Which Distribution Channels does Taza use, and why are they appropriate
for this company?
2. In what ways does Taza benefit from selling directly to some consumers?
What are some potential problems selling directly to consumers?
3. In what ways are Taza’s distribution efforts influenced by the fact that its
products are organic?
Taza Cultivates Channel Relationships with Chocolate

Answers:

1. In every business, Both wholesalers and Distributors are


important in order for a business to branch out, promote their
products and make money faster. Taza’s products are being
marketed mostly through Wholesales, Distribution and US Retail.
As the article says; “Wholesale will always be our bread and butter
where we move the volume and we have good margins”. Aside
from that, they broaden their distribution channels to individual
customers through their website and events.

Long story short, Selling to Distributors and Retailers help the


company to sell large amounts of products, while selling to
individuals helps them to make personal connections and reach
different set of potential customers.
Taza Cultivates Channel Relationships with Chocolate

2. Gaining the Trust of the customers is a number ones must in


each and every company. Taza chocolate built their customer
relation ship through letting the customers have the knowledge on
how they process their high quality and organic chocolates.
Furthermore, Direct Selling to customers helps the company to
reach willing customers whom are far from the retailers and those
customers that wants a specific product. Direct selling to customers
also helps to forge relationships although it is less efficient to ship
directly to customers and may affect the chocolate’s quality. Aside
from that, Taza used this strategy to make itself one step ahead of
its competitors. Having the people watch the process of their
chocolate-making, Taza would be different from other chocolate
Manufacturers. In this case, Taza can perform effectively in the
market. Another benefit of Direct selling to the company is that, It
became familiar with its customers, it made its name with the help
of special tasting and limited edition treats to lure customers to
their store during the holidays and events that the company will
host.
Taza Cultivates Channel Relationships with Chocolate

The only downfall is that Taza cannot provide the same quality
of its product to all of their consumers since chocolate is a
perishable product and it cannot hold long during transportation.

3. With personal connections of Taza to its growers/ farmers whom


supplies the ingredients. Taza promises High – quality products to
its consumers and keeping that statement is the most important to
the company. So Taza sees to it that they maintain their
relationships with their farmers to ensure the best product. In this
way, Taza makes their Social responsibilities evident while making
sure they produce high quality products through the best
ingredients where they command premium price.
Taza Cultivates Channel Relationships with Chocolate

REFERENCES

Coe, Sophie D., and Michael D. Coe. The True History of Chocolate. New
York: Thames and Hudson, 1996. Print.

Fair Trade USA. N.p., n.d. Web. 03 May 2017.

Martin, Carla. “Modern Day Slavery.” Lecture, Chocolate Lecture,


Cambridge, March 22, 2017.

Martin, Carla. “Alternative Trade and Virtuous Localization/Globalization.”


Lecture, Chocolate Lecture, Cambridge, April 04, 2017.

Martin, Carla. “Slavery, Abolition, and Forced Labor.” Lecture, Chocolate


Lecture, Cambridge, March 01, 2017.

ISO New England, www.iso-ne.com, Accessed December 5, 2009

US EPA, http://www.epa.gov/cleanenergy/energy-resources/refs.html,
Accessed December 5, 2009

CBECS (2003)
Source:http://www.eia.doe.gov/emeu/cbecs/cbecs2003/detailed_tables_2
003/2003set11/2003pdf/c24.pdf, US DOE
Taza Cultivates Channel Relationships with Chocolate

Nolan, Markham, Dusan Sekulovic, and Sara Rao. “The Fair Trade Shell
Game.” Vocativ. Vocativ, 16 Apr. 2014. Web. 03 May 2017.

“Organic Stone Ground Chocolate for Bold Flavor.” Taza Chocolate. N.p.,
2015. Web. 08 May. 2018. <https://www.tazachocolate.com/&gt;.

Shute, Nancy. “Bean-To-Bar Chocolate Makers Dare To Bare How It’s


Done.” NPR. NPR, 14 Feb. 2013. Web. 03 May 2017.

Taza Chocolate. “Sourcing for Impact in Haiti.” Vimeo. Taza Chocolate, 03


May 2017. Web. 03 May 2017.

Zusman, Michael C. “What It Really Takes to Make Artisan


Chocolate.” Eater. N.p., 11 Feb. 2016. Web. 03 May 2017.

Ailworth, Erin. "Taza Chocolate focuses on quality amid growth".


bostonglobe.com. The Boston Globe.

Luna, Taryn. "Seven Things You Should Know About Alex Whitmore".
bostonglobe.com. The Boston Globe.
Taza Cultivates Channel Relationships with Chocolate

"CEO Desk: How Taza Chocolate's founder brought a taste of Mexico to


Somerville | Boston.com". www.boston.com. Retrieved 2020-04-29.

Hofherr, Justine (February 23, 2016). "CEO Desk: How Taza Chocolate's
founder brought a taste of Mexico to Somerville". Boston.com. Retrieved
December 16, 2017.

"The Taza Chocolate Story". tazachocolate.com. Retrieved October 20,


2015.

"Beyond fair trade: These bean-to-bar chocolate makers are upping the
ante on working with cocoa farmers". Financial Post. December 6, 2017. Retrieved
December 16, 2017.

"Taza Chocolate – U.S.A." Chocosphere. Retrieved August 16, 2012.