Askinosie Chocolate shares first profits

But Dec. 17, 2007, was a day of clarity for Askinosie.

That’s the day the prominent criminal defense attorney doled out cash to 22 Ecuadorian farmers who harvest, ferment and dry the cacao beans he imports to make Askinosie Chocolate.

Askinosie began selling premium dark chocolate bars crafted at his East Commercial Street factory last May, and the fledgling company turned its first profit in October.

Early on, Askinosie vowed to pay his Latin American suppliers more than the fair trade price for cacao beans and to share a percentage of his profits with them. He made good on the promise last month by returning to Ecuador, and this week he’ll be in southern Mexico passing out pesos to 20 farmers who grow the Trinitario beans that flavor his flagship Soconusco bar.

In Ecuador, Askinosie distributed 10 percent of the company’s net profit among the farmers and furnished them with financial statements translated into Spanish.

He also brought them chocolate bars in the original packaging, which includes a map of the region and a photo of a farmer.

“Now they know for sure where (their crop is) going,” he said. “They’re beginning to make a connection with what they’re doing in the orchard … and the chocolate, and that’s what I was trying to do. By far, it was the best day I’d had since I started the business.”

Askinosie wouldn’t say how much each farmer received, but he thinks the profit-sharing gesture was a milestone.

“It made an impact on their lives,” he said. “I know it was a substantial number for them. It certainly changed their Christmas. One guy – it brought tears to his eyes that he got this money. And that was meaningful for me that someone would respond that favorably to us.”

Stake in the outcome

Askinosie believes that his chocolate, which already has received accolades from bloggers and tasting aficionados, will only improve in taste if the bean producers have a “stake in the outcome.”

The essence of Askinosie Chocolate lies in the cacao bean, or more specifically, the way the bean is fermented and dried to preserve its palate-pleasing properties, Askinosie said. He has impressed upon his suppliers the importance of meeting those high-quality standards in order to reap the financial rewards.

That’s the crux of the “stake in the outcome” business model Askinosie borrowed from friend and business adviser Jack Stack, founder and CEO of SRC Holdings Corp.

The trademarked philosophy preached far and wide by Stack is prominently featured in Askinosie Chocolate packaging and on the company’s Web site, www.askinosie.com.

“I think the program is revolutionary,” Askinosie said. “In my opinion, it’s bigger and more important than fair trade.”

Bucking conventional business wisdom aimed at keeping costs low, Askinosie deals directly with his suppliers to arrange for cacao bean shipments to Springfield. Transportation and logistics issues without an intermediary are costly, but they are costs Askinosie is willing to absorb.

Askinosie Chocolate received its first shipment of beans – a total of 12 tons – from Ecuador and Mexico early last year. Routing the beans from Ecuador actually proved easier and less expensive than from neighboring Mexico, said Askinosie, who’s been working with Springfield-based logistics firm Marisol International.

“I’m telling you dealing with Mexico is like dealing with a company on Mars,” said Marisol General Manager Carie Samuel. “It’s getting better, but (Askinosie) wants to get the best beans for the best chocolate. And the best beans are in places that are really, really hard to get to. That’s just been our challenge.”

Askinosie is searching for a third supplier after an attempt to buy cacao beans from coastal Venezuela went sour. The chocolate maker said he wired about $25,000 to one farmer who vanished with the money.

“I did not get one bean,” he said. “And I could sure use that money right now.”

‘A bumpy, bumpy ride’

The Venezuelan fiasco may have been the biggest predicament for Askinosie in his first year of business, but there were certainly others.

For the first two months of production, chocolate factory workers struggled with the tempering phase, which uses gradual heat to harden the bars to a brittle state. Only 10 percent of each batch – about 100 bars – were properly tempered, Askinosie recalled.

“I was pretty much at the end of my rope at that point,” he said. “It was one of the most stressful times in my life.”

Askinosie hired a temperature consultant and picked the brains of confectioners nationwide before learning of a German company that manufactures a continuous tempering machine – a $47,000 fix.

“Production since then has been beautiful,” he added.

Today, the chocolate factory – operating at about 25 percent capacity – is cranking out some 2,500 bars a week. Most are shipped to specialty stores throughout the country that have inked distribution agreements with Askinosie Chocolate, which is now in 60 locations in 25 states. The bars are locally available at Harter House and the Brown Derby International Wine Center for about $8 apiece.

In the coming year, Askinosie said he would focus on marketing his dark chocolate as a companion to dark beer crafted at microbreweries. He also plans to ramp up production in hopes of doubling revenues to offset higher-than-expected labor costs. Askinosie Chocolate now has 10 to 15 employees, about three times as many as Askinosie anticipated.

“I really miscalculated,” he said. “The bottleneck is in packaging. But I couldn’t automate it if I wanted to, because part of the experience is the packaging.”

While Askinosie considers himself an artisan, he’s all too familiar with the financial realities after a year in an industry he describes as more cutthroat than law.

“The transition from lawyer to chocolate-maker has been a bumpy, bumpy ride,” he said. “It has not been easy. We need to reach greater profitability, and we need to reach a point for me where it’s affordable for me to no longer be a lawyer.”

Askinosie still consults with law firm partner Stacie Bilyeu, who is also a criminal defense attorney. Askinosie and Bilyeu LLC is located in an office just a few blocks west of the chocolate factory on Commercial Street.[[In-content Ad]]