From Farmers Markets to 5,000 Stores: How Taza Chocolate Stayed True and Grew

0:00Chocolate candy is dominated by just a handful of large multinational corporations in terms of the overall volume of chocolate candy that's produced. So if you want to exist as a small business in the chocolate candy category, you have to find a niche that is defensible. Welcome to Shopify Masters, your companion for starting and building a business. I'm your host, Serena Smith. Few brands have hit the sweet spot between tradition and disruption quite like Taza Chocolate. For nearly 20 years now, founders Alex Whitmore and Kathleen Fulton have been upending the industry with their bold stone ground chocolate, a texture and taste unlike anything else on the shelf.

0:41We knew very early on that we were making a very polarizing product. People either loved it or hated it. The married duo began by hand grinding cacao in a small Boston workshop and grew Taza into a specialty chocolate brand with 40 products made from organic cacao sold in over 5 ,000 stores worldwide. Known for its transparency, ethical sourcing, and fearless approach to flavor, Taza has found the right recipe for shaking up an entire category. We're thrilled to deliver this really unique product to the market, and we're proud of it every day. Here with more are Alex Whitmore and Kathleen Fulton, co-founders of Taza Chocolate.

1:15Husband and wife duo, co-parents of three children. Is there anything you don't do together? Well, Serena, thanks for having us. It's awesome to be on the program. I want to go back to the beginning for a moment. You know, we take terms like bean to bar and craft chocolate almost for granted at this point. But we have to remember that 20 years ago, those were basically unknown terms in the landscape, right? So what was it about chocolate and why was it important to you to own every part of the manufacturing process when that is a hugely more difficult way to go about manufacturing chocolate than the vast majority of purveyors out there doing it?

2:00Yeah. So it's hard to remember what the world was like 20 years ago, but at the time, the organic lettuce was like the super wilty, sad looking lettuce that only hippies bought, you know, on the store shelves. And that was kind of where the industry was. I'm a total foodie. I love cooking. I love eating. I love culinary experience. I love travel. When we were starting the business, I wanted to build something that I was not only proud of and proud to go to work for every day, but something that I was excited about from a culinary standpoint. And what we ended up building was a chocolate making company.

2:39And a lot of people don't understand what goes into that. But most chocolate brands out there that you see on the shelf of the are either having their product co-manufactured by a big manufacturing company, and they're just kind of marketing it and putting their pretty package around it. Or they're actually doing some of the manufacturing themselves, where they're buying bulk chocolate from a big manufacturer, and they're kind of mixing in their own special sauce and then forming it into bars and wrapping it. And that's what most of the manufacturers do. And then there's actually what we do, which is what we call a bean-to-bar manufacturer.

3:15So we actually do everything from taking all the materials from the cocoa farms, taking all the raw agricultural inputs. We use organic cane sugar, and we actually roast and winnow and grind the cocoa right here at our factory in Somerville. And that's really hard. It's very equipment intensive. It's very operationally challenging. and it's something that we take a lot of pride in because it allows us to do what I'm passionate about, which is really bring amazing, unique flavors to people that they've never experienced before. And so I think that's something that we strive to do here at Taza is give people a really unique flavor experience that they've never had anywhere else with chocolate.

4:04You, when you started this, are just a couple of 28-year-old kids who, you know, by your own admission, kind of don't know any better. And you decide to take on a very labor-intensive process that's also like a very global process. Like, how did you even go about finding your farmers and forming those relationships to get you to the part where you have the beans and you're roasting them and the entire production process? And the story is on our first date, he told me he had a business idea because I asked him, like, are you another one of these anti-capitalists? Because I've been in some relationships with these total idealists that were going nowhere.

4:48I was trying to figure out where I was going and what I was doing. And he was doing much the same. And he said, I have this business plan for a chocolate cafe. And I didn't even know him. And I just said, like, well, that's a dumb idea. You would hate the retail hours and the overhead. It was just like a knee jerk response. And then he said, well, do you want to come see our business plan? But I mean, for all intents and purposes, I just like pushed him on that idea. And he went, I think, in a direction that was very natural for him, which was like, make it myself, figure it out. And he just started sourcing equipment, traveling to Mexico and slowly putting together this idea of making chocolate, renting a space.

5:28He made all the contacts and really just learned by traveling and meeting people and putting himself out there. And we cobbled together this idea, you know, and I just we did what we do really well. It's just brainstorm together. So I just we just kept talking through names and he said, I got it. Taza chocolate. And we just worked like that together. My background was studio arts and I was trying to grow my digital graphic design skills. And I just started working on this project as a class project. And that's how it started. It was really organic. It's not like we sat down like, you're going to do this and you're going to do this.

6:02And we just kept working together like that. And he kept doing what he does really well. And I kept doing what I could do to be part of it. I like creating. He likes creating. I also love food. I don't like making it as much. I just really like eating it. So, yeah, I think that's just kind of how it went. And some of the decisions we made back then, like not introducing dairy because that adds complexity to an already very complicated process. Right now, it's like paying off in spades. These decisions we made that kind of kept us very niche, we stuck to them for really like now for 20 years. We've never had soy.

6:44We've never had dairy. We've never had gluten. We were vegan before we knew we were vegan. Would you say that's true, Alex? Yeah. I mean, before the vegan trend even happened, we were doing it already. We've always been certified organic. In a moment prior to that being the MO across the board, right? When we started Taza, there were no other very well-known small artisanal chocolate makers. It was not a thing here in the U.S., but it wasn't like with awareness. We weren't like, oh, well, I see that there's this white space over here. We just were following an idea and it grew. I mean, if you can put your humility aside for a second, to what extent do you think not only that you were part of a movement, but that you've helped sort of shape that movement?

7:33Big part. and Alice is a really big part in terms of like sourcing and cocoa and working with cocoa farmers and so he became an expert in cocoa and cocoa sourcing and I'm not that's as much as I can say because I'm a non-expert yeah it was very much the gestalt of the the moment you know right when farmers markets were starting and the whole slow food movement was really becoming this thing you You know, Alice Waters, Carlo Petrini, they were really trying to foment this movement. But my love of travel, spirit of adventure, really wanting to go deep on one specific subject and really understand it.

8:14Like, where is the flavor coming from? And also, what are the cultural traditions around this flavor? And like, how do you think about that? Because that's a very important part of culinary history and food. I was an anthropology major in college. So that really drove me to travel everywhere. It started in Mexico and then it spread out in Belize, Guatemala, Bolivia, Dominican Republic, Haiti. We were the first U.S. company to import certified organic cacao from Haiti, which we're really proud of to this day, the impact we're able to bring to that country with our business there. So that kind of spirit of adventure and excitement around food and flavor really drove this.

8:54And that definitely came out of that time period, the mid-aughts. Yeah. And I can say, like, I love making a tangible product, you know, something you could see and hold and share and experience. And it's fun. You never know where it's going to go. And you never really know what consumers are going to like. We knew very early on that we were making a very polarizing product. People either loved it or hated it because the flavor is really intense. And it's kind of like, we wouldn't want to say, like, take it or leave it. But we are very comfortable with the fact early on, you know, some people were going to love it and some people were not, you know, and that was OK.

9:34And that means like we would be standing at a farmer's market and sampling it and we would get like live feedback from people like love it, hate it. You know, why would you ever do this? You know, we had some amazing customer service emails that are like, well, you know, why is this so disgusting? And then we have super fans, you know, fans for life. So, it kind of demands all these different pieces of you to keep forging ahead when you're making something that is so different from the norm. And there's not really a lot of precedent. At the time when we started, there was not a lot of precedent for what we were doing.

10:06Ultimately, do you think that there is value from a business perspective in being a little more divisive? Look, we're in a very, very competitive and crowded category. Chocolate candy is dominated by just a handful of large multinational corporations in terms of the overall volume of chocolate candy that's produced. So if you want to exist as a small business in the chocolate candy category, you have to find a niche that is defensible. You can't just make whatever the big guys are making. So if you think about what we do, we really are focused and staying focused on what we do, which is making really weird, dramatically flavored and textured chocolate products that really celebrate a specific ideal around food and flavor and ingredients.

11:02that focus has allowed us to be successful in a very competitive category. And, you know, we're not going to grow to be a multi-billion dollar company with that strategy. No, but we can build a business that we're really proud of that can have a nice, meaningful impact in our community, in the chocolate industry in general. We're well known throughout the world as thought leaders in transparent and ethical trade practices and the cocoa supply chain. and we deliver a product that we're really proud of. Our small but mighty team here at Taza Chocolate, we're thrilled to deliver this really unique product to the market and we're proud of it every day.

11:42There is great power in being ahead of the curve and establishing yourselves as unique players in the industry as you have. And it also comes along with its fair share of challenges when you're introducing a product that is largely unfamiliar to people and their palates. What did that early consumer education look like so that you could convert people into customers? Yeah, we did a lot of demos and sampling, a lot of it. And it really shaped and guided what we ended up making. And to this day, we learned from our consumer, our core consumer, the ones that kept coming back for more, that they just wanted really intense cacao flavor.

12:30And to this day, this bar right here, the Taza Wicked Dark 95 % Dark Chocolate Bar is our number one SKU by far. And that's because of years of just listening to the customer and just following what they wanted after we presented them with a bunch of things that we loved, that we were proud of to make. It's gratifying to know that we make something that is part of people's everyday sort of piece of joy. And being super niche has come with challenges when we've tried to do something like grow maybe in an area that we're not really made for. Those are some pain points we've had trying to be mass market really hard, if not impossible, for makers like Taza.

13:18You know, so over the years, we've had crisis points. And when we're like, oh, where are we going to grow? We're going to grow over here. And then we try and we just can't. We've evolved over the years and learned, like, just play to your strengths, play to this super dark customer who wants a really cacao flavor forward product. And that's not mass market. Whenever we haven't been really true to ourselves is when we've stumbled. I could say that that's the case for everyday life. I could say that that's the case for our marriage. It's definitely the case for the business. Kathleen, you were speaking to moments where Taza went in the direction or attempted to go in the direction of going a little bit more mass market and it not working.

14:01Can you talk to me with like a little bit more specificity? Give me an example of when you guys made a move like that and you had to pivot back? Yeah, I mean, we tried to compete on price, right, basically, to go more mass market. and that was a mistake. One, it's hard with our business model because we're small. You really have to move a lot of volume and maybe be part of a larger corporation to compete on price. In an environment like this right now where cocoa prices are really high, they can continue to capture market share because smaller businesses cannot. And then, you know, just product launches.

14:37You know, we've tried to make products that are like maybe fun flavors and things like that. And I don't think they're what our customers are looking for. on the regular. It feels like our customer, they're not going to buy Taza chocolate for their fun flavors. They're going to buy it for their like everyday staple, almost like they would buy coffee. Like you find a coffee brand you like and you have it every day. Sometimes you might be out in the world and get another cup of coffee from someone else. But when you're going to brew it at home, it's going to be your favorite brand. So yeah, I think anytime we've tried to play outside of our wheelhouse, when we've tried to be more candy than food, we just don't want enough business with that.

15:15One very notable shift that you guys have made in more recent years is moving into the B2B space, right? Operating as a third-party manufacturer for other brands. Why make that call and what has the option been? We were in a crisis period where the demand for our brand was really up and down and we were trying to figure out how to stabilize the business. And when you're a manufacturing company, you really have to utilize your machines, your assets. And if you don't, you basically have all this overhead that you're carrying that's not adding value to the business. And so we needed to figure out how to just constantly be running our machines and manufacturing chocolate and keeping the pipes full.

16:01And Kathleen was definitely one of the drivers of this strategy, which is to really diversify our book of business. So it wasn't just wholly dependent on our own brand, but basically spread out the risk and spread out the opportunity across other brands as well. And so what we ended up doing was exploring co-manufacturing relationships where we would actually make another chocolate brand's products in our manufacturing facility. We've also done private labels, so work with retailers that want a private brand experience for their retail stores where we would manufacture their chocolate products.

16:42And then we also have evaluated other channels like industrial B2B where we would manufacture a base chocolate or some kind of an ingredient that another brand or company is using in the manufacturing of their finished goods. So those are kind of the key things that we've done over the last several years that have really helped us stabilize our manufacturing operations and make sure we always have stuff to make every day for all of our staff so we can stabilize our staffing and, you know, keep our team engaged with the company and productive. Yeah, and I think that there's this really interesting tension, especially if you have the privilege of having a company that can last 20 years plus is that tension of wanting to stay really true to what you know and your core consumer and your core philosophies and also being open to evolution and change and understanding when you want to be in one category versus the other, right?

17:46You just made me think of one thing. In recent years, you probably have noticed this because you live in LA. We went through this whole phase over the last 10 years where there was a huge amount of growth with chocolate brands manufacturing chocolate that was sugar-free. and so they would use allulose or you know monk fruit or whatever all these alternative non-nutritive yeah stevia non-nutritive sweeteners that was like a massive trend and like so many times we were talking about gosh we we should probably make a sugar-free option and like we never did because we never had something that tasted good like we never made something that we were really proud of in terms of flavor.

18:30And so we just never did it. And we only use nutritive sweeteners. We just use real natural sugars and the pendulum swung back and now everyone just wants real chocolate again. If they're going to indulge in chocolate, they want to just have the real deal. They don't want to have the alternative sugar-free chocolate. That's been shrinking as a percentage of the category for years now. So we're really glad we didn't do that. It's easy to get sucked into those trends. And we really try to avoid doing that. Kathleen, the landscape has changed really meaningfully over the last 20 years in terms of where you've reached customers.

19:07Has it changed your approach to brand building? I think that we're in a better, more solid place right now too, is because we have partners and they're external to our company. And that's something we've learned over the years. It's hard to have everything in-house. We've done it. and it's really great to rely on experts. I'm like happy to say we have some good external marketing and they are brand building partners who help us better present our brand on all these different platforms that there are now in the world. When we started, it was like create a wrapper, have postcards. You know, we had wrappers and postcards in like a very archaic website.

19:51Right. There's some tenants of that brand that are still alive in our brand now. But I would say my approach has changed to like, let other people help you. Don't try to do everything yourself. Stick to your core principles and your mission. Our mission really has not changed since we began Taza, which I think is something we're really proud of. At the same time, we could be doing so much better in terms of presenting our brand, not necessarily building it. We have our 20 years behind us that it's like, okay, there's still so much in that story. And in that 20 years that I don't think that we communicate well.

20:28What are the important elements of the story that you feel like you're not communicating to the audience? I mean, I think number one, that we're makers, you know, like somehow I think that's not necessarily the lead, although we're trying to make it the lead. We skip over some things that are just so familiar to us because we're in the business and we have grown up in the business, Alex and I, and some of our key, even staff members that we forget are important to consumers because we're just in it. You know, it's harder to see. So that's why those external partners can be really helpful. But yeah, I would say number one, that we're makers and then the work that goes into sourcing phenomenal ingredients to make a phenomenal product.

21:10It's so important and it's something that we spend a lot of time on and then just the process and I'm pointing to Alex the process um the piece of how we make it what temperature we roast the beans at what do we use to grind it you know the actual process to making this very minimally processed product that's the thing about Taza like it's like the shortest time from bean to bar probably of any other chocolate you're going to eat. But we're missing that whole backstory. It's a long, almost boring story. A lot of people come to our factory and see it. And that seems to really make them loyal for life.

21:50The one thing I will say about the brand is Kathleen very early on had us build a mission statement and a set of core values. And we have those and they're still true today. The mission is to make and share stone ground chocolate that is seriously good and fair for all. And then our core values also really help guide us in terms of how we behave as a business. And they've also been critical. True grit is a core value. We always meet challenges with courage and a can-do attitude. That's something that defines us for sure. Seriously bold. So just making a brand experience or a flavor experience unlike any other.

22:31Teamwork. You know, we succeed by working together. That's always been the case. Ingenuity. So just being really resourceful about how we get to where we want to be. We've done that since day one. We've had to be really scrappy and creative because we haven't we don't have a lot of money. So we have to figure out how to do stuff in a way that is very cost effective. And when we strayed from that, it's hurt. And then the last thing is wicked high standards. So we just make sure we're just really proud of everything that we're putting out into the world. Is that advice that you would give to other early stage founders to establish that mission statement and those core values early on and utilize them as a sort of North Star as you build the business?

23:19Yeah, I mean, if you can, it's huge because it helps you so much if you actually follow them. It's so frequent that people forget to follow them. That's the hard part is actually following them all the time. Even when the whole world looks like it's against you, you really have to stick to them. And the only times we've really stumbled is when we've strayed. You guys spoke so beautifully about your mission statement and your values and not deviating from those over the course of the last two decades. From a practical perspective, what does that mean in terms of your relationships with the farmers, but also how you're treating your staff in Boston.

23:56Yeah, well, I mean, since the beginning, we wanted to build something that we were proud of, that we were proud to go to work to every day, and that would have a positive impact in our community, but also just in the industry in general. And it's something I happen to be really passionate about, which was developing these really great relationships with amazing farmers of delicious cocoa beans and other ingredients that we could use to make the best chocolate that we could possibly make. In doing that, I spent a lot of time traveling and meeting people and learning about the industry and how the cocoa trade works.

24:32And we, over time, developed kind of a framework of doing business that would allow us to have as much impact as possible in a positive way in the industry by bringing more money to farmers for a really premium quality product. And it's always been about quality. Quality first. Impact follows the quality. So we wanted to find the best cocoa beans and then pay a really premium price for those cocoa beans and bring them to market as chocolate products. So we developed a system whereby we were like, okay, you guys have amazing cacao. We want to tell the whole world about you, and we're going to pay you a really high premium above and beyond the world market price, above the fair trade organic price to get really high quality cocoa beans.

25:22And we're going to kind of shout from the hilltops. And so we developed this transparency report to show the entire world where we were getting all of our cacao, how much we were buying, how much we were paying for the products, and then making sure that everyone understood in the supply chain where it all was coming from. So it was totally transparent and something we could be really proud of. And that kind of set the standard for what was a really opaque and shady industry previously. And now there's a number of companies that do it. And I ended up starting a couple of cocoa processing and exporting operations with another business that I was involved with.

25:59There's been a number of different ways that I've tried to have an impact there. And that also follows all the way to the factory. So the beans get here. And over the years, we've really struggled to learn how to be a great manufacturing company and a great employer here in Somerville. But now I can say we're really proud to employ, I think we're at 38 people right now. So many of them have been with us for many, many years. And we do our best to be employers that are fair. And again, we want people who are really excited to come to work and be part of what we're trying to build here at Taza Chocolate.

26:32Can you just talk about the difference that you've been able to make in farmers' lives by omitting the middlemen and paying a higher wage than they've been accustomed to historically? Yeah, well, for a lot of chocolate makers, what you do is you just, you pick up the phone and to get your ingredient, you call someone, you negotiate the lowest price possible for the ingredient that you need, and you get it shipped to you, and then you do your thing. But for us, it was a lot more involved than that. And for the cocoa farmers and the cocoa exporters that we worked with, it means a lot to them that we're not just some big company that wants to buy low and sell high.

27:15Because that's what almost everyone's doing. They're like, okay, I'm going to buy, Okay, we'll contract 100 tons. You have to deliver it in February, whatever. And then they'll go out and see if they can find a buyer to make the biggest profit they can make on it. That's not what we are. We actually are consuming the cocoa beans ourselves. We're not a trader. By working directly, we're able to pay a much higher price. And we're excited to because we're not working with an intermediary. We're working directly with the exporters, with the cocoa farmers and cocoa producers. So that allows us to give them a much higher margin for their products.