Ethico: An Entrepreneurial Venture

For this project, I was challenged to work collaboratively with a team of other students to observe problems in our environment and produce creative solutions to be molded into a startup. This project ended in a culminating pitch competition with 30 startups to potential investors, industry experts, and the entrepreneurship staff.

My group chose to focus on issues we saw in international trade, access to rarer products across the world, and unethical methods used across the globe in trade.

After 5-6 months, Ethico was created as a piece of the puzzle in improving labor conditions, international trade, and manufacturing high-quality, ethically produced products that are easy to access.

Pitch Slides and Transcript                                        

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Hi everyone! I'm Jacob. And today, I'm gonna be talking a lot about chocolate.                
Raise your hand if you've ever had chocolate.

Okay. That’s what I figured. Me too.

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Well, I hate to break it to you guys, but big chocolate companies like the ones we’ve all likely eaten are considered largely criminal in the cocoa industry. 

Don’t get me wrong, it tastes pretty good and works great on the go, but these companies have sustained a model that supports profits over people.

No need to feel guilty. We all raised our hands too. 

‍Big chocolate companies have promised to maintain ethical standards across the production of their chocolate, saying things like...

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“We provide financial support to cocoa farmers.”                                                                   

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“We work with farming community members to combat child labor.”                                 

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“We combat deforestation.”                                                                                                        

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…but despite these promises – and many others – we know big chocolate companies are still taking advantage of smallholder farmers and not adhering to the values they define in these promises.

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75% of farmers in western Africa make less than a dollar a day, forcing them to give in to unethical opportunities to keep their costs competitive and stay alive. 

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The Food Empowerment Project estimates that 2.1 million children in Western Africa live in what the International Labour Organization calls “the worst forms of child labor,”

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The Guardian estimates 360,000 hectares {hek-ters} of deforestation happening in western Africa is caused by cocoa production.

We know that these are massive problems and they can’t just be solved overnight.

We do have the potential to address parts of these problems and demonstrate to Big Chocolate that it is possible to value people while still being profitable. 

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How can we...                                                                                                                                

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...benefit our farmers…                                                                                                                  

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...strengthen our environment…                                                                                                  

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...and call upon big chocolate companies to value the people involved in their process?

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Here's how.                                                                                                                                    

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I'm Kendall and we are EthiCo. 

We produce high-quality chocolate from criollo cocoa...                                                     

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Criollo cocoa is highly valued and sought after, as it is one of the rarest in the world...    

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To do this, we create unique relationships with our source communities in Venezuela.  

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We work directly with La Empresa Campesina de Chuao - Chuao Farmers’ Enterprise. This is where we get our cocoa. {La Em-Press-Ah Camp-Ey-Cena De Chow}

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Overall, this looks like sourcing from communities in Venezuela, manufacturing in Houston, TX, and selling to grocers on the West Coast.

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We’re looking at high-end grocers, especially with an emphasis on the West Coast market space - our target market. We see an extremely limited chocolate supply, especially with the luxury aspect missing. Our research suggests that this market is ready for a massive disruption. Us.

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Something we noticed when researching similar products is that their packaging is…how do I put this…boring. It's somewhat understandable wanting to look like everyone else because it's the safe option, but our goal is to stand out, be different, and be disruptive. 

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We've created packaging that is bright, bold, and gets our message across, as exactly who we are. Potential packaging solutions include recycled materials that are environmentally friendly.

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We've presented our story to you, so consumers know what they are buying and more importantly why. We are intentional about educating consumers so that they can make clear and concise decisions about our products.

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We're anticipating 650 bars...                                                                                                     

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...per month…                                                                                                                                 

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...per store…                                                                                                                                    

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...to 15 grocers…                                                                                                                             

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...at $7.50 per bar…                                                                                                                        

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That means we are making $2.87 per bar or a 38% gross margin.                                        

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This all boils down to over $20,000 of profit per month...                                                      

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...or a little under $250,000 a year – allowing us to break even in just over a year. This looks like a 28% operating margin right off the bat.

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We're estimating a $1500 slotting fee for these high-end grocers. A fee that puts our product on their shelf.

For our end consumer, on the other hand, we estimate that we will spend under $4 per bar.

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Don't fret, this is just the start. We have the ability to expand to an international market and create a unique line of products that keep our consumers engaged.

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So why sell our bars at $7.50 a piece… considering the market price is so much higher, this gives us an advantage to sell our product for less. Let's take a look at what some of our competitors are doing…

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Let's take a look at our competitors.

While the average market prices are $10-$15, notice how some bars go for upwards of $20.

For us, that means grocers have room to profit and we have room to grow.

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Additionally, EthiCo is all about our people, not our profit.

This brings me to my favorite part of our business model.                                                   

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We've incorporated a program called the Process for Progress Initiative…                        

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...this simply starts with taking 5% of our revenue to implement it back into Venezuelan communities.

Since the beginning, we have built this into our operating expenses, as we would not exist without these communities.

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We're simply setting the standard for big chocolate on the values that matter, especially in these underprivileged communities.

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Adding on to that, we have implemented the initial costs of solar energy systems into our manufacturing facility in Houston, Texas.

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...we continue to look for ways we can be at the peak of sustainability.                              

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At EthiCo, we strive to stay committed to our people...                                                          

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...pursue sustainability...                                                                                                               

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...and solidify the notion that all chocolate should be produced with ethical integrity.     

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Once again, we are EthiCo: Decadence Redefined...

Thank you.                                                                                                                                    

Appendix Slides                                                           

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Financial Modeling                                                      

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I urge you to remember that this presentation and financial model are backed by hours and hours of research, interviews, and testing.

If you have additional questions about anything shown here, please do not hesitate to reach out and ask.

Thank you!