Goodwill abounds for plans for small-scale chocolate manufacturing in Dunedin.
As is acknowledged, and as is sensible, the proposal, while challenging, is constrained enough to appear achievable. Competing more directly with giant Mondelez, Cadbury's owner, and the other chocolate multinationals, let alone Porirua-based Whittaker's, would have been phenomenally difficult. The manufacturing, marketing and distribution world of fast-moving consumer goods, including chocolate bars, is cut-throat.
Instead, opportunities arise around the margins and for niche and, usually, high-quality products. Just as craft beers have been able to capture successfully high-value corners of the beer market, craft chocolate makers have in recent years established themselves.
Often, nevertheless, such enterprises are precarious, relying on labours of passion and commitment. There are no economies of scale, and a fine product does not translate to profitable sales without suitable outlets and successful promotion.
One such niche operator in Dunedin is the Otago Chocolate Company (Ocho). It manufactures from Vogel St premises, creating small bean-to-bar batches, using bean sourced from the Solomon Islands and Papua New Guinea (and sometimes Samoa). They are sold through specialty shops in Dunedin and Central Otago and its factory.
Ocho's founder, Liz Rowe, is supporting a proposal where Ocho could be incorporated into a new business, subsuming the Ocho brand name, after a third-party valuation.
The idea arises primarily from the work and ideas of Dunedin city councillor Jim O'Malley and the Own The Factory campaign. Dr O'Malley, who has a background in biotech and drug development and owns a small biotech firm, thought Mondelez might be persuaded to award him the third-party manufacturing rights for the products made in Dunedin by the New Zealand confectionery line (including Jaffas, Buzz Bars and Pineapple Lumps). This is even though he intended to use the business as a stepping stone to own-brand chocolate production. At the time, despite the lack of discouraging words in public from Mondelez, that seemed unlikely. Why would Mondelez help establish what could become a significant direct competitor in New Zealand?
So it came to pass. Dr O'Malley's Buy the Factory swiftly received $5.8million in pledges, but the goal of $20million and mid-scale manufacturing was abandoned in the absence of Mondelez support. They now plan to raise $2million through the PledgeMe crowd-funding site.
The business would begin with about 20 staff. Dr O'Malley hoped it would grow to at least 100 within 10 years. Two lines of equipment would be imported from Italy, for a dark-chocolate and milk-chocolate line. A central-city location would be found, but not at the too-expensive Cadbury site.
Moves to establish Dunedin Manufacturing Holdings as an incorporated society were under way, and a five-strong board, including an employee representative, is envisaged. A chief executive is to be appointed soon.
Obviously, 20 jobs is few compared with the 350 disappearing at Cadbury's, as Dr O'Malley recognises. Nevertheless, most Dunedin people will be wishing the enterprise every success. It continues 150 years of chocolate manufacturing in Dunedin, it provides employment for at least a few skilled staff with the possibility of more and it bolsters pride in what people in the city can achieve.
Running businesses has never been easy. It must be hoped a business run through an incorporated society can keep its focus and its competitiveness, that it can be hard-nosed where necessary to achieve success.
So far so good. A quality brand, all going to plan, will be absorbed and the business will start small. Once firmly established, it should then have the potential to grow steadily, one bite at a time.
