November 2007 Roundup

I don't think I have gone so long without writing and for that I apologize. It's not laziness, writer's cramp or apathy. I just have way too much going on right now. So I thought maybe I could sum it up a little bit in this post.

I managed to loose a long time client and then get them back. I have a client with a chain of locations throughout the city that manages to get into cash flow problems around this time of year. We find out on payday when we get a check payable for 90 days (Ouch!). I overreacted and they didn't take it well and we eventually kissed and made up, all in the same month.

I have been flying to Uruguay, Chile and Cordoba to meet with a mixture of new, current and potential clients. This sounds more glamorous than it really is. I get to experience flight delays on every single one of my flights for example. I also get to go to new unexplored cities (unexplored by me) with only enough time to maybe walk 6 blocks before I have to go do something. They stayed mainly unexplored. I get to take lots of pictures of stores and store shelves and get to wait around for meetings. All of this would be enough to drive me to suicide, but since I am doing this for the sake of my business, I have to admit that my curiosity drives me to do that job well.

I joined a political group called Democrats Abroad. For those of you who know me I can just picture your eyebrows going up. I have never been much of a joiner of groups. However, all the shenanigans that have been going on in the name of my country have just gotten me sick and I felt that I had to do something; voting obviously isn't enough. I guess that if I had written a post on this subject the title would have had been "The Devil Made Me Do It". If you would like to read a little bit about this group you can click - here - for Yanqui Mike's posts on the subject and - here - for 99's posts.

I have a new client! Normally I don't mention this until I have a purchase order in my hands but these guys have been so enthusiastic during the whole sales process that only a natural disaster or an act from God can keep them from following through. The chain is Libertad. It is a supermarket chain that is positioned mostly in the north of the country and they were purchased by Casino (French multinational) back in 1998. They also form part of a large group of supermarket chains in Latin America that are owned by Casino. This should help us get into these other countries. As for Argentina we pretty much have the whole country covered with these three clients (Jumbo, La Anonima and Libertad) now I can focus on exporting. You can insert a big sigh of relief from me here.

I have another new client in Blockbuster Video. No, I am not going into the DVD business. Blockbuster is actually hurting big time from the sale of illegal DVD's. They are forced to think out of the box and try something new. Sure you always had that option of buying some snacks from there to go with the movies but now they are going all out gourmet. There first gourmet store was on Callao (& Santa Fe) and from the looks of their purchases the trial must have worked and they are expanding the concept to other stores. Where else can you get the world's best chocolate chip cookies to go with that movie? If you answered your grandmother's house it's time to get off your lazy ass, get a job and limit your PS2 gaming time, unless of course you are 14 years old.

I managed to read some blogs and managed to be impressed by some of them so much that I want to share them with you:

Taos finds out one of the things that Argentines are super efficient at doing... and that is killing themselves behind the wheel of an automobile. It's actually very tragic and depressing but he's just presenting the facts people. You can click - here - for that article. However, he also finds out that Argentine women love having sex more than women from other countries. He also found that 97.2% of Argentines are literate. Somebody give that guy some Scooby snacks. He is churning out way too many interesting articles.

Pablo in Rosario also touched on a depressing topic in the state of abortion in Santa Fe (The State in which he lives in). He has also started assigning names to the power outages in his city like how they give names to tropical storms. The latest outage is called Carlos. You gotta love that.

Ian finds out why "one should not fuck with the French". This little episode happened in my neighborhood.

Robert Wright has the skinny on the Recoleta Cemetary.

A Texan in Argentina discovers Punta del Este, Uruguay.

Starbucks and Argentina

This coffee falls into your stomach, and straightway there is a general commotion. Ideas begin to move like the battalions of the Grand Army of the battlefield, and the battle takes place. Things remembered arrive at full gallop, ensuing to the wind. The light cavalry of comparisons deliver a magnificent deploying charge, the artillery of logic hurry up with their train and ammunition, the shafts of with start up like sharpshooters. Similes arise, the paper is covered with ink; for the struggle commences and is concluded with torrents of black water, just as a battle with powder. ~Honore de Balzac, "The Pleasures and Pains of Coffee"

This quote was actually about drinking a concentrated coffee on an empty stomach and its effects on the author as he sits down to write. It did remind me though of all the passion that the topic of coffee brings up when you mention it to local Argentines and expats.

The locals don’t really like what is normally consumed in the States (drip style coffee) and the expats don’t really like the coffee beans that are available in Argentina. When the topic of coffee comes up both sides just don't understand each other. Now just to clear things up a little. There is one local type of coffee that is virtually undrinkable unless you were brought up on it. I make this last point because it is the majority of the coffee available in the supermarkets so someone is buying this stuff. This is called Torrado and basically what it means is that they use sugar in the roasting process. This does not mean that the coffee made from these beans is sweet. It is an awful sour tasting concoction that results from roasting sugar and coffee beans together. It’s just plain nasty.

Argentina does have a strong and healthy coffee culture (not built on that Torrado crap thank God). There are many old style coffee houses. The city of Buenos Aires has even put together a list of cafes that have a historical relevance. And they have some newer modern coffee chains, kind of like Starbuck’s. The most important players in this category being Café Martinez, Bonafide, The Coffee Store, Havanna Café, McCafe and Aroma Cafe. The demand is so great for this that even the gourmet ice cream shops have gotten into the coffee game. Freddo offers coffee and tea and in some cases shares a store front with Aroma Café. Persicco and Volta offer coffee as well. Chungo does the same and basically just about all the gourmet ice cream stores do this.

So why on earth can’t you buy a decent coffee bean to take home? This is what most expats are complaining about. The only chains that offer coffee beans for home grinding are Café Martinez, Bonafide, The Coffee Store, La Bolsa del Café and Estación General de Café. Some of these businesses have been around for a long time like Café Martinez and Bonafide but the current day concept of gourmet coffee shops are fairly new. I mean those businesses started out as importers of coffee and eventually morphed into what they are today. This is still relatively new to Argentina. My impression is that most people only go out for coffee. There has been little demand for that gourmet mono-source coffee bean from Guatemala or Jamaica, but I also see that changing. Bottom line is they make their coffee with espresso machines here and sometimes they will cut it with milk. That’s pretty much the two main variations and they go by either “un café”—no milk, straight shot, or “cortado” –for the one with milk, or “lagrima” –mostly milk with a little bit of coffee, or cappuccino. There is one more variation that is called “café con leche” and this is normally served in the morning. It is the only one that comes in what would approach an American sized cup-a-joe and it is more like half milk, half coffee. Some places even leave a container of milk and a separate one for your coffee and you mix it yourself. For the other coffees, they are served in small cups that can be ordered a bit larger by ordering a double or “doble”. You can forget about drip style coffee. I have never seen it offered.

So why does Starbuck’s want to be in Argentina? I am sure it’s the same reasons why you would find that gas stations, car washes, movie theatres, ice cream stores and even some furniture stores all trying to get into the coffee market here. Just about everyone goes out for coffee. Argentina should actually be a no-brainer for a brand like Starbuck’s to be attracted to it. The real question is where will Starbuck’s fit into this local market? Are they a little late? Will locals go to Starbuck’s? I am not in the coffee business but I do supply it with baked goods. My impression is that there is room enough for another player in the market. Starbuck’s should be a catalyst for a lot of healthy competition among the gourmet coffee segment. Their focus should be on offering high quality gourmet products as well as integrating some of the local staples like medialunas and reacquainting the local Italian segment with their beloved cantuccini while offering authentic chocolate chip cookies to those American expats and tourists. They will be held to a pretty high standard so they will not be able to get away with giving out cheap products with their coffee like some local chains do. However, their main sex appeal will be there never ending variety of coffee drinks. This will be a novelty because no one has tried that approach here really. It will be interesting to see how locals will take to some of these new novel coffee drinks added to their current short list of coffee options. That I think is a crucial key to Starbuck’s success in Argentina.

If you would like to see some of the posts and comments regarding this topic I have collected several posts from other bloggers in Buenos Aires and an article on the subject. There were many comments flying around the expat sites as well but I can not publish those here. The topic makes for some interesting passion filled reading….

Moving to Argentina - Starbuck´s Finally Coming to Argentina

Expat Argnetina - Time to Cry for Argentina... Starbuck´s is Coming!

Cafe Culture in Buenos Aires - Not a Starbuck's in Sight.

Do Argentines Love Coffee or the Experience of Drinking it?

Your Set of Works - by Yanqui Mike

Yanqui Mike on Coffee Beens

Starbucks abrira en dos meses. - 283 comments and counting (in Spanish).

A Texan in Argentina: Confessions of a Former Starbucks Addict

Picture of Starbuck's coffee with brownie I found at this site.

Mountains, Whales and Cookies

First I want to apologize to all of you. I have been absent for a while and this post will be more of an explanation as to why and will be more like a diary type of post. I have been extremely busy and have actually felt a bit overwhelmed.

I do have a new client called La Anonima. They are THE supermarket chain that covers the south of Argentina. They loved our cookies and they wanted to start introducing them to the rest of the country.

I went on a trip to the south of Argentina to visit some of the stores and see firsthand how the cookies were doing on the supermarket shelves of La Anonima. I Also wanted to kick myself for forgetting my camera at home. You will see why later on.

The first cities I went to where Trelew and Pto Madryn. My hotel was actually in Trelew which made sense to my tourist agent since it was closer to the airport. However, it is such a small city and it did not look like it had much of a tourist trade going on. Bottom line was that I did not like my hotel very much. The city itself was clean and orderly. The people were really nice. They had these car park attendants that gave out receipts and they were actually cheerful and chatty. Every time I parked my car I got into a brief, nice conversation...for example:

me: Good morning. How much do I owe you?
car park girl: Oh, hi! It's 50 cents per hour. Are you a tourist?
me: No, I am just a big fan of Avis.

me: Okay, yes, I am a tourist from Buenos Aires, but I am actually an American.
girl: Oh, you come from such a lovely place. Why did you come to live here?
me: Argentina has its charms too.

And speaking of one of those charms... I received compliments from two different women. This has never happened to me in Argentina and it really surprised me. One woman was working the gift shop in the dinosaur museum and the other one was a flight attendant. I was obviously flattered but mostly pleasantly surprised. Both of them really liked my hat and they were both very attractive. I am happily married but it's nice to get little comments like those.

Anyway, Trelew does have a very nice paleontology museum called MEF. In the future I would stop by the museum from the airport and then schlep 56 kilometers to Pto Madryn and stay there. Again the town was small but the hotels looked nice and there where a bunch of restaurants. In Trelew, at 2pm the place emptied out. Everyone would go home for lunch basically. The few restaurants I saw where mostly empty. After eating at one I could understand why. Anyway, back to Pto Madryn. After checking out the local supermarket I decided to drive over to one of the beaches. It was a terribly windy day so when I finally pulled the car up to a beach there was one other car there. About 50 meters from the shore was an old boat wreck; about 10 meters from the shore was a whale! This is the part where I really was kicking myself for not bringing my camera. It was actually swimming down the shore. After it left the other people got in their car and drove off. As soon as they did I noticed that the whale was actually turning around and was coming back. I could have pulled up a beach-chair and just waited despite the rather nasty wind. The flying sand was pricking at me as if the wind actually picked up little sewing needles and they were flying into me sharp end first. I didn't care though because right in front of me was a WHALE. I have never seen a whale in person before and I was entranced. I want to come back and bring my whole family to see them. Also, off in the distance I could see other whales jumping out of the water and splashing around. I so wanted to go on a whale watching tour but that wind was just relentless.

I drove back to Trelew cursing that wind that was now rocking my car making it difficult to drive. I just had to ask a local about the wind and they said that even though the area is known to be windy this was an exceptionally windy day. I spent the rest of the night watching TV in my crummy hotel room.

The next day I went to Ushuaia. I had originally been there in 2000 as part of my honeymoon trip and the place has grown. It was actually difficult to find a parking space. The hotel was very nice and very new (Lennox Hotel). The view from the breakfast area was just stunning and it is right in the middle of town so you can walk everywhere.

I did not have much time for sightseeing though. I was busy visiting with my new clients, seeing our products displayed, giving their employees information about us and the cookies. Now I am putting it all together in a report that I am going to share with the buyer back in BsAs. Actually when I got back I started receiving calls from some more new businesses that want to be clients. I am also organizing a stand in Casa FOA for a couple of events, not for the whole event. I was also meeting with some Coffee Store locations that want to continue buying from us in spite of what had happened previously. I was also writing or answering questions in Spanish for Clarin. They are going to do another piece on us and the reporter just had to have it yesterday. I have a million other things that I could write about but those are just part of my to-do list and would make for very boring reading.

In the end I learned a lot about my new client and scoped out some future vacation trips. Not a bad way to make a living visiting with whales and having breakfast while looking at the majestic snow capped Andes. Next time I will have my camera with me.

Loosing a Customer

In case you don’t know, or in case you work for the Argentine Federal government, Argentina is experiencing inflation. How much is hard to tell since the numbers are being fudged all the time and the government’s official stand on this topic is that there really is no inflation or at least not enough to be a problem.

However, I am not going to talk about inflation and the Argentine economy. There are other sites and resources to go to for that sort of thing. I want to talk about a victim of this inflation.

When we started selling to The Coffee Store I quoted a very economical product for them with the agreement that they had to eventually have other higher margin products of ours as well as allowing us to use their retail shelf space to sell our brand name products. I did this to get our foot in the door. I mean once they start offering our cookies they are going to sell so many of them that I can afford to not make so much on the economically priced and low margin cantucci that they give away with their coffee.

They wanted and insisted that the brand name products I leave on consignment. I really disliked the whole consignment scenario thinking it more appropriate if you are selling bubblegum or chocolates at kiosks not for high end gourmet cookies. However, they did argue that they had great exposure so I went ahead and agreed reluctantly and hoped that they would prove me wrong.

So far there are three components to this approach and I will expand on each one:

1. Economically priced cantucci that they give away with their coffee

2. They would add higher margin products to their product mix.

3. I would leave, on consignment, our branded products.

1 & 2. We made countless samples of different cookie flavors and different sizes. We also rushed to modify one of our brownie pictures so that they could use the picture (and eventually our brownie) in a promotion they were thinking about having. None of those things panned out. Instead, we started to see sharp increases in just about everything related to our factory and the cookie making business. Obviously we had to pass those increases on to our clients.

What kind of increases did we see? Well from the period between January of 2007 and May 2007 we saw our chocolate chips go up 48%, margarine 70%, butter 39%, eggs 27%, etc. In addition, in July there was a wage increase handed down by the government that was retroactive to April. These price hikes are felt immediately when you have low margin products so our economically priced cantucci needed to have price modifications consistently, on a monthly basis. Since May we have seen more price increases, but that’s not a problem right.

All of these price variations have forced me to have monthly meetings with my largest clients and for the smaller ones they just have to take it but I at least let them know beforehand what’s coming. This is really not all that much fun. There is a lot to prepare for these meetings. Basically I have to prove to them, every month, how the price increases I am suffering every month are impacting the price of the cookies they are buying. All my clients have reached the same conclusions as I with the exception of The Coffee Store.

3. There were some stores that really did not like working with consignment either. As a result I changed things around so that for those stores that would pay on delivery I would give them a discount. This was a cost cutting measure for everyone. There were plenty of stores that took me up on the offer, but there were holdouts. And as I would have guessed, the locations that sold very little really had no intention of ever going off the consignment trap. I mean, I give them cookies to decorate their shelves with and they don’t pay anything until they sell something. It was completely painless to them. It is also the very last time I ever give anything out on consignment.

So in the end, the Coffee Store managed to prove to some of their franchisees that consignment does not really work and to the others that it is a great way to decorate your store; not only did they not add any more products but decided to throw in the towel.

Yep, The Coffee Store is no longer a client of ours. There was a mutual realization that this was not going to work. However, it is still sad when this sort of thing happens. So what did I learn from this failure?

I will never leverage entering into a business by giving stuff away (low margin items and consignment).

I am the one at fault here because they just asked, I was the dope that went “yeah, okay”.

I will never sell anything on consignment again, ever. If a client does not believe in your product enough to buy it then they will never be any good at selling it themselves.

I will never give credit to franchisees again ever.

So who is the victim here? I honestly believe it is The Coffee Store.

What do you think?

Le Shop Long Weekend Promo

This weekend Le-Shop is running a promotion with our cookies. If your total shopping ticket is over $200 pesos then you get Sugar & Spice cookies for free.

Boutique del Libro

I would like to welcome a new client to Sugar & Spice. Boutique del Libro is a chain of book stores with 12 locations. Some of those locations have cafe´s in them. So my actual client is not the book store itself but the cafe inside the bookstore. In this case in particular it is the cafe inside the location in Palermo Viejo:

Thames 1762
4833-6637
Monday - Thursday from 10am to 10pm
Friday from 10am to 11pm
Saturday from 11am to 11pm
Sunday from 2pm to 10pm

So if you are in the area and you need to shop for books and you have worked up a desire for a coffee and a cookie or a brownie then just head on over there.

To the Cheese, cheese

Al queso, queso is a privately held, family run business. They started with one store and they have grown to somewhere around 19 locations. They were one of our first big clients and the owner (Hugo Diaz) just loves our savory cookies.

They now have a website where you can buy some of their products. Unfortunately he does not have Sugar & Spice products on the site. I will have to have a talk with him about that.

Regardless, I do hope that they are successful with their website and that it does help them get more sales. Meanwhile I have created a little list of what I would like to see on his website:

1. A list of his stores with phone numbers and hours.
2. Pictures of the products and some more descriptions
3. Maybe a map of the zones where they deliver
4. A Little history of the company.
5. Information about some of the companies that they buy from

This last one could be more informative like a little history about each firm. I happen to know that many of the products that are sold at his stores are from small companies. I would love to read a little about each of them and what makes their products so special.

If you have any suggestions that I may have missed send them to me. I could even send him a link to this blog so he can view all the comments directly.

Tonel Privado

We have a new client! This is a family run winery. Their main store is in Belgrano in front of the Juramento Market. They have expanded to 10 locations and they are very well located throughout the city.

I have been after these guys for a very long time and finally they have come around. Maybe they were waiting around to make sure I wasn´t a flash in the pan (here one day and gone tomorrow).

But now they have my cookies and I just wanted to say Welcome to them.

Pay Day

When I started this business I received a lot of warnings about dealing with locals from the locals that I already knew. Porteños will rob you as sure as rain and you can’t trust any of them where the main messages.

I was pleasantly surprised to find out just the opposite in most cases. Business people are business people and it’s just not good business going around cheating people. If you cheat people word will get out and you will not be able to grow and prosper. In fact, I had heard some disturbing things about one of my current clients before they became my clients.

I did not approach Al Queso, queso right away because I had heard some rumors about them. This client is a cheese, cold cuts and wine shop. They also have some imported beers and other gourmand delicacies. On hindsight I should have investigated a bit further. I had heard that they had a reputation for not paying well and stringing you along once you were their provider. There was some truth to this but it was only for certain shops under the control of one individual. This individual is no longer around. Most of the shops are owned by the original owner. This is a family business and it is growing.

When I approached them, the owner was the one that would make the decisions and he is a very busy man. He has almost 20 stores under his belt and they are not linked by any computer system. He is still doing it the old fashioned way.

Anyway, he tries the products out, he negotiates the deals, and sometimes he is there at payday but usually it’s only his employees. Payday is once a week. You show up, sign in and wait. It’s first come first served. Sometimes you would be there 15 minutes. These days you are lucky if you only get to wait two hours. I took advantage of this time to meet the other providers. Some of them were business owners just like me, others were sales people sent out to collect payment. All of them had one thing in common; they did not like waiting around to get paid.

But this happens every week, rain or shine

These days I have someone else go and get paid for me. I do not miss standing around for 2 + hours waiting. I do miss listening to the gossip, jokes, and stories about that other guy who would not pay.

I have clients who are a bit more modern, bigger, centralized office with full time accountants and guess what; sometimes they don’t pay on time. I guess, if I ever go back to waiting at Queso, queso I can pitch in with a couple of stories of my own now.

Turning Lemons into Lemonade

Once in a while I loose a sale. Grant it, I don’t usually loose them but when it does happen I can’t help but get depressed about it before I shake it off and move on. When it does happen, and I am able to see the positive side to the loss, then it’s that much easier.

A while back I met with a company called Grupo Multifood. They have several restaurant/café’s that are located in various shopping malls like Paseo Alcorta and Patio Bullrich for example. At that moment we did not have a lot of business with bulk cookies for the coffee set. We had to develop a cantucci that was economical, that would not break but wouldn’t break people’s teeth as well, and that had to be delicious. I had several meetings with them and I delivered lots of samples.

They currently had someone making cantucci for them so I was really trying to get them to change suppliers. This time it did not work. After all the samples were sent and all the meetings that I went to, I came up empty handed.

So what is the silver lining to this story? I was now ready to approach The Coffee Store. Now I had a product already developed and ready to go. This was such a natural fit for The Coffee Store. They were also a much bigger client in terms of number of stores. They also had the same supplier as Grupo Multifood. Luckily for me, The Coffee Store happened to like my product more than the one they were currently handling. Normally it´s just not one reason why someone decides to change suppliers. This time around it was just a better fit for them for various reasons. They also happened to like that with one supplier they can have multiple products like Cookies, Cantucci, Biscotti, and some other new products that I can’t quite mention yet.

In the end, I am not sure why I failed to persuade Grupo Multifood from switching over. But I am sure glad they made me run around and develop a new product that was perfect for the market-at least I think it is and The Coffee Store thinks so as well. All that work I had put into the lost opportunity really made things so much easier for the second opportunity that came my way. Anyone for some lemonade?

Arm Chair Sales Manager

This is an experiment. I get many questions regarding what it would be like to do business in Argentina. For those of you who do not know our story I will give you a short summary.

We started baking cookies out of our home after I begged my wife to try it just for the hell of it. I would go around with a Tupperware in hand visiting the local bars and cafes of Palermo Viejo.

The demand and interest soon started to grow for our homemade cookies. We soon rented a small space in Palermo Viejo and started to serve delicatessens, wine stores, and cheese and meat shops. We also noted that we would outgrow our new location quickly so we started to look for a new place.

Now we have a state of the art baking facility consisting of 600m2. We supply the same type of small independently owned shops that we did from the beginning but we also supply some bigger clients as well. Some of our clients include McDonald’s, Falabella, Aroma Café, Freddo, Munchi´s, The Coffee Store, Al Queso, queso, etc.

It is impossible to give an exact reason or explanation as to how we got from baking cookies at home to sending out pallets of cookies to major corporations. However, I could give you a glimpse into what happens client to client. This is where this experiment comes into play.

I want to give you the opportunity to play armchair sales manager. I will present you with either a target or new client. I will give as much information to you as possible and either a problem or a goal and you can give me comments as to what you would do or what you think I should do. You can pretend to be my coach, boss, or mentor.

I present the first case. In this case I will with hold the name of the client. I may or may not do that in the future. We will see how this evolves.

The Coffee Store

This is a new client for us. They have a chain of coffee shops throughout the city. For those of you in the States, it would be the closest thing to a Starbucks that we have. Our proposal to them was to present a low priced yummy alternative to what they were currently offering with their coffees in the shape of a cantucci (little biscotti). However, for us that product is a very low margin product and part of the agreement was that they would also buy from us Cookies as well as have our brand in their shelves, which they would buy on consignment (Sugar & Spice branded product). We would also develop new products for them down the line.

Four months have passed by and they seemed to be very pleased with our cantucci. The product on consignment sells well in some stores and in some others it doesn’t. This last point was to be expected. So far, they have not added any other products to their line-up. This, even though, one of their locations even went so far as to open packages that were on consignment to sell the cookies out of a jar. I have had meetings with them and have presented several options.

Our cookies are a high price alternative to what they currently have. My argument is that if they have better tasting, higher quality cookies, even though their margins might shrink a little bit, they will end up selling more.

What do you think? What should be my next move with this company? What would you do? If you need or want more information you could also ask me and I will do my best to answer you.