Every week, we will seek out expert advice to help a small or medium-sized company overcome a key issue it is facing in its business
Since 2002, Ottawa-based La Siembra Co-operative Inc. has created one of the top-selling fair trade and organic chocolate bars in the country.
Its Camino line has been positioned as a premium product by the 13-employee company, which is owned by 10 co-op members, including chief executive officer Jennifer Williams.
For the first five years, Camino’s sales were going gangbusters, rising at an average 40 per-cent clip year-over-year. But in the last five years, that growth has slowed and its share of the market has slid considerably.
Those bars, Ms. Williams says, sell for an average of 50 cents apiece less than the Camino bars’ selling price of $3.99 to $4.99 for a 100-gram bar. Over the years, other cheaper competing bars have entered the market, too.
Ms. Williams says she began to see Camino’s share start to slip in 2007 from virtually all of the fair trade and organic market – a small portion of the overall market – to about 32 per cent currently. Between 2007 and 2011, the Camino line’s revenue growth slid to an average 7 per cent a year.
Things took a turn upward last year after La Siembra updated Camino’s packaging, helping to boost revenue growth by 26 per cent in 2011.
Still, even though the bars, sold in more than 3,000 outlets across Canada, from big grocery-store chains to specialty food retailers, are generating $2-million in annual revenues – the co-op’s biggest seller among its fair trade and organic food products, representing about 30 per cent of overall business – Ms. Williams says her challenge is to get sales growth and market share back up to where they were before.
“Since [Green & Black’s]came into the market, it’s been really hard to grow our revenues,” she says.
She says she can’t compete on price: Costs have risen, squeezing margins to around 35 per cent from 50 per cent a few years ago. Besides, she speculates, if La Siembra dropped the Camino price, Kraft and other competitors might do the same.
Instead, she wants to focus on the premium product message, convincing consumers Camino’s bars are still worth paying more for.
The Challenge: “We need to get people to understand why they should pay a premium price for a premium product.”
THE EXPERTS WEIGH IN
Jim Menzies, Toronto-based partner with business advisory firm Grant Thornton LLP
She’s right that they can’t compete on price, so they need to take their differentiating factor, which is that they’re fair trade, organic and a co-operative, and wrap their marketing around it. This whole notion of social responsibility is what’s differentiating them. When people hear Camino, that social responsibility and caring for the environment should pop into their minds.
A good way to get that across is to come up with a tagline that reflects who they are and what their product is. It needs to be an easily understood statement that gets customers’ attention. If people can see clearly how they’re different — and, of course, the bar has to taste good — then they’ll pay for that difference.
Marion MacKenzie, president of Toronto-based public relations firm GCI Group
They need to promote the luxury aspect. Like a latte, chocolate falls into that luxury category. To do that, they need to be in environments where the products have a halo effect. Where it’s seen as cool. Get it into a Starbucks, art gallery gift shops or something like Fashion Week. They may not bring in particularly high volumes, but that creates the essence of being a premium product. So when people go back to larger grocery stores, the product is perceived differently when it’s next to its peers.
I would also give the product to on-air personalities. Give it to people who are the seen and be seen. They should be seen consuming the product. At the same time, sell the message that they’re also doing something good in the world. That will make people feel good about themselves when they’re consuming the product.
Frank Sorichetti, owner and founder of Toronto-based Aquarian Leather Products Inc., a maker of high-end leather bags and accessories
She has to keep hammering home her message. It’s the same with us. We’ve had to keep telling people that ‘I know it’s $50 more, but our quality is better, you’ve got to believe me.’ I think she should push the fact that she imports chocolate from Switzerland. A Canadian company bringing in custom-made Swiss products, that could do well.
She also needs to be more exclusive. People don’t want to buy something sold at Loblaw’s. Her grocery-store market is big, so I’d continue to sell there, but maybe under a different label. She may just have to reduce her price to compete in the regular grocery stores, but she might make it up in volume. She can also make that up by charging more in the higher-end stores.
THREE THINGS THE COMPANY CAN DO NOW
Create a tagline
Develop a statement that clearly describes what differentiates the brand.
Push the luxury aspect, having it available at places that speak to the higher end and promoted as a luxury product.
Create two brands
Consider splitting up the line, creating a less expensive brand for lower-end stores, while keeping the Camino brand in higher-end outlets.
Special to The Globe and Mail
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