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Meli Baklava & Chocolate Inc. co-owner Julie Kyriakaki, in the company’s showroom area in Toronto on Wednesday, July 2, 2014. (Matthew Sherwood for The Globe and Mail)
Meli Baklava & Chocolate Inc. co-owner Julie Kyriakaki, in the company’s showroom area in Toronto on Wednesday, July 2, 2014. (Matthew Sherwood for The Globe and Mail)

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Business makes baklava and chocolates: Will stores bite? Add to ...

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It’s a family affair inside Unit 9 of a small industrial plaza in Scarborough, in eastern Toronto. And the goods are a marriage of Greek pastries and chocolate.

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In the front of Meli Baklava & Chocolate Inc.’s operations, there is a showroom display of fancy chocolates and desserts. In the back, Taso Drakopoulos works as a master pastry chef and chocolatier, having years of experience in perfecting his trade in Greece. His partner Julie Kyriakaki handles the business side, coming from a more corporate background.

But, “I was always a foodie,” she said.

There is also Mr. Drakopoulos’s former wife Niki Drakopoulos adding her baklava expertise, as well as his daughter Kelly making chocolate creations. “The vibes work. We all can be very compatible and work well with each other,” Ms. Kyriakaki said.

The aim now is to work well with retailers and sell in their stores.

Their small operation has been in business only since January, but their products are already on the shelves in specialty food shops such as McEwan, Coppa’s Fresh Market and Pusateri’s Fine Foods. They are thinking bigger, even trying to approach Shoppers Drug Mart at the moment.

“Our main goal right now is to promote the wholesale side of the business mostly,” and then to try to set up a number of small retail boutique stores around Toronto, Ms. Kyriakaki said.

Interest appears to have quickly grown for their handcrafted chocolates and fancy baklava, “in varieties people don’t even know so much about,” Ms. Kyriakaki said.

“In our four or five months of operation now, we’re pretty pleased. We’ve been able to get in some significant stores that we wanted to begin with,” she said.

Yet for any small business, cash flow can be a problem. Larger retailers are eager to take samples and place orders. But those same retailers can then be slow in paying for the goods. That is a problem for a small business with immediate bills and a lease to pay.

But the problem may not be a lack of comportment on the part of larger food retailers. It may be due to food retailers wanting to reduce the number of food companies they do business with, while conversely not wanting a particularly successful product to elude them.

As Brent Houlden, a partner at professional services firm Deloitte LLP and a specialist in retail, explained, “They are trying to get fewer and fewer vendors. From a supply-chain point of view, a payables point of view, it’s cheaper to have fewer vendors than more. But if there’s something that’s hot or unique, then they would break the rule.”

They need to be convinced to put the product on their shelves. So, a company needs to look beyond perfecting the product. The job now is to perfect the company’s marketing, which Meli is trying to do with a social-media presence to get the word out about tasting events and by posting numerous photos of its products.

Facebook and LinkedIn have worked best so far, Ms. Kyriakaki said. About 90 per cent of their Facebook friends are in the Greater Toronto Area, which is Meli’s key market at the moment.

“More and more people want to get something local, handmade, that type of thing,” said Diane Chiasson, a retail specialist in Toronto, who has experience in consulting on selling chocolate.

The trick is to figure out what kind of retailers to target. Besides specialty food stores, she recommends high-traffic public markets, particularly Toronto’s St. Lawrence Market, for drumming up excitement and sussing out customers’ tastes. A less obvious option could be to set up a store within a store, or sell with a retailer such as Holt Renfrew.

But here again, the trick for Meli is to realize that retailers of different sizes will have very different interests, say consultants. For instance, smaller specialty chains tend to have higher profit margins than larger grocery stores. “So, they would be interested in carrying these [boutique] brands, because there’s more margin. Their customers are willing to pay much higher prices because they’re not price conscious. But there would have to be a huge social media element for this thing to work,” Mr. Houlden said.

The family is convinced that the demand is there. “I think the foodie scene of Toronto is growing and growing even stronger, which helps us in what we’re trying to aim for,” Ms. Kyriakaki said.

This means that the food scene appears willing to learn about and try the company’s fancy desserts. But it also means a considerable effort learning how to reach those buyers.

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