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COVID-19: Industry Updates

Alter Eco CEO Mike Forbes on B Corp. model and COVID-19 response – podcast

Food & Beverage Insider assistant editor Alex Smolokoff discusses COVID-19 and how the B Corp. model can help companies navigate the current landscape with Alter Eco CEO Mike Forbes.

Every business’s response to the COVID-19 pandemic will be different, and some will respond better than others. In this edition of the Food & Beverage Insider podcast, Mike Forbes, CEO of sustainable and Certified B Corp. chocolate company Alter Eco, discusses how his business has responded to these strange times, and why following the B Corp. model has helped inform that response.

According to the official B Corp. website, “Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.”

That focus on accountability, inclusivity and building meaningful relationships has helped Alter Eco and other B Corps. stay resilient through these unprecedented times.

With Food & Beverage Insider assistant editor Alex Smolokoff, this podcast addresses:

  • The values that go into earning and maintaining the valuable B Corp. certification, from supplier relationships to employee empowerment;
  • The lessons Mike Forbes and Alter Eco have learned during the COVID-19 pandemic;
  • Advice for new or young businesses in the natural products space.

 

Podcast transcript: 

Alex Smolokoff: Hello and welcome to another edition of the Food & Beverage Insider podcast. I'm Alex Smolokoff and joining me by phone today is Mike Forbes, CEO of Alter Eco which is a sustainability minded and certified B Corp chocolate company. Mike, thanks for joining me today and taking some time during these very strange times to discuss some things about your company with me. I'm really looking forward to it, I think this will be really nice conversation. So ironically enough, it is a Forbes article that really sparked the idea to speak with you in the first place. A couple of weeks ago while doing some research for an article I was reading a Forbes article that mentioned that B corporations may be better suited to kind of work through these unprecedented times and come out a little bit better on the other end than maybe companies that don't follow that model. So, I have been speaking to a couple of different brands, a couple different companies that are certified B Corps to basically see why that might be and see if they agree with that overall sentiment. So, I guess we'll start really very general, if you could just maybe take a couple minutes, describe Alter Eco as a company and why it is that being a certified B Corp was something that you sought out for your company and how that aligns with your own values.

Mike Forbes: So, first of all, thanks for having me. Really great to chat with you about what I think is going to be really important topic going forward. Alter Eco was really founded on the idea of creating food, and chocolate in particular, that's really better for the folks who eat it, better for the planet that provides it and better for the people who provide it, who make it. And, you know, we try to be clean in every way we do business and we really try to take every piece of sustainability to the next level. So, one example is our truffles that you might see, the wrappers are actually fully composable. That goes a lot further than a lot of other companies out there. This idea of a different way of doing business has been in our DNA since the beginning. Our founders were traveling abroad and they realized that a lot of the stuff back home that they were paying big dollars for, kind of specialty gourmet foods, when they actually met the farmers that made them, they're pretty impoverished, and there was a lot of evidence of the issues created by global warming and really destructive farming practices. Through that Alter Eco was created.

We became a B Corp, simply because I think it is the one thing that really aligns with that piece of our ethos that I talked about – that everything we do has to really be better at every single stage of the process. And what I love about B Corp is there is a lot of companies out there who try to talk about making money and growing, but B Corp asks a bigger, better question which is “Are you making the world a better place, and are you leaving the planet and people better than how you found them”?

Smolokoff: Awesome thank you. That's really interesting, especially with, I know chocolate specifically has in the past had some supply chain issues both in terms of the ingredient itself and the people who are farming and supplying it for us. So, I think that being a chocolate company and really focusing on not just the people who are purchasing your product, but the people that are making it are really important values. So, going back to that Forbes article, the quote that really stood out to me the most was by Anthea Kelsnik who is Co-CEO of B Lab USA/Canada, and she said “If there is a silver lining of the COVID-19 pandemic it's that now more than ever the B Corp model is relevant.” So, I was curious if you could maybe go into some detail about some of the effects that the COVID-19 pandemic is having on your company, whether that be in terms of sales or supply chain, really any impact it's having and maybe what aspects of the B Corp model have allowed you to maybe work through and mitigate some of those issues.

Forbes: What's been really amazing about the past 60 days is that I really feel like every single aspect of our business has changed. For us, luckily chocolate is up, people want more comfort food. But even within that, different segments are up and down, so more people are migrating to our bars. It's kind of a tried and true, and really comforting flavors. Whereas you know we had some businesses where people would eat truffles at work and people are working from home now, so those types of things go away. So that creates a lot of challenges in terms of fulfillment.

The questions we get from retail partners and business partners have completely changed. If you think 90 days ago, everybody wanted to know about innovation and what's your new keto line or those sorts of things. Now the questions we get are “Can you fulfill orders? Is your workforce healthy?” Much more basic kind of lower on the Maslow's hierarchy of needs, so to speak. We're lucky that we are very stable and thriving as a company and I think B Corp. is a big part of this. We're filling 99% of our chocolate orders, we’re producing when we need to produce, people are healthy. All of those really, really important things with health being most important. But we've had to completely change how we've responded to our business and worked on our business in the past 60 days. I think a big one and everyone is going through this, is working from home, and you know what that really makes me realize again and again is your team is everything, especially for a small company like us. We’re based in San Francisco and we have some folks working from home in small apartments with five roommates. We have other folks who have young kids at home. Myself, I’m actually teaching math class to my seven-year-old right after this. And so, you really have to approach everything you do with your employees from just a place of empathy and accommodation. So, hey, certain people can’t meet between 2:00 and 4:00 because they're working with their children, you know those sorts of things and just working around that.

Some other things I've noticed is just the nature of our interactions with each other have changed. There's really a lot more, you know, I think prior to COVID it was getting to the business issues right away, you know, how much do we have in stock? Is that enough or too much? And how's the new product going? Now, we spend a lot more time touching on, how are you? How are you doing? How's your family doing? What do you need? Because I think everybody has their moment, you know. I think we all went and started working from home thinking maybe it would be two or three weeks, and I think we're on day, for Alter Eco, 49 now. So, everyone has their good days and bad days and you really have to kind of reach out during kind of both ends of the spectrum.

Supply chain has been the biggest thing, even beyond team, and I think this is where you know B Corp really creates that notion and it instills that notion of your team goes beyond your employees. Your entire supply chain is your team. So, it's fundamentally changed for us how we coordinate with our manufacturing partners and you know, really, how much can you make today, just given everything that's going on? How can we reconfigure the warehouse so our employees are safe? How can we support people at our warehouse? You know things like even just providing more free lunches. But also knowing you've got to really think about what that lunch is so you can reinforce social distancing. It's really been a humbling experience and reinforced for all of us how much we all depend on each other for a simple bar of chocolate to reach the store shelf, so we spent more time than ever checking in on all our supply chain partners. You know the big thing that's also important to think through is the impact on the actual grower of the cacao. And, you know when you think about in San Francisco, it might be hard to find toilet paper or paper towels, but ultimately you can get your hands on them. What we've seen happen in Ecuador, for example, we work extensively with a Co-op in Ecuador, not only have items become more scarce, but the prices have doubled or tripled. And, so if you're a farmer, it’s already harder to make ends meet, and suddenly the price of bleach triples, that’s a really big deal. So, one of the things we've actually started doing is raising donations, actually, to send directly to our farmers to help them buy basic supplies and getting folks to help us with that because what for us has become harder to accomplish, but still doable, if you're a farmer in a third world country is actually a really different and much more difficult proposition.

Smolokoff: You know, I think the whole supply chain and the suppliers is a really integral part of this, and one of the quotes that stood out with another company I spoke to which was Sun & Swell Foods, I spoke to their CEO, Kate Flynn, who mentioned that, in being a B Corp, you do get scored on length of supplier relationships and that that really encourages having a very close knit relationship with a supplier. So, is that the case with you that you've had the same supplier maybe for several years, or for quite some time? And do you feel that sticking with one supplier and having that really strong relationship as opposed to maybe having several suppliers that you’re less close to has helped you be able to work through supply chain issues during this time?

Forbes: Yes, so that's a great question. One of our cacao partners is newer in the Dominican Republic, the others in Peru and Ecuador, we've been working with since the beginning. And the same with our manufacturing relationships. So, before COVID happened our goal as a company was to make sure we physically had a team visit every farming partner this year. Now that’s obviously not going to be possible anymore, but the fact that we’ve had those relationships since 2010 or sooner does allow us to reach out in a different way and just make sure we can be really open with folks and ask how are you doing? Where do you need help? Because it takes a close relationship for the farmer to be able to look and say hey, actually getting bleach is difficult, we need a new sanitation station, those sorts of things. It takes a little bit of psychological safety to be able to say that to each other, and so I think length of relationship and also the fact that we've invested a ton of time and really getting to know folks in our supply chain helps with that.

Smolokoff: And then on top of suppliers and supplier relationships, I think the other big theme that I noticed in speaking to some of these other B Corporations, the word resiliency and resilient came up a lot and specifically one of the quotes that stood out someone told me is that a lot of the variables that go into being a certified B Corp are things that make you more resilient as a business. Would you agree with that statement, and maybe could you give some examples of how that B Corp model allows you to be more resilient than because of that, maybe a little bit more able to adapt on the fly to changing circumstances where you're really not sure what the next day is going to be like.

Forbes: I think resiliency is critical and I think it goes even beyond that to just truly caring about those around you. If you think about the B Corp certification process, you’re not a certified B Corp unless you achieve a certain score on their audit and they go really deep into every part of your business starting with your office and moving to maybe your factory and then to all of the partners that supply you. And what really goes into that for you to be able to become a B Corp in the first place, is just fundamentally caring about all of your supply chain partners be it farmer or factory or truckers, that you care more than just how much are you paying them to provide a service to you. You want to make sure that they are happy and healthy and earning a living from this business as well. And, so I think, you know that the piece of that that goes in, because it takes so much extra time and as a small company we’re already busy doing so many things, it takes a lot of extra time to get certified and do it the right way but I think in doing that you learn so much more about who you're working with and I think the more you know somebody the more you care about them. It creates a different relationship that when times get really tough, and I think they are really tough right now and they're really uncertain for so many folks in the world, you sort of have this reservoir of goodwill you can call on and a sense of we’re in this together and sort of shared strength and sacrifice that helps you just figure things out. You know the old model would be we talk to the factory and say hey, we need 5,000 bars today or whatever the number is, you know now it's actually a different conversation – tell us how many you can make and we'll figure it out and play from there.

Smolokoff: And, moving not completely off of the B Corp model, but just in terms of maybe more a general reaction to the pandemic and some changing things in the industry, obviously there are no food trade shows right now where you can go out and sample. People are going out and shopping in stores less, probably purchasing online more so maybe you have fewer of those impulse purchases of a candy bar or a nice piece of chocolate. So, I'm just curious what your company has been doing to work around that and to get past maybe some of your old avenues of getting the name out and getting the word out, and what you've been doing instead, whether it's an increased presence online or whatever the case may be to try and stay at least as close as you can to maybe the projections that you had three or four months ago.

Forbes: Yeah, I think for us, you know I mentioned in a team meeting the other day hey, actually right now, our number one sales method is actually having a really good operations team. Because you have to have products in stock in order to fulfill any demand and so that's something we've actually doubled down on a little bit is how do we make sure we have everything in stock? And we've been really lucky and fortunate on that. We've done a lot of hard work; it's paid off at I think a 99% fill rate for chocolate the last couple months and that helps consumers because they know when they come to our website it’s going to be there, and it also gives reassurance to our retail partners that they know we’re here for them. We spend a lot more time online. Our website sales, I think quintupled in April, which was an unforeseen thing and it's allowed us to think more about how we experiment online, how we experimented with Instacart and Amazon, and some of those other new ways that people are discovering things. We know people are spending more online. How can we work with entertainers and influencers and those sorts of things to bring a little fun and chocolate into people’s lives? It’s allowed us, it’s forced us to really be flexible because I think we had like many companies, here's our 12-month marketing plan and everything is laid out and planned three months in advance. Well guess what, a lot of that's out the window now. And that goes back to resiliency and flexibility, which is a big part of the B Corp model. We've had meetings where we said, hey, how we planned our food service business, isn't as relevant right now because people are working it from home, so how do we change that and reach them in different ways and online is an example, and there's a couple other ways we can do that. So, for me it's been really fun to watch how our team has risen to that challenge and not taking it as you know, oh shoot everything we've worked for is kind of on pause for a while, but you know, there's actually a bunch of new opportunities, and how do we work to get chocolate to people and introduce our brand to folks who are working from home and spending their time fundamentally differently than they ever imagined they would 90 days ago.

Smolokoff: And then you know, it’s a little bit tough to say once things get back to normal because we don’t really know what normal will look like and we certainly don’t know when that will be. But, as important as it is to be able to adjust and maybe call an audible in terms of some things that you're doing in the middle of this pandemic, and even as we're hopefully maybe getting closer and closer to normalcy moving forward, are there any lessons or any new ways of doing business that might stick with you even when we do return to a period of normalcy whenever that may be? How might your business look differently than it did say in December or January before any of this happened? What lessons or things that you’ve learned might stick with the way the company does business even when we get back to quote unquote, the way things were?

Forbes: There's a couple things that we think about. One, I would say I had been traditional, we should be in the same office and having kind of informal conversations and running into each other and working on issues that way and what I've learned from this is there is great value to sort of meeting everybody where they're at in terms of work styles and some people are going to want to work from home more than others, and that's okay. I think it will actually be important as we need a little more physical distance going forward. So that's one thing that we think about a lot. The other is really just making sure you're stopping and thinking about what your Plan B is, but also your Plan C, your plan D and your plan E when maybe things don't go as you expected. I think one of the reasons we’ve been able to do well during these times is there are spots where we did have a few backup plans and actually before we closed the office we planned on how we would close that for a few days to make sure we could do that effectively and make sure our culture, which we value a lot, could kind of translate to an online form with Microsoft Teams and all those good apps. So, we’ll really talk a lot more about backup plans and redundancy, but there’s a lot of things that won’t change. I think the core of what we are about is making the planet a better place and making sure farmers benefit from the great work they do. I actually think that’s going to be more important than ever. You know, my seven-year-old has said to me once the good thing about this time daddy is the Earth gets to breathe again. And you know, while I certainly wish it would have happened in a different way, I think this gives all of us a chance to step back, pause and say what's really important in life and how do we make sure we're running our day to day, as much as we can, according to those principles, to make everyone around us and everything around us a little better.

Smolokoff: I really only have one more question and it’s sort of a question that you’ve been answering for the last 15 minutes or so, but I’ll put it a little bit more concisely to end things here. Let’s say I’m starting a business. I’m new to the industry, I want to start a better-for-you food business. I’m going to be a small company and I say, Mike, what is the one or two biggest pieces of advice you can give me? The one or two things that you would say you have to focus on these things if you want to be a successful company and be a company that can maybe work through some unforeseen hiccups along the way, whether that is a small hiccup or a global pandemic sized one. What would you tell a new business starting out; make sure that you do this thing if you want to make sure you're a successful company?


Forbes: A couple things. I think one is you’ve got to have your big crazy vision and stick to it. Because the ideas that really change the world, I think everybody initially thinks are crazy ideas. The people who stick with it through thick and thin are the ones who really do end up changing the world for the better. That said, you've got to balance that with reaching out to everybody around you and getting good feedback on how could I do this differently? How could I do this better? And sort of learning from that experience but making sure you’re also sticking to your vision at the same time.

The second thing is, the food business is hard. It’s hard to get into stores, it’s actually even harder to get your product off the shelf. So, I always advise people to kind of make your optimistic plan, and then your ‘oh geez well what if a whole bunch of stuff doesn’t work’ plan, and make sure that you’ve built your business to withstand the worst case scenario but that you're really ready to tackle the best case scenario, and that's the one you dream about at night so that the things that can go wrong don’t drag you down, but you’re ready for them because something will happen. We’ve been in business for quite a few years now, but we’re still a smaller company and I get surprises every day. So you’ve got to learn to take them in stride.

Smolokoff: Alright, thank you so much, again, that's Mike Forbes, CEO of Alter Eco. Mike thank you again for taking some time out of your day. I know things have probably been pretty hectic the last few weeks for you guys so I really appreciate you taking some time speaking to me and hopefully this is the kind of advice that other companies can take and move forward with and use them to better themselves, better their business, better the planet, everything that goes along with the B Corp model. Thank you again for taking some time I really appreciate it.

Forbes: Thanks so much. Have a great day.

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