Small Eugene company sells its chocolate to the lactose intolerant and vegans
8212; When Sam Melner learned that he was allergic to dairy products, he was unwilling to accept his doctor's directive to swear off chocolate.
"I didn't quite believe him," he said.
A chocoholic, Melner knew chocolate came from the cacao plant, and that milk was an additive to commercial chocolate. He started doing research and experimenting in his kitchen and soon developed what he considered a tasty dark chocolate made without dairy or other additives.
It was so tasty, in fact, that he decided to turn it into a business, joining with a partner to establish Chocolate Decadence, a Eugene company marking its 10th year in existence.
The company, with four full-time employees and about $225,000 in annual sales, is small but steadily growing, Melner said. In the past year, the company has nearly tripled the number of natural food stores it sells to, shipping to about 300 stores in 42 states. — The challenge confronting Melner now is how to keep growing his business &
8212; to get into more stores and bigger stores, and eventually to expand his production facility &
8212; with limited capital. The chocolate industry is very competitive &
8212; visit most grocery stores and you'll see shelf after shelf of chocolate goodies from a large array of national and local producers. But Melner figures there is little rivalry in his narrow niche.
Chocolate Decadence is literally a mom-and-pop (and son) operation &
8212; Melner's wife, Marjorie, works in the kitchen and his son, Pete, is the general manager. And its tiny plant will never be mistaken for Willy Wonka's chocolate factory.
The company shares manufacturing space with a salsa company, occupying about 800 square feet.
Workers make all the candy by hand. They heat the chocolate, add flavorings and pour it into molds. One recent afternoon, Marjorie Melner sat at a table and painstakingly dipped nuts in molten chocolate with a long fork.
Sam Melner, 77, took a circuitous route to becoming a chocolatier. Born in Southern California, he taught school for 2 1/2 years in Modesto, then moved to New York to work in book publishing. After 15 years, he decided that he wanted to be in business for himself.
He had a mail-order fly fishing business and a woodstove business. Then he bought a small Eugene salsa company, Salsa de Casa. He and a partner, Cheryl er, a vegan, started Chocolate Decadence, and he soon sold the salsa company to focus on chocolate. Melner later bought out er.
Melner, without offering specific dollar figures, said his company is profitable, but not hugely so.
He said he takes out a loan every year to get through the summer months, when the company loses money because of slow sales and the extra expense of shipping chocolate with ice packets to prevent melting.
Melner said his company relies mostly on word-of-mouth, and some advertising in natural food magazines, but can't afford more aggressive marketing.
"We'd like to get as big as we can," he said. "We'd like to get big enough to expand to the general market."
The growth issues confronting Chocolate Decadence are common among small-business owners, said Jim Lindly, director of Lane Community College's Business Development Center.
While there are some notable exceptions &
8212; think Les Schwab Tire Centers &
8212; most small businesses need to borrow cash to finance growth, he said.
That's because business owners have to pay money &
8212; for payroll, payroll taxes, supplies &
8212; before they get paid.
"Often times you end up with a gap," Lindly said. "On paper, I'm looking profitable, but from a cash flow standpoint, I don't have any money."
Melner said his company has been successful getting into independent stores but so far has been unable to crack the big chain store market.
His biggest account is the Eugene-based Market of Choice grocery stores.
"The next level, as far as I can tell, is to have more natural food stores that we sell to," he said.
"I don't know if we can do it in larger stores. Most larger stores are chains, and it's almost impossible to get a response from chains."
Chocolate Decadence is not cheap.
A three-ounce, dairy-free chocolate bar, for example, costs $2.95; organic goes for $3.55 per bar.
The company does about half its sales through its Web site, chocolatedecadence.com, and about half through natural food stores.
Melner said his company caters to two main markets: People who are allergic to dairy products, and people who eschew all animal products, including dairy and sometimes honey.
The vegan and allergic markets are relatively small, Melner said, but growing.
And many people have a passion for chocolate. Like Melner, his customers don't want to deprive themselves of the sensual pleasures of chocolate.
Up to 8 percent of infants and toddlers have milk allergies, a number that decreases to — or 4 percent as children get older and outgrow the allergy, said Anne Munoz-Furlong, founder and CEO of the Food Allergy & Anaphylaxis Network.
Among adults, lactose intolerance is more common than milk allergies, and also forces people to give up chocolate, she said.
"There's great interest in having milk-free chocolate because of everyone's love affair with chocolate," she said.
Similarly, many vegans are keen to indulge their taste for real chocolate.
"I think there's a huge demand," said Mary Margaret Chappell, editor-in-chief of Vegetarian Times magazine. "For so long, vegans had to content themselves with carob &
8212; bleah. ... I think of carob as that '70s-tasting stuff. It doesn't do it for you."