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The US Expansion Series is a podcast on how to successfully expand your business to the US market. This first season hosts Fleur & Flora of TABS will discuss the legal landscape, the risk of liabilities, pitching to US investors and the expansion journeys of Tony Chocolonely, ChannelEngine and the Belgian Boys. The goal of this podcast is to provide companies with the tools and guidance for those interested in expanding to the US market.
Need help setting up your business in the US? Find us on www.tabsinc.com
Welcome to The US expansion series. The pod podcast where you can learn about successfully expanding to and scaling your business in The US market. My name is Fleur.
Speaker 2:My name is Flora. And in every episode, we dive into a different aspect of a successful market expansion. This podcast is brought to you by Tabs in order to support you on your expansion journey. How are you today, Flor?
Speaker 1:I'm well. Thanks for asking. I am, as always, very excited about today's episode. And I can't wait to hear your conversation with Fritz Snell from Tony Chocolonely. And knowing Fritz a bit, I think he is the best person to guide us through this journey of Tony Chocolonely.
Speaker 2:Yeah. I agree. I think it's so amazing that we get to dive into the expansion journey of Tony's. And, I mean, they're doing so well in The US. In New York, you can't walk into any grocery store.
Speaker 2:Doesn't matter if it's a large or Whole Foods or just a small deli around the corner. Everywhere you see the Tony Show Cologne chocolate bar. So that's really impressive. And it's funny because this interview was the first interview of this podcast series, and I had no idea what to expect. I've never done a podcast, so I was so nervous.
Speaker 2:And I did a lot of research beforehand because I really wanted to prepare well.
Speaker 1:Yeah. I remember that time because you did so much research. I think at some point, you knew more about Tony's than the average worker
Speaker 2:at Tony's. Yeah. Probably. But I mean, I found out a lot. I discovered a lot.
Speaker 2:And to me, it was really fascinating because I've always known Tony's Chocolonely as this very fun, colorful brand, of course, delicious tasting chocolate. And I know that they're fair trade and doing great work, but I didn't realize that it started with such a serious mission.
Speaker 1:Yeah. I didn't realize that until I read all your research. And it may be interesting and helpful to give the listeners some of that background information as well. So Tony's was founded by Dutch journalist, Thun van der Kuyke. And Thun read a book in 2003 on illegal child labor practices on cacao plants in West Africa.
Speaker 1:And Thun was so shocked by it that he couldn't believe that this was actually happening in modern day society. So he decided to look further into these practices. And he found that this was actually very common in West Africa and that most multinational chocolate companies weren't doing anything about this. So together with a group of journalists, they decided to raise awareness on this issue and get people's attention. And a few years down the line, they eventually started Tony Chocolonely to show that it can be done differently and and to change the chocolate industry from within.
Speaker 2:And so what I love is that it's a bold brand, making a statement that's very important and needs to be shared. And therefore, it also made a lot of sense for them to expand to The US market. I mean, they're very successful in The Netherlands and other European countries. But The Netherlands is, of course, a very small country, especially compared to The US. And all the large chocolate companies are all present in The US.
Speaker 2:So if you actually want to be able to make a difference and make an impact, you also have to be present there and do business in The US.
Speaker 1:Also nice to mention is how the name Tony Chocolonely came about. So Tony stands for Thun, Thun van der Koeke, and Chocolonely stands for his lonely battle against slavery in the chocolate industry.
Speaker 2:And for the people that don't know, Thorn is a very Dutch name. Oh, yeah. That's actually also something that they did very well. From the start, they chose a name that works well for internationalization and US expansion. I mean, the name tone would probably resonate less with most people in The US.
Speaker 2:But yeah, I'm very excited to hear more about the expansion journey, and I think we should listen to the conversation.
Speaker 3:Oh, Fritz, thanks for joining our podcast. I'm so excited to dive into Tony's market expansion with you today. You are the chief of markets at Tony's Local Only. What does the chief of markets do exactly?
Speaker 4:Well, I guess in a lot of other companies, they would call us the chief commercial officer. But while we already have a c c o, being our chief chocolate officer, I'm the chief of market. So basically, I'm commercially responsible for all the markets that we that we're in, and next to that also for the e commerce business.
Speaker 3:Okay. And today, we're of course going to focus on The US market. Tony's entered the market in 2015, around seven years ago. Why was The US a target market for Tony's?
Speaker 4:Yeah. That's a relatively easy question to answer because as you probably know, we are an impact company. We are an impact company that makes chocolate and not the other way around. So Tony was Tony's was founded in February 2005 by a bunch of Dutch journalists who wanted to change the cocoa industry from within. And if you truly wanna make impact and really change that industry, you gotta have presence in the world's biggest chocolate markets, being The US.
Speaker 3:And how did you prepare for the market? Did you do any market research?
Speaker 4:Well, I I think it's safe to say that we did it in a typical Tony's way. So first create the problem and then solve it. So so we did reach out to a potential customer in The US, being New Seasons Market in in Portland, Oregon. The only b corp b corp certified retail organization at that moment. Also, Tony's is b corp certified, so that was basically the connection.
Speaker 4:And we hired a a Dutch sales guy who already had lived there, and we didn't do a very comprehensive market research. We had a firm belief in our brand and our story, so we thought, well, if we start with the right customer, everything will work out.
Speaker 3:And Tony Chocolonely is, of course, a very popular chocolate brand in The Netherlands. Everyone knows it, has tried at least one of your chocolate bars. When you started in The US, you were a brand new company in The US. Yeah. It's a huge market.
Speaker 3:So how did you create that brand awareness and share your story like you mentioned?
Speaker 4:Yeah. Yeah. It's it's it's a very good good question. So Tony's is a company that's slightly different from a lot of other companies. One of the things we're different in is that we, in principle, don't do paid media, or at least that was the principle when we started.
Speaker 4:So we heavily relied on grassroots marketing. We believe that we have a very genuine and and and real story that's worth to be told, so that we get a lot of free publicity, earned media, and we do a lot of grassroots marketing. So all kinds of food related events in and around Portland, and we handed out tons of chocolate bars because eating is believing.
Speaker 3:And was this all done by the local team? Like, how how much support did they receive from The Netherlands?
Speaker 4:Yeah. So the let's say the three d support, so the the the real life activations was indeed done by the local team. They were supported with all kinds of visuals and designs and and and other stuff, but mainly done by the local team. So they really had to have a a real hands on mentality.
Speaker 3:Yeah. What did the team look like in those early days? You had the first person that you've hired.
Speaker 4:Yeah. We started with Peter Sandee, that was the Dutch guy I was just referring to, and I think within a year or two, the team expanded to four or five people, and they did everything together actually. Yeah.
Speaker 3:And those were all sales and marketing employ
Speaker 4:Mainly, and some operational support. Yeah. But in in in such a startup phase, it's not as strict as in a scale up or even more mature phase. Right? You have more generalists that that basically, apart from their direct responsibility, also help out in other areas, and that's also very much needed in that stage.
Speaker 3:Yeah. It is amazing. I saw that there was also a special bar made for Portland.
Speaker 4:Right. The Hello PDX bar, Indeed. So the abbreviation for the Portland Airport is PDX. So indeed, we made a milk bar with the PDX wrapper, and we did a launching campaign. Hi.
Speaker 4:Hello PDX. We're Tony's chuckle only. Nice to meet you. And that was received very well.
Speaker 3:And then in 2019, Tony's made the move from Portland to to New York. Why this decision to leave Portland and move to New York?
Speaker 4:It was not an easy decision to start with. But So, as said, we The first bars hit the shelves in 2015 in Portland, and we gradually expanded the team there, but we also found out or learned that it was quite challenging to to manage a team on a ten hour flight distance, and nine hour nine hour time difference. Right? There they started when hours ended, more or less. And also, Portland was not necessarily the greatest source of talented FMCG skilled people.
Speaker 4:So altogether, we decided it would be better to bring the offers literally a bit closer to home in terms of distance and in terms of time difference. So that was actually the main the main reason.
Speaker 3:Yeah. Yeah. We're getting this feedback from a lot of companies that the nine hour time difference can be really tough, especially when like the smaller team in US still relies on the team in Europe for, yeah, certain decisions.
Speaker 4:Absolutely. Yeah.
Speaker 3:And if you look back at your market expansion, what were the main challenges for Tony Show alone in The US?
Speaker 4:Well, in hindsight, focus. So I think we started really well. I said it was with New Seasons market that was very supportive for our mission, had the right target audience, very strong geographical focus. And after that, personally, I think we spread ourselves a bit too thin, and then you can easily spend a lot of money on logistics for instance. It's more challenging to support your brand across the nation if you're only still a very small brand.
Speaker 4:So I think if we would do it again, also after launch at New Seasons Market, would focus more on certain regions, certain specific retailers, instead of giving into the temptation of national coverage too soon. Does that make sense?
Speaker 3:Yeah. Yeah. Because did you have any assistance also from, I don't know, certain advisors or experts?
Speaker 4:Formerly not, but yes. Clearly, we we we spoke to a lot of people involved in The US market, but we're always a bit, well, I won't say stubborn, but let's let's call it willful. We always thought and still think that we are able to break certain rules. That said, in in this in this case, if we would do it again, I think we would do it differently.
Speaker 3:Yeah.
Speaker 4:And create more scale, more in in certain specific regions before moving on to the next ones. Yeah.
Speaker 3:Does did it help you in any way that you were so successful already in The Netherlands? Did that help you in The US to grow further?
Speaker 4:Yeah. Well, the only Let's say, a spillover customer, right, where we had a direct relation between the European customer and a and a US customer was actually Ahold. It's more a mainstream retailer, grocery retailer in the in The US, where typically we start in the bit more premium channel. So in the first few years, the answer to that question would be no. And we thought very highly of ourselves and we're very confident, but it doesn't mean a lot in The US if you're successful in the in in particularly in The Netherlands.
Speaker 4:Right? So honestly, the the the success of the first one, two years is is based I think on on the brand, the story, and the product. And not so much on the success in the in The Netherlands.
Speaker 3:That's great. You really did it yourself.
Speaker 4:Well, sort of. I I I do believe we have great taste in chocolate, and I think I'm not the only one. We have a a unique story and a very real story, and we have a brand that visually and in terms of tone of voice really stands out. So, in in talks like these, I always say those three pillars for me are the key to becoming a real global brand at some point, and that has really helped us to to take off in The US, I think.
Speaker 3:And did you also notice, because in The US, marketing and having a good story is of course very important, they're also very good at it. Did you notice that they received it very well, the story of Tony Chocolonely?
Speaker 4:Yeah. And I think it's Here it's important to say that for that purposes, Portland was a very good city to launch in. People in Portland The pace of life is different than than the one in New York. People are very interested in food and everything that's behind food, in the supply chain, the stories around it, and are really keen to learn these things. And for us that was spot on.
Speaker 4:As said, we don't do paid media, and so then you have to find other ways to to get your message across. And and Portland was was a very good city for that, and and the the people that live in Portland were very open to our story, so that that that also really helped. Yeah.
Speaker 1:Very interesting how Portland was a great place to start their expansion because, like Fritz is sharing with us, the mentality and culture in Portland matched really well with Tony's bold brand and and and its message. But then after some time when the company started to grow and needed to operate more efficiently and the team started to grow, New York turned out to be a better location.
Speaker 2:And it makes sense, of course, that you can compare those early days getting your brand out there with the scaling phase later on. Another thing that stood out to me from Fritz's story was definitely don't underestimate the size of the market, how huge The US is. But that also means don't underestimate, when you're able to do business in The US, how huge the size of an order could be when you get that opportunity to work with the large retailers. We've seen it with one of our companies that we assisted, that they had a sales director in The US that was trying to get a foot in the door with Whole Foods for a few years. He did everything he could, but it was so difficult to get into contact.
Speaker 2:And then when he finally succeeded and he was so happy, the European parent company wasn't able to deliver because the order size was just too huge. So, yeah, also keep that in mind that when you're able to succeed in The US, you also, yeah, need to expect that volumes can be so much larger, which, I mean, of course, means, yeah, a lot more potential, more opportunities in The US.
Speaker 1:And next, you and Fritz discuss the cultural differences that he experienced when he was working and living in The US, the exciting new partnership with Ben and Jerry's, and Fritz shared some valuable tips for entrepreneurs aspiring to expand to The US market.
Speaker 3:And you've also lived in New York yourself in 2020 to start the New York office. Did you notice a lot of cultural differences while working there?
Speaker 4:You mean between New York and Portland, or between New York and The The Netherlands?
Speaker 3:Yeah. Both.
Speaker 4:Well, the answer to both questions would be yes. So, as said, the the the pace of life and the attitude of people is very different in in New York versus Portland. Actually, almost the complete opposite, I would say. Yeah. And also, the cultural differences between The Netherlands and The US in general are are way bigger than I than I anticipated.
Speaker 4:I was raised in a time where you would watch all these American sitcoms, so And you you understand the language and you speak the language, so it feels sort of close by and maybe similar. But in in reality, the differences are way bigger than I think a lot of people would expect.
Speaker 3:And do you have an example in business where you've noticed it?
Speaker 4:It's not so much specifically related to business, but in general, there's a lot of sensitivities in in in the in The United States that we don't even think about in Europe. We can be especially Dutch people can be very bold and blunt. We always say, we appreciate honesty, take that as a compliment instead of taking offense. And we've been in several global meetings, virtual global meetings where after the meetings, people from the US team came to me and said about someone who said something that, did he really say that? You cannot do that.
Speaker 4:And I had not even thought of that. And so that was that was interesting to learn that. And that's just one example, but yeah. In general, bigger difference than I anticipated.
Speaker 3:And if we're talking about culture, one of Tony's statements that you're crazy about chocolate, serious about people, starting with your own employees. Tony really takes pride in caring for its employees from a limited PDO, taking home as much structure as you can carry. I'm very jealous. But the world culture, as you've noticed in The US, can be very different. So how did your US employees respond to Tony's world culture?
Speaker 4:There's not a single answer to that. So in principle, they really appreciate what we do. For instance, we have unlimited holidays, which is very rare in The United States. I think in general, people have around ten to fifteen Yeah. Days per year.
Speaker 4:Yeah. We have unlimited days. At the same time, what I also noticed is that the split between your work life and your private life is a bit stricter in The US versus what I was used to in The Netherlands. I I had to get used to that a little bit, you know. I was I was used to when you come in the office in the morning, you chitchat a little bit before you start working, they didn't do that.
Speaker 4:They walk to their desks, they say good morning, and they start working. And it's not a big thing, but I think it was for me, it was quite remarkable. Nothing terrible, but interesting.
Speaker 3:Did you have to adjust anything in your policies of way of working for The US market?
Speaker 4:You mean the formal policies? Well, coincidentally, we are reviewing that right now because for a long time, we wanted to have uniform policies across all the markets. But now, we're learning that that's not always the best thing to do because in some instances, local laws are simply different, and also cultural changes. For instance, we have a transparent salary structure, so everyone can see from everyone across the globe what they're making. And I'm not sure if that's even officially allowed.
Speaker 4:I just learned that a couple of days ago. So for instance, that's something that we might need to review in the in the future, and we're also learning now that we're getting bigger and more mature in in other markets than The Netherlands, that it made a lot of sense to use those uniform policies in certain phase of the company. Now that we're getting better, we might need to review it.
Speaker 3:And what's your secret to building a successful team in The US?
Speaker 4:Well, there's no there's not a secret. I think I think specifically in New York, there's an insane race for talent. So building building a culture, an attractive culture that people really feel if they're in job interviews, you know, having an office that feels like home, taking care of people, that helps. There's a lot of ambitious people in New York, also monetary factor plays quite a big role. But So I think building the culture and showing what you're about as a company, right?
Speaker 4:We as an impact company that we are there to make the world a better place and at the same time be commercially successful. That really helps to not only You're able to use more than one dimension than only the monetary one. Let's put it like that. Does that make sense?
Speaker 3:Yeah. Yep. You've mentioned that you noticed a difference between the work mentality in Portland and New York?
Speaker 4:Well, I have never worked in Portland myself. I visited it quite often, but I've never been part of the daily office culture. So I don't necessarily think that people are working less hard there, but the general attitude is a bit more relaxed. So both in in in private lives as well as in work lives, I think. So so there there is a difference.
Speaker 4:Yeah.
Speaker 3:And I also have to congratulate you on the partnership with Ben and Jerry's love affair, a huge step. So how did this partnership come about?
Speaker 4:Yeah. First of all, thank you. We are very happy with it. It's I I honestly feel that it's gonna be a game changer in many aspects. So a couple of years ago, Tony's started its open chain platform where we enable other chocolate companies or companies that at least use chocolate in their products to source their cocoa according to our five sourcing principles that together we we refer to as the recipe for slavery chocolate.
Speaker 4:And the conversations with Ben and Jerry's started already two, three years ago. Also, they are a company that really wanna make the world a better place. And roughly four or five months ago, we actually landed them, they actually signed the agreement and they are part of our open chain network now. And to celebrate that, they've developed two pints of ice cream with Tony's flavors in them. We did the other way around, we developed two chocolate bars with typical Ben and Jerry's flavors.
Speaker 4:The unfortunate part is that we were confronted with supply chain issues from our chocolate supplier, Barrie Gallabaud in Belgium. So the pints of chocolate are actually in store, and our bars aren't yet. In The US though, both will hit the shelves early next year.
Speaker 3:Can't wait to try it.
Speaker 4:I've tried them. They're awesome.
Speaker 3:And what's next? What does the future look like for Tonys in The US?
Speaker 4:Well, I think we've proven that there is a place for Tonys in The US. We are really starting to get traction from a commercial point of view. For the people that are a bit familiar with The US grocery landscape, we are now national at Target, Elbit's and Safeway, Whole Foods Market, CVS, and a bunch of other customers. So we are really moving towards national national distribution. You can also sense it from that we get more and more press requests that people are starting to notice us.
Speaker 4:And and I think that's that's very promising. We're also working on local production, so up until now, we are shipping finished goods from Europe to The US, and apart from the fact that that's really expensive, it doesn't give you a lot of flexibility. So we expect the first bars to be produced locally somewhere next year. So honestly, I do believe that the sky is the limit in The US for for Tonys. For us, again, impact is the main driver.
Speaker 4:To make impact, we at least wanna be seen by our big competitors, and that's already starting to happen, but they ain't seen nothing yet.
Speaker 3:That's amazing. It really is such an amazing and inspiring brand with a great story, a great mission. And to wrap it up, do you have any final tips for entrepreneurs who are looking to expand to The US?
Speaker 4:Well, we made a lot of mistakes ourselves. So let let me not pretend to be someone that that that knows everything, but what what we have learned, what I said earlier, if we would do it again, we would have been After the first step, we would have been more focused in terms of customers and geographies before before going national. I think that's the the main the main take out for us, and don't underestimate the differences between The US and and for instance, The Netherlands.
Speaker 3:Thanks so much, Fritz. Thanks for your time today.
Speaker 4:My pleasure and good luck.
Speaker 1:Flora, it was very interesting to learn about Tony's expansion. And I can confirm the free chocolate policy that you guys were talking about.
Speaker 2:That's so amazing. That's a great connection to have. And that was already our fourth episode. Our next episode is on how to protect yourself from liabilities in The US with Manny Schonhuber. And after that, we already have our final episode, where we dive into the expansion journey of Belgian boys with their CEO, Anoop Gottlieb.
Speaker 2:Yes. And during that episode with the Belgian boys, we'll dive deeper in how you get a foot in
Speaker 1:the door with larger retailers such as Walmart and Target, and what obstacles you may face when working with these larger retailers. Well, this is it for today. Thank you for joining us and taking the time to listen. Please subscribe, like, and share. You can find The US Expansion series on Apple Podcasts, Spotify, or wherever you get your podcasts.