Well, hello ladies and gents, Robert Sykes, Keto savage.com
and today is not a normal podcast.
I do not have a guest on. This is a short podcast.
It's just me talking a little biz dev with y'all got some
updates on the keto brick situation, some entrepreneurial
ship talk here Yeah, we've got some unprecedented times in the
cacao butter market. We're going through a little bit
of a cacao butter crisis, so to speak.
So I wanted to bring y'all up to speed on that, how that's going
to impact the bricks, how it's going to impact y'all that
consume the bricks. So this podcast is just a little
update and a little business talk.
So hopefully you enjoy. I will definitely be transparent
with all things going forward as always.
But yeah, this little podcast I want to put on my podcast
platform as well as a YouTube video for all the people that
prefer viewing as opposed to listening.
But for all you lovely listeners, here you go.
What is going on y'all? Robert Sykes, Keto brick.com and
I got an announcement for y'all. So I have always prided myself
in being as transparent with y'all as possible from the very
get go. I've shown you all the behind
the scenes of us slaving away making these bricks by hand when
we first in, you know, conceived the product back in 2017,
launched in 2018. And I've, I've tried to show you
all the behind the scenes every step of the way from moving to
one location to the next. You know, the different
flavours, the different profiles, like all that stuff.
We've increased the prices twice since we've been in business.
I don't like increasing prices. We don't offer discounts on the
bricks apart from our anniversary launch, as you all
know, because the margins on the bricks are so slim in the 1st
place. I am an entrepreneur.
I love business, I love entrepreneurship.
I love creating something of value with my own two hands and
putting it out into the world. Some things in business are
outside of my control and right now we are facing one of those
situations. I don't know if you're in the
know or not about the cacao butter crisis that is currently
underway, but if you simply Google cacao butter crisis, you
will be inundated with all kinds of information about what is
going on. Basically, from what I've
gathered, I've talked to multiple suppliers at this
point, there was an El Nino season in Africa where a lot of
the cacao crops are produced. Basically decimated their crop
plantation by a third, some estimates say 2/3 of their
normal production. So there is a massive shortage
on the cacao market supply right now.
Basic supply and demand that has resulted in a crazy increase in
costs of cacao butter. To give you all some
perspective, I've been in a contract on cacao butter at 5
bucks a pound and I got recently quoted at $10.10 a pound.
So I bought that up. I got 3600 lbs of cacao butter
at $10.10 a pound and I am now getting quotes north of $20 a
pound. That is a pretty significant
increase from the $5 a pound that I've been paying for cacao
butter. As you all know, the margins on
the bricks are already minuscule to begin with, which is why we
don't do the discounts. So an increase by that degree
for our primary ingredient is not a good thing for business.
And I'm just trying to stay in business.
I'm trying to be proactive. I'm trying to be resilient.
I'm trying to do right by y'all. I'm trying to figure out what I
need to do as the owner of this company to take it in the right
direction so that we stay in business.
So we keep offering the bricks at a reasonable price and do
everything to the best of my ability.
And I've been looking at my different options and
unfortunately, I don't have much control over the rainy season in
Africa. I don't know when prices will
stabilize, if they will stabilize.
There are so many unknowns right now.
Like it cost me a lot of sleep at night to say the least.
At $20 a pound, I am losing a significant amount of money on
the bricks at their current pricing.
And I can't stay in business if I'm losing money because then I
can't buy more ingredients to make more bricks to make the
whole process work. So what I'm going to do as
proactively as possible is currently the pricing on the
bricks is $12.00 for a single brick.
That price has actually never changed.
That was the price that we started out with six years ago
and that's the price that we've kept.
I'm going to try and keep that the same.
So 12 bucks for a brick, a single brick.
What has changed for the two times that we have adjusted
pricing as we went from the, you know, one week supply, two weeks
supply, one month supply to the volume discount system which is
what we currently use. In which case if you buy, you
know six or more bricks, you get a 20% discount and then you buy
beyond that you get a 25% discount and then 24 bricks and
more is a 30% discount. What I'm going to do to try and
mitigate this whole cost increase of cacao butter
situation is simply reduce the cost of the volume or reduce the
discount inherent in the volume discount.
So now rather than getting a 20% discount when you buy 6 bricks
or more, you're going to get a 10% discount.
When you buy 24 bricks or more, rather than getting a 30%
discount, you're going to get a 20% discount.
So basically everything drops by 10% across the board on the
volume discount tier system. I feel like that is the most
reasonable way to go about it rather than me increasing the
cost of the bricks from $12.00. Rather than me charging shipping
or anything like that, I'm just simply going to reduce the
volume discount by 10% across the board.
That will hopefully offset this crazy increase in cacao butter
to some degree at the $10.10 price.
If if I'm having to get Brexit, $20 a pound, that's still not
going to cover that shortage there.
So I don't honestly know what's going to happen.
I'm playing it by ear right now as we go through this, as I
learn more from suppliers. I've been talking to multiple
different suppliers. I'm trying to find options in
every outlet that I can. I'm trying to get pricing for
just getting an entire shipping container of cacao butter
shipped here directly from the farmers and going direct to the
source. I'm also looking at alternative
options for the base ingredients.
So right now obviously it's raw organic cacao butter.
I've been experimenting with beef tallow as an option.
So grass fed, grass finished beef tallow.
I've been playing with that for quite some time.
I've pretty well got a formula finalized now.
This whole cacao butter crisis is going to expedite me making
that formula a reality. So we're playing around with a
beef tallow option. I'm playing around with a bunch
of different options right now. So we've got the beef tallow as
a potential viable outlet. We've got, I'm going to try and
formulate some bricks using some cacao butter, some beef tallow,
some maybe 100% beef tallow and no cacao butter.
I'm just playing around, seeing what sticks and seeing how
things are going to work out. I don't know what the future of
the cacao commodity system is going to be and nobody seems to
know. I've heard that it may stabilize
by the end of the year. I've heard that it may take six
years. I have no idea what's going to
happen. We're just waiting for the
powers that be to shake out. And you know what?
See what those numbers are going to look like.
As is true with everything from the get go, I'm going to be
completely honest and transparent with y'all.
I'm going to share exactly what I learned.
Anytime I find out something new about the commodity market, I'm
going to let y'all know what I find out.
But in the meantime, this is the only way that I know to hedge my
bets and be as proactive as possible.
So decreasing the volume discount by 10% across the
board, finding alternative options for base ingredients,
whether it's beef tallow or something else, and then just
being honest and transparent with y'all.
So that is what we're looking like right now.
Scary times for me because it's like that is our primary
ingredient. That is what the the whole brick
is based on is that raw organic cacao butter, which has all the
amazing properties that it does, the high stearic acid content.
Beef tallow also has pretty high stearic acid content.
So I think that would be a pretty viable option.
Now beef tallow is not going to be as resilient to the heat as
cacao butter. So depending on when we launch
those flavours during summer months, they may be more
susceptible to melting. So I've got to get all this
stuff figured out. I am losing a lot of sleep right
now. Stress levels are pretty high.
But that is all for me to figure out and for me to just do right
by y'all. So that's exactly what I'm going
to do. I'm going to be resilient.
I'm going to figure this out. I'm trying to be very stoic
about this and control those things which I have control over
and be at peace with those things that I do not.
I do not control the rainy season in Africa or the supply
and demand of the commodity market as a whole.
So I can't control those, but I can't control my communication
with y'all, the quality and integrity of the bricks.
On that note, a lot of these larger chocolate manufacturers
like the Nestles of the world are trying to, you know,
sidestep and use really low quality ingredients to fill this
void. I have no intentions of using,
you know, soy products or canola oil or anything like that in the
bricks. So you don't have to worry about
that. Anything that I do with regards
to the formulation will be up front and honest with y'all, and
hopefully things just keep getting better, but that will be
for time to tell. So as is true from the very
beginning and now I'm going forward and as always, I will be
honest with y'all, I'll be transparent with y'all, I'll let
you know what I learned and we will adjust course as necessary.
But as it sits currently, the pricing has literally, you know,
it's skyrocketed on cacao butter.
So as I learn more, I'll be sure to keep you up to date.
These changes will go into effect on the 1st of May.
So currently you can get take advantage of your current
pricing. This drop of a 10% across the
discount volume, discounts across the board will go into
effect on the 1st of May of this year.
So if you want to stock up before then, by all means do so.
I will put out another e-mail newsletter before then to remind
y'all just so everybody's in the know and I will obviously be
very upfront and transparent with y'all with anything that I
learned going forward, but I hate this.
I apologize for this inconvenience.
This is outside of my hands, outside of my control, so I'm
just trying to control what I can.
So that is where things sit currently.
Hope y'all can be understanding of this.
If there's any questions, by all means don't hesitate to reach
out and let me know. But truly, if you are
interested, just simply Google the cacao butter crisis right
now and you will see what is going on.
It is kind of crazy. It is very crazy.
I talked to somebody, a supplier yesterday and he said that he's
been in business for 12 years, you know, within the cacao
market and he's never seen prices like this.
He said it was unprecedented and they've literally 6X in the past
few months. So don't know how long this will
happen. Don't know what's going to
happen but I'm doing the best I can with the resources I have
and being as honest and transparent in the process.
So thank you all so much for the support.
I want to keep doing everything I can to make sure y'all keep
getting bricks and that is why we are doing these changes as it
sits currently. So thank you all so very much
and we will talk to you next time, yeah.