#268 – Expats and Chocolate: Opportunities in Latin America’s Food Industry

Automatically transcribed from the original recording; names and wording may contain errors.

[00:14] Hello there all you expat wannabes, I'm Johnny Mueller and you're listening to the Expat Files, living in Latin America. The show that tells you just what it's like to live, work, play and or retire down here in Latin America. It's a mix of the good, the bad, the ugly and the great and it's all right here so let's get started. Now here's something we haven't talked about yet, a guilty pleasure called chocolate. And where do you think the best cacao or chocolate beans or pods come from? Well a huge quantity of it comes from guess where, Latin America. Now I don't know anything about growing or farming this stuff but I can tell you this, there's a huge worldwide market for it and in fact there's a shortage. So prices are very high and I also know there's a lot of different varying grades in the seed so you really have to know your business when you're growing and storing this stuff because

[01:03] I understand too if it's not dried and stored a certain way you could lose your whole crop in a couple of weeks. But aside from that there are huge business opportunities for expats down here in the chocolate candy business and for anyone who's got their eyes open it's obvious. I mean even if you don't know much about it how hard could it be? It's all about recipes, formulations and patience and first world packaging and marketing. Something that none of the Latin's down here seem to have a clue about. I mean first of all think of the logistics, they've got the raw materials right here, the raw cane sugar and the chocolate right at the source not to mention the little extras like nuts, pecans and almonds and cashews and a dozen other varieties of nuts not to mention a dozen or so varieties of honey and you could buy all of that stuff in huge quantities

[01:51] right at the local markets. And when you buy from the source right here you'll pay like 20% of what you'd pay for pecans and almonds and stuff up in the first world. And as for honey which is going maybe 4 or 5 bucks a pound in the states, down here you can buy it wholesale for a buck a pound. And by the way all that news about the bee die offs worldwide, well it's all irrelevant to the beekeepers down here because it's just not an issue, no one's got a problem with it, not yet anyway. Since Dow and Monsanto and the agronazis really haven't positioned themselves down here yet. However Argentina is one country they're pushing very hard to take over so if you're planning moving there, get ready for Monsanto and the GMOs. Oh and when you're talking about chocolate, don't forget about the cows, just remember

[02:36] that down here unlike in the states they've got pure grass fed non-factory farm cows. Down here that's the norm not the exception. And I can vouch for that personally because at least 3 or 4 times a year I nearly clobber one or two on the highway out in the boonies. Because you see down here, because you see down here the dairy farmers have a habit of just opening the barn doors and letting the cows out to fend for themselves. And often times if you live a little ways out of the city they'll end up hanging around on your street, your yard or even in your garden. And of course you've heard the saying, till the cows come home. Well I can vouch for the fact that sometimes they don't want to go home, they'd rather lay down and fall asleep on your lawn or in your driveway. And when that happens you know, you just go into your junk drawer and pull out a couple

[03:21] of big old firecrackers, man it's a lot of fun. Before I came down here I never thought a cow could run, much less gallop. And I know this is off the subject, but I really love the fact that they sell every kind of firecracker imaginable down here and it's perfectly legal. Now what was I talking about? Oh yeah, I was saying that down here nearly all the milk and milk products come from non factory farm cows. They're all basically free range grass grazers. Now that's exactly the kind of milk and cream that you want when you plan on making a high quality milk chocolate. And with the better blends of chocolate, that's where the action is, in the milk chocolate. Though that's not the only way to go obviously. These days there's kind of been a renaissance in the dark dense high percentage of cacao chocolate.

[04:07] But those are still more or less in the realm of boutique specialty candy. No real high volume stuff there. Though there is a big market in the first world for that stuff too. So anyway with all the natural organic ingredients right at your fingertips down here, and top quality too, at prices that you could never touch up in the first world, you'd think that some smart local latin businessmen would be all over that. Well it's not that they haven't tried, yet the candy outlets in the local candy makers make a very poor grade of chocolate. Sure there are a lot of candy manufacturers down here, but the chocolate, on a 1 to 10 scale, I've never tasted anything that's over a 4 or a 5. They just can't seem to get past mediocre. And again these are all latin companies of course, and they try to copy successful first

[04:57] world candy manufacturers that make B grade chocolate for the masses. Like Hershey's and Nestle's. And funny enough, one local chocolate company has tried to copy the Nestle's bar practically down to the wrapper. So that when you're 5 or 10 feet away you really think it's a Nestle's bar. But even though if you rate a regular Nestle's chocolate bar from the states or Europe at let's say a 5 or a 6, the latin copy of that same bar is about a 3 or a 4 on a 10 scale. To us expats it tastes like wax. Once we've tried one we're so disappointed we'd never go back. And even though it's less than half the price of a Nestle's bar, it just ain't worth it, believe me. Now I like chocolate as much as the next guy, maybe even more so. But I just will not eat any of the local mass produced chocolate bars.

[05:45] Even the regular so called penny candy, and yes they still have penny candy down here by the way, that stuff's low grade cheap garbage too. And the thing that baffles me is, that when you go to one of the local coffee shops and ask for a hot chocolate, about 90% of the time, or even more, it's coming from a prefab mix loaded with fillers and additives, a package, usually again from a big company like Nestle's or Hershey's, nothing but mediocre or worse and to add insult to injury, that stuff's imported. And here they've got the best chocolate in the world right at their doorsteps. I mean is that ass backwards or what? Come on you expat wannabes, can't you just smell the opportunity here? Meanwhile, perhaps only a couple of miles away, there's a huge central market where you can find every ingredient possible at unbelievable rock bottom wholesale prices.

[06:36] I'm talking wholesale Latin American style, not New York style. And talk about fresh, you'll never get it this fresh. I mean look, they've only got to cut it off a tree or harvest it and drive it like 5 kilometers to the market and that's it. There's no cutting it, loading it on a container, driving it to a port, shipping it to Atlanta, unloading it, and driving it another thousand miles by truck. You get the point? Why do you think the raw materials are so damn cheap down here? And here's another thing that doesn't make sense. Sure, you can go to the local grocery stores and even check out some of the local kiosks that sell food products and you can buy the local version of baker's chocolate. Unsweetened blocks of solid bitter chocolate, used for cooking for things like cakes and cookies and pastries. So the question is why if they sell that stuff all over the place and from what people tell

[07:25] me, that's made out of very high grade chocolate. Bitter and strong of course, but pure because it's got no sugar or additives in it. And you can buy that stuff for like a buck and a half a pound. And get this, especially you expat wannabes? Imagine just packaging that stuff and sending it up to the states and labeling it with some kind of special local slogan. You know, give it a marketing hook. Just to distinguish it from other similar products up there. You just buy it and invent your own packaging. You won't have to change the product a bit. Use the Mayan or the Incan or the Aztec angle. Why not? It comes right from the heart of Latin American pyramid country. Remember it was the Mayans themselves that discovered chocolate and they made the first drink out of it. So it's a natural to play up that angle because Americans up north are fascinated with those

[08:11] lost ancient cultures. Consider this, Shaman's brand original baker's chocolate sounds a lot catchier than let's say Johnny's baker's chocolate now, doesn't it? Then, for example, you put it in a nice brown recyclable paper wrapper formed into a shape of a little pyramid and print a couple of mystic indigenous sayings on it, tie a silk ribbon around it and sell it to all the whole food stores up north. Okay, so that might not work and I don't know anything about marketing, but you see it takes being down here to see what's available and what's not to get your thought process going. Okay, the point is, this whole conversation started because you just cannot get a good local chocolate bar, yet the finest ingredients in the world are right here at your fingertips and they're cheap.

[08:58] And like I said, as it turns out, every Latin country has at least a half a dozen of its own candy brands and chocolate bars. And some brands from Argentina, Brazil and Costa Rica have gone international, Latin America international. In other words, they're sold throughout neighboring Spanish speaking countries. They haven't, I repeat, they haven't gone first world international because the quality, like I said, is just not up to snuff. Now remember, Latin America is a huge market in itself with a population of over a half a billion people. So cheap, low quality sweets and candy bars are everywhere, simply because the people don't make enough money to afford the imported stuff from the first world, even the mediocre stuff like Hershey's and Nestle's.

[09:43] Sure, you see that stuff down here, but the common man doesn't buy it, except for very special occasions. They load up in the cheap, local junk at half the price instead. And you know young kids, they'll eat anything that's sweet. They're looking for quantity, not quality. But in the first world, it's a different story. Kids want what they want and if they don't get it, they wine until they do. Anyway, no company down here has ever come close to making that smooth silky chocolate, we're used to tasting when we get one of those more expensive European chocolate bars. Latin chocolate makers can't even copy Nestle's or Hershey's. How can we expect them to even get close to the finer grades of the massed produced European chocolates? You know the ones I mean. The higher priced stuff you can pick up at your average grocery store up north.

[10:31] There's always a few good German, Swiss or Belgian brands. And always twice as much, but twice as good, as a Hershey bar. And they sell that stuff down here too. Like the Ritter and the Hosta brands from Germany, plus even finer chocolates. But only in specialty shops in high end areas and malls. So here's another great expat opportunity that could just start out as a hobby. A little custom chocolate shop, making just a few very excellent products and then branch out if it takes off. You'll just kill those European brands on the cost angle. You'll beat the hell out of them in a number of ways. Which first of all, you're buying the cacao fresh and direct locally at about a tenth of what they're paying for it in Belgium. What with the imports and the duties and the packaging and the shipping and the insurance, you won't be shelling out for any of that.

[11:18] Secondly, you got that Latin American labor force with the average salary being 2 to 300 bucks a month. Whereas if your chocolate business was in Germany, Austria, Belgium or the US, you just might be paying 3000 bucks a month for each full time employee. That's 10 times as much for labor. Not to mention if you're here in the Alti Plano, you won't need air conditioning or heating in your business factory or plant. Let me tell you, it's a golden opportunity that no one seems to be taking advantage of. There are little specialty shops that make their own hand-dipped chocolates and I can think of one right now called Zürich, spelled exactly like Zürich, Switzerland. Only down here, the Latins pronounce it Zürich and it's an expensive little chocolate store with an upper middle class restaurant attached.

[12:04] So their clients are not the middle and lower classes. And it was actually started years ago by a Swiss immigrant and was bought by a Latin and now it slipped back a few notches. Which is what usually happens when the first world owner gets out or retires. Anyway in this place, the hand-dipped chocolates look nice and are first world priced but to me and my expat friends, they never rate over a 7 on a 10 scale. I think Cadbury's, a pretty good mass produced European chocolate you can also get down here, has them beat hands down. I'm sure you've wolfed down a few yourself and that imported Cadbury stuff, even though it's mass produced, beats the pants off of nearly all of these little mom and pop chocolate shops. And believe me, there are tons of little chocolate shops like that everywhere throughout Latin

[12:50] America. And of course, I haven't tried 2% of them myself but I'm always asking around. And it's true, if just one of these little shops made a consistent chocolate product that was very good quality, it would definitely catch on, get franchised locally and maybe even go international. But sorry to say, that almost never happens. Marketing products outside of Latin America is something that the locals do not have a handle on. Even if they had a winning product, they wouldn't know where to start. I mean let's face it, how many products in the grocery store or hardware store or whatever up in your town are original products that were designed and made in Latin America. And I don't mean products that were outsourced in Latin America either. To tell you the truth, I can think of only two Latin manufactured products that have

[13:37] a high presence up in the states. Wines from Chile and Argentina and cocaine. That's pretty sad, isn't it? Sure you can find roses and orchids and coffee and sugar bananas, avocados and pineapples but those are not manufactured or processed items. So anyway for all you expats and wannabes who would like to have a nice little fattening hobby, why not take a crack at the chocolate business? People are always asking me for expat business ideas, so there's another one. And for just a couple of grand you could get a business like that off the ground in a hurry. Now the other day I was at one of those quinceanuous parties I always talk about. It was held for the 15 year old daughter of an expat friend of mine and his Latin wife. Now I have to admit it was a pretty spectacular shindig and the guy must have spent about

[14:25] 10 grand on the party. But why not? He's one of those gringos who made it big down here. Came down 20 or so years ago with nothing and now he has enough money to do everything he ever wanted to do in life, unless his wife says he can't. And because he's got the means his wife made him throw this big quinceanuous party. And like he said, his wife was handling everything. The only thing he had to do was smile a lot and pay for it. So anyway at one point in the party I was talking to some wealthy movers and shakers. All Latin dudes of course. Guys in banking and real estate development and even a couple of rich young guys who went to university up in the states. Now when you get around a bunch of guys like that, whether it's in the first world or in Latin America, when they stop talking about sports they start talking about investments. And by the way since I'm off the tourist trail I was pretty much the only other gringo at

[15:14] the party. And because I'm the lone gringo and a lot of these guys have been to the states, they immediately try to tell me how much they love it up there. And often they'll tell me how much nicer it is up there than in their home country. Because you know, educated Latins have an inferiority complex about their country, being that the country they were born in is third world. Which we people from the first world know carries a heavy stigma. So a lot of these upscale and educated Latins will try to impress you with their knowledge of English and their affiliation with the United States. So first off, most of these guys will come up and speak to you in English. And then of course you'll say, why your English is pretty good, how'd you learn it? And then they'll tell you their story about their US connection. Which will be interesting for about 6 seconds and then you can just nod a lot and think

[16:01] of an excuse to slip over to the bar. Now get this, wealthy Latins like to impress gringos too by breaking into North American sports talk. Thinking that all of us are as nuts about sports as they are. That always seems to be the icebreaker when I meet upscale Latin guys. And these guys do know a bit about American sports. And I'm not really sure if it's because they actually like it or follow it. But I am positive that they know it's something that the common Latin guy has no interest in. So it elevates them to a kind of elite, in their eyes anyway, quasi-gringo like status. I mean what better way to bond with a gringo guy, right? Unless you're someone that has virtually no interest in sports, like me. And it's kind of funny to stand around and watch them arguing about something Tiger Woods

[16:47] did or the Yankees or the Packers did. And I'll tell you it's almost like a kind of a competition going on there too, trying to outdo each other with their knowledge of American sports. Kind of weird. And obviously they know infinitely more about American sports than I do. So I just nod once in a while and watch them get into it. But like expat Eddie says, it's kind of funny watching those guys discuss American football and Eddie knows his football, by the way. He says when these Latin guys get into it with him, he says, no offense here, they've got a woman's knowledge of the sport. But he doesn't let on and he doesn't want to hurt their feelings. He thinks it's amusing. Because like he says, there's just no gringo counterpoint to that. Gringos do not try to impress Latins with their limited knowledge of soccer, for example. That would be lame. North Americans and expats get plenty of pleasure out of being obsessed with the NBA and the

[17:36] NFL. They do not need to bone up on their World Cup soccer for anyone. Anyway, when I'm with upscale Latins, they seem to pull that on me all the time. So with guy talk amongst that crowd, it's usually investments, sports, and females. There will be those comments about who's the hottest babe or babes at the party. We are talking about Latin men, you know. So as for me, when these guys jump into the sports mode, I just try to lead them back to investments or sex talk. I mean, even though these guys are Latin movers and shakers, whatever they've got to say, there's not much mental heavy lifting going on. Man, do I sound like a snob or what? And by the way, you do know that every Latin American country has CNN in Spanish. And that's the level of their worldview, since they don't read much more than the headlines in the news and the sports pages.

[18:23] Anyway, lately when these guys are talking about investments and projects and building developments and who's cleaning up and who's taking a hit, where to put your money, the usual stuff. And it always leads to the same conclusion. They're going to give me some great real estate advice. The next big thing, the next project, getting in on the ground floor. Man, if I haven't heard that a thousand times. And I'll tell you what, I learned my lesson. I know better not to mention the real estate bubble. Because whenever I do, I get the glazed eye, deer in the headlight look as they steer me back to sports or sex talk. They say, Johnny, don't you know, in our country, real estate doesn't go down. It only goes up. That sound familiar to anyone? So anyway, at this Kinsay annuals party, just when I thought one of these upscale Latin

[19:10] guys was going to lay the sports routine on me, he said something that I never heard coming out of a Latin person's mouth before. He said, Johnny, how come Americans are so obsessed with zombies? Hmm, I thought, now that's a new one. Now, this I wanted to get into with this guy. And you know, it has crossed my mind over the years that there have been dozens of zombie movies and zombie books and zombie TV series and reality shows. And even I understand there's a few zombie theme parks out there. So I said, yep, you're right. We're totally obsessed with zombies. I mean, we as a culture, not me personally, I don't think I've seen four zombie movies in my life. And I don't quite get it. In fact, I heard the last two Halloween's in the States.

[19:56] The number one costume was a zombie costume. And it seems like no one's immune. In fact, a gringle friend of mine who took a European vacation with his wife, he told me that when they check in their hotel, his wife asked the manager at the front desk what time the Walking Dead came on TV there. And as it turned out, he said in Italy and in Spain, they couldn't get it. So she spent three hours in the hotel business center trying to download or stream the episodes. And like my friend said, she was not a happy camper. So what does that say about Americans? Are we not at a societal low point here? Anyway, I tried to talk about this crazy zombie obsession with this Latin guy and he just didn't get it. And in fact, I don't either. And he said something that made a lot of sense to me. He said, you know, Johnny, we get the two or 300 cable channels you guys get up in the

[20:43] States. We get all that stuff down here. And that means we get all that zombie crap too. And he's right. Everywhere you look on Latin TV, there's zombie shows, programs coming from Hollywood in the States, of course, subtitled and dubbed in Spanish like everything else they get down here. And funny enough, I did a little checking the next day and I found out that guess what? The ratings on zombie shows are through the roof in the States. But down here in Latin America, the ratings on those shows are in the crapper. Latins have just not warmed up to the zombie thing yet. They don't get the punchline if there is one. They look at it as one of those nutty gringoisms like buying an electric knife. Now, I don't think there's a single Latin American that owns an electric knife, but every mom in the States owns one. She got it for Christmas.

[21:30] Electric knives? Come on. I don't get it either. Anyway, Latins are not into zombies. And like this guy said, it's not as if he and his family and his friends haven't given him a try. It's just that, like he said, zombie flicks are one trick ponies. Everyone knows what's going to happen in the end. They say Americans are dumbed down. Well, that might be a compliment. Try brain dead. Now there's a good master's thesis for someone. I think Expat Eddie got it right when he said, it's that lag time thing again. Just give these guys three or four more years and they'll be nuts about zombies. That's what Eddie says and he's probably right. Pretty soon, they'll have their own TV Spanish zombies. And then the Spanish zombie movies will come too. And to back up his point, he said, look Johnny, remember eight or ten years ago when all those

[22:16] vampire movies first hit. Starting with Interview with the Vampire and then the Twilight movies. Well it took about three or four years but all those movies became big hits down here too. But not the first time around. It took a while. So you might ask, how can Expat Gringo Businessman hook into that lag time zombie effect that's surely going to hit? I don't know but some smart gringos are going to make money out of it. That's for sure. Who knows, maybe it'll be a paintball zombie theme park. Hey, now there's an idea. How about let's change gears with an email. And this comes from Anna in Washington, D.C. She starts by saying, Johnny, I'm ready to move down to Latin America. I've got my mind made up. It's a big step but I know I'm going to be much better off for it. However, I have this sneaking suspicion that once I'm down there and the adventure and

[23:02] the mystery and the freshness of it wears off, I'm going to miss the social life I had back up in the States. I'm going to get bored and have a case of cabin fever just like I did when our family went every summer to our cabin in upstate New York. It was always fun the first week or so and that faded fast and I just wanted to go home. Now you could say I'm kind of the anti-type. In fact, my high school counselor said I was a double type A personality. Always fidgeting, always on the move and I always got to do something. That's why for one thing, I do not want to live out in the boonies. As you say, I want to live close to a big city. I'm going to need my music and theater and art gallery fix every once in a while. And coffee bars and ethnic restaurants and boutique shopping are always nice too. Now, of course, I don't expect Bon Jovi, Rihanna or the three tenors to be playing

[23:50] at the theater down the street. But I think you know what I mean. Though maybe I'm just looking for an excuse and I'm getting cold feet. Thanks for all those great shows, Anna. Well to answer that, let me just give you a short list now of the big name groups and outfits that have come through Latin America just in the past year and a half. And when these people come to Latin America on a tour, they hit all the major cities, big concert halls and amphitheaters. Now I think I mentioned in a previous show that Latin America has been rediscovered by the broken down has-bends of rock and roll. You know, those former super groups of the 60s, 70s and 80s who have been saved from the disgrace of being permanently installed as a lounge lizard band in a second-rate Vegas casino bar. Yep, the gringo advantage rides again for the dinosaurs of rock too.

[24:39] And even though these former super groups never had a song in Spanish, it doesn't matter. They're super groups from the first world. Only Latins will never know how far these guys have fallen nor how many original members are dead and buried. Well let me tell you in the last year or so, there's been ILO, Ario Speedwagon, Air Supply, the band America, then there was Jethro Tull, Creedence Clearwater, without John Fogerty. Yeah, that must have been a real treat. But the Latins bought at Hookline and Sinker and no one complained. Then there was KC and the Sunshine Band, Cool and the Gang, without Cool, whoever he is and who'd know the difference anyway. And as we speak, touring right now are the Jonas Brothers, Aerosmith, the Red Hot Chili Peppers and Cirque du Soleil. Now that former big time American and British bands have fallen a bit off the big concert

[25:27] circuit up there, they've found that Latin America is a gold mine. So you're never going to hurt for first world top-notch musical entertainment. Not to mention you've got international jazz and blues stars coming down here too. And if you're into hip-hop or rapper house music, they've got world-class DJs coming in all the time. The Latin newspapers are always highlighting some famous DJ or rapper coming in to do his gig. And every city's got dozens of little theaters, along with their own B-grade symphony orchestras, dance troupes and ballet companies. Not to mention it seems every copy band in the universe is hit in Latin America too because Latins don't seem to know the difference between the copy and the real thing. In fact, bands copying Queen, Abba, The Beatles, Kiss, Metallica, you name it, they come down

[26:14] here and clean up. Not to mention they've got arts and crafts things going on down here up the keister. And if you like, you can take gourmet cooking classes. You name the food, they've got persons from that country teaching the gourmet food class. And don't forget the outdoor sports. They've got mountain biking and splunking and caving and skydiving, surfing and scuba and ziplining, you name it, and they're doing it here. And don't forget, wherever there's gringos, there's tennis, racquetball and golf. Not to mention you can take classes in natural medicine, hydroponic gardening, beekeeping, rose and orchid and tropical flower cultivation. Oh yeah, and they've even got comedy clubs down here in Spanish of course and they really stink so you might want to cross that off your list. There's a huge lag time here in sophisticated comedy but we won't talk about that.

[27:01] And how about not just horseback riding but actually being able to own and stable your own horse. And I actually know a gringa who bought a horse and is having it stable. And that's totally a rich man's game in the States. Just to board and feed a horse up north costs anywhere from about 7 grand to 10 grand a year. Not to mention medical costs and extras. But down here in Latin America, like everything else, you're looking at about a fifth to a quarter of that amount. And by the way, Anne, as far as opera, there aren't three tenors anymore, only two. South of the border, down Mexico way. You've been listening to The Expat Files, living in Latin America, coming to you each week from somewhere south of the border. And don't forget you can email me on anything at all about Latin America, The Expat Files

[27:50] at gmail.com. See you next time on most famous. Ah, she was a picture.