Seattle Chocolate targets global markets to spawn growth.

When the International Sweets and Biscuits Fair (ISM) opens its doors later this month in Cologne, Germany, the U.S.A. Pavilion will house several major players in the U.S. confectionery industry, well-seasoned in international trade shows. Alongside them will be Seattle Chocolate Company,

With 25,000 potential buyers expected to attend the ISM, it is an opportunity Seattle Chocolate President/ CEO Steve Elliott couldn't pass up.

"We are a small company," says Elliott, a man whose short tenure in the industry doesn't interfere with his ability to make big plans for his company's growth. "We try not to make investments like ISM unless they have fairly immediate returns. We have to strike fire pretty fast after we run the flint across the stone and see a return on our investment fairly quickly."

That shouldn't be difficult once buyers nibble a bite of a creamy espresso, passion fruit or one of the other delightful flavors of meltaway truffles. The reaction is predictable. Soon the order book comes out and talk turns to prices, delivery dates, shipping arrangements. It's a familiar scenario to Elliott and his crew, one that has propelled the four-year-old company to gross revenues of more than $7 million in 1995.

Elliott's decision for Seattle Chocolate to participate at ISM won't be the first risk he has taken.

In 1991, with 20 years' experience in the construction and real estate business under his belt, Elliott purchased 75 percent of Camelot Chocolates, a chocolate packing and marketing firm on Seattle's waterfront. The business wasn't prospering and Elliott intended to shut it down. But he began to think about running it himself, though he knew nothing about operating a chocolate manufacturing business.

He changed the name to Seattle Chocolate Company. A telephone call to a lifelong friend, Steve Abel, netted a partner for his new venture. "Steve, you won't believe this, but I am running a candy company!"

When Steve Abel said he might be interested in joining him in the venture, Elliott advised "Bring your checkbook and your heartbeat, because I am not running this by myself. I've run too many small businesses. I don't want 90 hour weeks again."

Seattle Chocolate Company began in a 3,000-square-foot space. Elliott and Abel purchased some used equipment and hired three employees. "We were having trouble with our chocolate truffle supplier," Elliott remembers. "They weren't able to supply enough and we had no control over the flavors. We didn't like what we were producing. We knew we should be making our own chocolate, but didn't have the slightest idea how to do it."

In those days Elliott and Abel delivered the confections in their own vehicles. In 1991, their first year, the company grossed just under $90,000.

When chocolatier Bruce Reed heard via the grapevine that Seattle was looking for someone who knew how to make chocolate, he contacted Elliott. "I began as an apprentice candymaker 15 years ago for a large department store that has since gone out of business," remarks Reed. He joined Seattle Chocolate Company, which was now focused on producing its own quality truffles.

In February of 1994 Seattle Chocolate moved into a renovated building a couple blocks south of downtown Seattle and the Kingdome. Investors helped finance the $1.2 million expansion. Of the new facility's 12,500 square feet, 11,000 square feet are dedicated to production and 1,500 for office space. A 15,000 square-foot storage and packaging facility is located nearby.

Along with a new facility, Seattle Chocolate expanded its ambitious management team with several more key players. Terry Wakefield is vice president of operations; Don Cotter, vice president of sales and marketing; and Dave Grossman is chief financial officer.

Wakefield sheds some light on the rapid growth of the company. "When we first moved in here, we were still making chocolates by hand on marble tables. Products were handled four or five times. Now it is only handled once--for packaging.

"From the beginning, we had all our packaging done off-site by a co-packer. We delivered products to them, they warehoused it and shipped it out. That was one of the things that allowed us to grow. We couldn't have done all that ourselves," Wakefield stresses.

Two moulding lines stretch across the production floor. A Carle & Montanari model 275 x 175/8 one-shot moulding line, purchased in 1994, deposits the truffle centers onto a conveyor. Continuing along the conveyor, they are bottomed, enrobed, and cooled, then proceed to a Pactec twist wrap unit. Additional processing equipment supporting the C&M line includes three Savage mixers, one Brockway mixer, a Carle & Montanari T-300 continuous automatic tempering machine, one HD-41 pump, a detemperer and an Aasted-Mikroverk AMK temperer.

The Aasted-Mikroverk moulding line, purchased last year, uses a different manufacturing system. Chocolatier Reed explains, "The Aasted is a non-traditional three-step mould plant. The shell of each truffle is formed when a unit with frozen cone heads goes down into the mould cavities displacing the chocolate and forming a shell.

"That's analogous to the coating that we put on our product with the Carle unit. We then fill that shell with a flavored center. The truffles travel through the cooling tunnel, then go through the bottomer and back into the cooling tunnel," Reed explains, adding that approximately 40 minutes from the time the process begins the moulds arrive at the demoulding section where they are demoulded. The truffles are conveyed to one of three Pactec twist wrap machines that are dedicated to the Aasted.

Equipment used in conjunction with the Aasted line for forming the shell include three melters (one for milk, one for dark and one for white chocolate), two detemperers and two AMK temperers. Additional equipment used with the segment of the Aasted line that forms truffle centers includes one melter, one temperer, a Savage mixer and one Brockway chocolate storage tank.

Installation of the Aasted line has enabled Seattle Chocolate Company to triple production to 120,000 pounds of truffles a week. According to Wakefield, "If you look at what has happened over the last 15 months, we have gone from doing everything manually, to an automated machine in the form of the Carle, which is automated but fairly straight forward.

"The next step was the Aasted that is a much more technically complex moulding line. We have gone through major technological changes in an unbelievably short period of time. We are now working on the infrastructure, including employee training, to balance our rapidly growing business," says Reed.

Sales and marketing vice president Don Cotter further explains why the company has made so many changes so quickly. "The reason we have made these technological changes is that to produce the quality of product that we demand and in the quantity that we need to keep our customers in stock, we had to acquire the production technology to keep up with our dynamic growth. I feel that our tremendous growth is primarily due to the quality of the product."

Seattle Chocolate buys 800,000 to one million pounds of chocolate annually from Schokinag, one of the largest chocolate producers in Germany. "We buy one pure milk and one pure dark and four proprietary blends of milk and dark. The blends are made according to our specifications," explains Reed.

Natural flavor is added to a blend to create the truffle center that is then coated in pure chocolate. No salt is added to the truffles so the authentic flavor comes through.

Blends are chosen for each truffle center according to how well they carry the flavors. Elliott expands on the reason for being so specific about chocolate blends. "It's important to understand that there is a balancing act that goes on in combining the right chocolate with the right flavor--a flavor profile. Some of the great winemakers are great farmers that have wonderful palates. Bruce is like that with chocolate."

Prestigious customers can sometimes be demanding. The Nordstrom family, owners of the Nordstrom chain of department stores, works with Seattle Chocolate to refine the recipe for their truffles. Starbucks Coffee Company is equally flavor conscious.

"Starbucks has some very sophisticated customers," explains Elliott. "Those people live and die by taste. We worked with them for weeks to develop the recipes for their truffles."

Though it has recipes for 50 to 75 different meltaway truffles, Seattle Chocolate currently makes the confections in mint, toffee, espresso, raspberry, Jamaican rum, hazelnut (made with 100 percent pure hazelnut paste), orange in white chocolate and passion fruit. The passion fruit truffle won the Confection of the Year award at the summer International Fancy Food and Confection Show in 1994.

Elegance in packaging

"There are two names that we go under for our trademarked brands," explains Cotter. "Probably 25 percent of our total annual sales are the Seattle Chocolate name, which are sold primarily in specialty stores. They are sold in either the six-ounce hexagonal box or our eight-ounce gift box. We also market those in a five-ounce cellophane gift bag."

The elegant eight-ounce gift box features a black corrugated bottom, an aqua, copper, gold, mauve or black top patterned with cocoa bean leaves tied with a narrow black ribbon. It retails for $10. The Jamaican rum truffle gift box won the 1995 Excellence Award in the National Paperboard Packaging competition. Customers include such big name department stores as Macy's and the Broadway, plus other gourmet retailers.

Seattle's other brand name is Cascade Truffles, which brings in another 25 percent of total annual sales. "Cascade Truffles are marketed in a 24-ounce reusable glass jar selling for $9 to $10," Cotter says. "They are sold to the mass merchandiser and wholesale club market." The company recently landed an account with Wal-mart to sell Cascade Truffles in its 2,000 stores nationwide.

A new sales representative in Chicago and one in New York have helped land more accounts, including B.J.'s Wholesale Club on the East Coast. The fact that both the production facility and its products have been certified as kosher was a key factor in securing that account.

Private label accounts for the other 50 percent of sales. "Twenty percent of our accounts bring in 80 percent of our business," adds Cotter. "Currently we do a little bit of business in Canada. We are just entering Mexico and the U.K. Ninety-seven percent of our business is in the U.S. We are looking to expand markets both in the U.S. and abroad. Since we are a small company, we can be responsive to our customers."

Focusing on production of one item, a meltaway truffle, has helped the company earn a reputation for a high quality confection sold at a reasonable price. Until recently, the bulk of sales occurred prior to the holiday season. In an effort to spread sales more evenly throughout the year, Seattle Chocolate has introduced a new item. Fancy moulded chocolate dessert cups will be marketed to restaurants and the mass market.

A daily workforce of 35 to 40 employees jumps during the peak season to over 100. According to Wakefield, nearly one-half of those are non-native speakers. "We would like to have English as a second language classes offered right in our plant, possibly beginning next year," he says. Staying tuned in to the needs of its culturally diverse employees is critical to Seattle's efficient production.

Aware of the difficulties people sometimes have adjusting to change, Wakefield talks about the company philosophy of 'creating a work atmosphere where each employee challenges the other to achieve greatness and to enjoy themselves in the process.' "Technological change drives cultural change," offers Wakefield. "Some of our employees have had to change the way they traditionally think about themselves in their own cultures. They are being trained in new technology and that changes the way they feel about themselves."

Refining Seattle's operations

In its short life, Seattle Chocolate has, according to Cotter, "been ramping up to where we are now with a three-phase marketing plan. We feel trade shows are very important. We have always gone to the Fancy Food show, but now we are also going to some of the large trade shows. We are also doing some advertising. We are beginning to get a lot of referrals from word-of-mouth, also."

But with so much growth achieved in such a short span of time, Elliott says the company needs to slow down a bit. This slowdown will allow Seattle to concentrate on refining processes and efficiency to build a firm foundation for growth. That growth may be fueled by taking a few more risks. "If you don't take risks, you may not have the opportunity to produce a really great product," says Elliott.