Stuck With 30,000 Boxes of Gourmet Chocolate

When it comes to startups, it’s important to remember your size and to stay true to your original vision.

Those are the lessons Alyssa McDonald learned the hard way during the process of forming her gourmet chocolate company, Blyss GmbH. She still has 30,000 tin boxes of gourmet chocolate to prove her point after shelling out 100,000 euros ($128,700) for designers, agencies and other fancy tools.

"It’s so embarrassing, the amount of money that was wasted because I acted like a big company," she says.

Ms. McDonald has recovered with a completely new strategy for the brand, turning around her Frankfurt-based startup over the past couple of years. She expects to be in the black next year.

Ms. McDonald’s tale is a cautionary one, but it also reflects the broader issues of launching a startup in the largely saturated market of Germany, Europe’s largest economy. While the country’s economic engine has kept humming despite the ongoing euro-zone crisis, startups here face difficult conditions for securing funding, as well as plenty of competition for resources in a market where brand-new Berlin-based tech companies are considered on trend.

Still, the most important lesson came in the form of determining what the vision for the product is – and sticking to it.

Ms. McDonald, originally from Australia and now living in Frankfurt, started Blyss Chocolate because she wanted to bring back the pure flavor of the cocoa bean, without any additives or sugar. She came up with the idea for the business in 2007 after falling ill. Her doctor told her that food ingredients played a part in her illness, prompting her to reexamine what people eat.

Two years later she quit her job as head of an international media-relations team for a large German company to pursue her vision.

"We’re eating so much glutamate, artificial flavors and preservatives," she says. "There are so many fillers to make cheap stuff last longer. It’s not food."

She discovered that unprocessed cocoa beans feature a number of health benefits, including magnesium and antioxidants – and they’re even diabetic-friendly.

The Australian traveled to the jungles of Ecuador, searching for the perfect cocoa bean: Arriba Nacionale, which features an intense smell and flowery aroma. She invested in an agricultural cooperative, where approximately 450 families grow cocoa pods for the chocolate company. She also plans to have the farmers partake in a profit-sharing plan.

Ms. McDonald sank all her savings into the development of a chocolate bar and a stylish designer metal box. While she applied to competitions for startups, organizers rejected her in favor of technology firms. She says she chose not to pursue loans for an unproven idea.

Her chocolate bar launched in 2010, but buyers failed to line up. Today she still has 30,000 boxes lying around.

Through this painful learning experience, she realized that the difference between expensive and cheap chocolate was not clear to consumers, and she’d have to figure out a better way to differentiate herself in the market.

She decided that the big marketing budget would go, and that she’d reduce the brand back to her original idea: single bean virgin chocolate.

She switched to producing cocoa, cocoa butter and chocolate in Ecuador, cold-pressed and partially hand-milled to retain the flavor and aroma. In addition, she created a "snack nut" version to show-off the flavor: chocolate-covered pieces of cocoa beans packed in unadorned glass jars.

In another key aspect of her new strategy, Ms. McDonald has limited her target group of customers to head chefs, sommeliers and luxury hotel managers in Europe, the Mideast and Asia.

"Chefs and sommeliers are our people, because they are the ones with trained noses, and they’re the ones that know their stuff," she says.

Her customers have come up with new ideas, inspired by her product, and such collaborations have resulted in additional products, including Rooibos tea with Blyss cocoa beans and bath essences with Blyss cocoa extract. The products are developed in cooperation with manufacturers in Germany or India and produced in limited quantities.

The connection with hotel managers has also opened up the chance for some grassroots marketing and networking. Ms. McDonald says she’s been invited to give lectures and workshops on health-conscious eating, chocolate and alternative business models.

Together with six freelance employees, scattered across the globe from Byron Bay, Australia to Frankfurt, Ms. McDonald watches the weather and harvest conditions and communicates with the teams in Ecuador. They take care of everything through Skype, Dropbox, Google, Toodledo and email.

Ms. McDonald now likes to hold up two jars of cocoa beans under potential customers’ noses and ask them which one looks nicer and smells better. She says it’s the most powerful way to win them over.

"There’s no branding, no labels and it’s not about brand games and market presence," she says. "It’s easy like that."

B. regardsFelix(Kyung) Seo