Stepping into the Desserts on Us factory off Arcata's Ericson Way is like landing on a planet whose atmosphere is mainly composed of caramel. And chocolate. The air inside is so thick with the aroma that it might actually have calories, but nobody seems to mind. On one wall is a whiteboard with dates chronicling shipments of butter, chocolate, sugar and nuts by the pallet, most of which will end up as Laceys cookies. If you used to bring people Laceys cookies when you went east or south, you needn't anymore. Now your distant friends and relations can buy them in their local Cost Plus, Costco, Trader Joe's or Whole Foods, since Laceys has gone national.
Looking on the shelves of Whole Foods, Trader Joe's and Costco, you can see that more and more local businesses seem to be selling their cheeses, cookies and booze in far-flung places. But getting into those stores can be difficult and risky, and not everyone wants in. Agencies and organizations like Humboldt Made are betting on the entrepreneurs who make the leap to out of area sales to help buoy our local economy. But can selling pie in Oregon really mean more bread for Humboldt?
Looking at the data, Dennis Mullins says it already has. A research analyst for the state's labor market information division of the employment development department, Mullins has analyzed census data on businesses and their incomes over the past decade and thinks Humboldt's army of entrepreneurs has shielded us from the harsher effects of recession as felt in other nearby counties.
While jobs went away and there were cutbacks in all industries, "entrepreneurs kept growing and even increased receipts through the recession," he says. "My thought is that those entrepreneurs offset the job loss in private industry sectors and cushioned the effect of the downturn for Humboldt County." Humboldt's unemployment rate didn't go as high as other counties, and it's now significantly lower than our neighbors' and better than the statewide average. When he looks at the data, Mullins sees entrepreneurship as one of the contributing factors. But what about pot? Well, take a look at Mendocino County — they've been known to grow a little weed, too, he says, but we still fared markedly better after the downturn in 2007.
"Humboldt grows entrepreneurs," says Angie Schwab, executive director of local marketing cooperative Humboldt Made, "There aren't that many great jobs, so people make their own jobs here." The hope is that some of those self-starters will create more jobs — buy more local ingredients, hire more workers, office staff, IT support — but that kind of growth requires reaching beyond the Redwoods. Jaqueline Debets, development coordinator at the county economic development division, is blunt: "There's no way they're going to make a living in a small market of ours so [producers are] all targeting national."
Debets sighs over the phone and explains that despite popular opinion, her office isn't focused on bringing big companies up to Humboldt. The cost of getting to and from our county is one barrier, and she says companies want workforce, not tax incentives. Instead, she says, "It's really about growing your own. It's about roots," and encouraging people with families and attachments to Humboldt — people who love the lifestyle and want to settle here — to get businesses going. That way, she says, "the company grows around them and the money stays here."
Mullins notes that without an interstate running through it, Humboldt is a bit of an "island economy." We were buying local before it was cool, largely out of necessity.
Emran Essa, the founder of Desserts on Us, sits at his desk in a buttoned up polo shirt, a wall of his son's crayon drawings looming over him. His hair is cropped close over solemn features. "I'm not exceptional," he says. "It happened to be at the right time with the right product." Back in 1990 when he still worked as an accountant at the Red Lion hotel and baked part-time in a rented kitchen, that product was Mediterranean baklava. At first Essa was only selling at local markets like the Co-op, Murphy's and coffee shops, places where he could bring his baklava, settle on a price and make a deal. Then a buyer for a catalog company tried the baklava at Gold Rush Coffee, and Desserts on Us started shipping nationally.
For Essa, it was a survival move. The demand for Middle-Eastern sweets in Humboldt was, unsurprisingly, limited. Five years later he expanded his line to include Laceys cookies, which, even with automation, he was only cranking out in batches of 200. The major hurdle getting into Costco a couple of years later was trimming his price down low enough to still turn a profit. Laceys ain't cheap to make. A package of cookies was costing Essa $9 to make, but Costco wanted to sell them for $6.50. Essa took a leap and increased production, lowering the cost of supplies by buying in bulk and stepping up his equipment and process to eliminate waste. If you can't keep up with orders, he admonishes, even the friendly local co-op will dump you.
Out on the factory floor, an army of delicate brown circles of caramelized sugar and nuts moves along the conveyer belt into a huge machine that bastes their undersides with chocolate. Women on either side of the belt gently sandwich the thin cookies as they emerge, warm and drippy. According to Essa, most buyers who visit the factory would prefer to order the bare, un-slathered cookies. He shrugs and says they shatter in shipping, which is why he added the sturdy layer of chocolate in the first place.
Over in the packaging area, a pair of workers sweep all but the busted rejects into plastic tubs. The toffee-brown shards and crumbles of chocolate in the waste bin at the end of the line amount to no more than a couple of handfuls. He says that when he first set up the box sealing machine, the woman who had been taping by hand smiled at him for the first time. "They don't have to like you," he says, chuckling, "but they start liking their work, their environment." The factory, built a decade ago, now employs 10 people, ships out a truckload of cookies a day, and has added additional warehouse space for the towers of stockpiled Ghiradelli chocolate, sugar and nuts.
Even though automating and stepping up production paid off, Essa says he couldn't have done the same thing today, listing all the new — and costly — health and safety requirements that have been added to Costco's protocol. A fledgling business might not be able to afford the $20,000 metal detector that rings like an air raid siren at the presence of a speck of glitter, ejecting the offending package of cookies off the conveyer belt. Desserts on Us got help along the way with a loan from Arcata Economic Development Corporation, and Essa says he was lucky enough to grow with Costco and use profits to keep up with their regulations.
Sandy Neal of the Northcoast Small Business Development Center says that safety regulations are particularly difficult hoops for food businesses to jump through. "It's tough," he says. "Regulations never go away. They're like rabbits and every year there's more of them." Schwab, with Humboldt Made, agrees. "If you're selling through Whole Foods or Costco, every ingredient in your recipe has to be sourced and coded in case there is a recall," she says. "You can't sell there without going through the process of proving that you're entirely safe and above board." It's a gauntlet that many small businesses can't afford to go through.
Neal, who coaches and counsels entrepreneurs, many of whom have never been in business before, also warns that growing too fast can be the kiss of death. He uses hot dogs as an example. Say you're making great dogs and a big chain wants to sell them. So you purchase a ton of ingredients for your big order, pay for all the equipment you'll need to fulfill the order and meet safety regs, hire some extra staff and ship out your hot dogs. Sure, your sales are way up, but it might be a couple of months before you get paid on that order and, in the meantime, you have larger bills and increased payroll. Slow, organic growth is more the norm, Neal insists. "If a small business is over-extended, it can be wiped out."
It's a pickle that Cassie Forrington of Boujie Baking finds herself in right now. She's recently been accepted by a Whole Foods regional buyer, but can't fulfill the scale of orders the deal requires with just herself and one employee. But it's too big a chance to pass up. So she's hunting around for a business partner — another set of hands to help with the increased workload — or an investor who will give her the money needed to increase production. "Every business gets to that Catch-22 at some point — you need money to grow, and you need to grow to make money."
Getting "discovered" in the first place by a buyer, or "forager" as they're called at Whole Foods, can be a longshot. An offshoot of the county's economic development division, Humboldt Made aims to help entrepreneurs market beyond the Redwood Curtain. That means overcoming the area's remoteness by getting local entrepreneurs to fancy food shows outside the county or bringing buyers up to Humboldt and putting local products under their noses. Last year, Humboldt Made got a $2,500 grant from the Headwaters Foundation to run a buyer tour up here. Six businesses are preparing for a March trip to a natural food show in Anaheim, and a group of buyers from that show will come up to Humboldt to meet with more entrepreneurs in April. Schwab says it's important not only to make new connections, but to "strengthen relationships between buyers and producers."
Marketing local products also means branding the artisanal vibe of Humboldt — fresh air, fresh produce and eco-grooviness. It might sound gimmicky, but Debets believes it's a great way to draw national buyers. "They're looking for handcrafted, they're looking for organic, they're looking for artisanal, because those things mean quality and safety and health" to consumers pacing the aisles of Trader Joe's and Whole Foods.
Mark Lecker of distributor Tony's Fine Foods says companies like Whole Foods want "unique products that will not cost their consumers too much." He says that while the Humboldt label doesn't have that much currency yet, he'd like to see the county pull off the kind of self-marketing that Sonoma and Napa counties have done, and he thinks there's enough good food here to support it. "I look at the Humboldt County foodshed as mostly undiscovered country."
Small businesses that want Humboldt Made's help branding and marketing pay an annual fee of $500 (half that during the current membership drive running through March), and Schwab says she tries to work with people who can't spare the cash. Unfortunately, says Debets, "those businesses that have the greatest need don't have the resources to pay. Where the revenue is going to come from is the challenge" for Humboldt Made.
Beyond the fee, members have to be "makers or producers" based in Humboldt, the owners have to reside here, and at least 50 percent of the materials, workforce and manufacturing has to be in Humboldt. The products also have to be legal (sorry, growers) and jive with the environmentally conscious, artisanal, wholesome image of the Humboldt Made brand.
But not all local businesses want help getting off the island.
For Moonstone Crossing Winery, not expanding was the right choice. After talking with Whole Foods buyers, owner Don Bremm decided not to chase the market beyond Humboldt. He says the winery is doing just fine selling somewhere in the neighborhood of 20,000 bottles a year to local stores and restaurants, from Wildberries to the Ingomar Club. He also sells to tourists who come to the tasting room in Trinidad, some of whom become repeat customers by ordering the wines to be shipped out to wherever home is. That's about as national as Bremm wants to go.
"When I worked through [the Whole Foods] spread sheet, I realized they want you to give it for just above what it cost you to make it, and we said, 'Hell, no.'" Bremm offered some of his cheaper wines, but Whole Foods declined, which he seems none too upset about. A former fisheries biologist, he says his backlog of wines allows him to cruise with things as they are. "I'm 60 years old. I definitely don't feel the need to kill myself anymore. We don't owe anybody any money, and we have 8,000 cases of paid-for wine." He laughs and admits that he's not doing much for employment in the county, but having a bunch of employees would change the lifestyle he chose when he started the business — just him and the wife and friends who come over when it's time to bottle, lending a hand in exchange for a meal and a couple of good wines.
Natural Decadence, on the other hand, is a kind of poster-business for Humboldt Made's hopes for growth. The gluten-free dessert company owned by Rosa Dixon and Milia Lando started out two years ago in a tiny kitchen at Redwood Acres. Now it occupies a cavernous new site there and, last year, it shipped out somewhere between 6,000 and 8,000 pies to local shops and Whole Foods stores in Northern California. "We didn't expect to go so far so fast," says Dixon. But Natural Decadence is still growing, adding stuffing and crackers to total 18 products in over 130 stores on the West Coast. Right now, the partners are applying for two more regions and deciding whether they are ready to go national.
Dixon is wearing a strand of pearls with her chef's jacket. "Have you seen Julie and Julia?" she asks. She watched it the night before and threw on the necklace in homage to Childs. Her office has a picture window that looks into the kitchen, where sheets of chocolate crusts are being pulled from the ovens, oranges are squeezed into juice, and bowls of grated Dick Taylor chocolate are melted into bubbling pots of coconut milk. She and her business partner Lando, a childhood friend, originally meant to make just one pie and to work part time. Dixon, a personal chef for years, only got into gluten-free cooking because her daughter was gravely ill — weighing a mere 14 pounds at 15 months old. Doctors at Stanford ultimately discovered the little girl had celiac disease, an extreme reaction to wheat gluten, and Dixon started cooking accordingly. But once the pie hit market shelves, Dixon and Lando discovered that the demand for gluten and dairy-free treats was growing even faster than they thought.
Cindy Bedingfield of Redwood Acres got a $61,000 Headwaters grant for the 1,800-square-foot kitchen space that Natural Decadence rents and a facility for neighboring Ohana Organics. (The kitchen was originally supposed to be about half that size, but when Whole Foods came knocking, the plan grew.) Dixon says they never would have been able to do it on their own. The roller that cranks out sheets of graham crackers was bought with Kickstarter funding, and they didn't have the cash for a kitchen that could handle big orders. In the middle of the Headwaters grant application process, Dixon and Lando got a one-line email from forager Harvindar Singh, who'd seen the pie in Wildberries and the Co-op, asking if they wanted to sell at Whole Foods. At first the women thought it was spam. Once they realized it was legit, they started scrambling.
After a boot-camp style round of mock interviews at SBDC, the pair headed to Whole Foods' corporate offices for a far less grueling meeting. They then went through a third-party audit from Everclean to evaluate Natural Decadence's processes and facility and to ensure proper ingredient tracking. Natural Decadence stuck a deal with a distributor, Tony's Fine Foods, to handle all that expensive metal detection and such, and to get the Chocolate Creamless Pie on the shelves at Whole Foods. By the end of the first holiday season, working weeks without days off to keep up with demand, Dixon says, "Physically, we were maxed out, but our facility didn't max out."
Since expanding the operation, the company has had to up its orders from Arcata's Tofu Shop (psst ... there's tofu in the pies) to 5,000 pounds during the October-January pie season. It's also gone from a two-woman show to seven to 10 people during the same months. And the company has no plans to move. "People say at some point you'll have to move out of Humboldt, but I don't really see it," Dixon says, looking around the office.
Dixon and Lando have gotten plenty of help from other local businesses, even competitors. Humboldt Bay Coffee brought Natural Decadence shortbread to a trade show to pair with its own samples. Fire and Light donated platters and stands for displays, and Humboldt Barnwood lent a table for the booth. Dixon and Lando have gotten in the community spirit by making introductions for Humboldt Hot Sauce, Moonstone Crossing Winery and others, and by partnering with Dick Taylor Chocolates and Humboldt Bay Coffee on their newest pie, Humboldt Mud Pie. It all sounds very friendly, but it's also a shrewd business move to work as a loose collective when trying to get the word out about your product and dealing with giant retailers.
"Humboldt is a place where people help each other," says Dixon.