Putting the Environment First: This month Michael speaks with founder and co-owner of Loving Earth, Scott Fry. Loving Earth do things a little differently; namely they put the environment first and have a clear vision for supporting the communities that they work with. Scott speaks to Michael about the challenges he has faced building his business from scratch as well as what the future looks like for Loving Earth.
It’s a fascinating story that we hope you will enjoy.
Scott announces at the end of the episode that he and the other owner of Loving Earth, Martha Butler, are going to be doing a Crowd Source Funding exercise where they will be seeking investment from customers and others to help them further scale the business. Watch out for the announcement in early October 2022 and if you are minded, be sure to register your interest.
About Scott Fry
Scott Fry is the founder and co-owner of Loving earth; a plant based regenerative chocolate and functional food business in Victoria. Scott founded the company after travelling through India and Mexico and became fascinated by the history of cacao. From humble beginnings packing products in the spare room of his house to running his facility in Melbourne; Scott still puts ethics and the environment first and would like to see more companies doing the same.
Contact Scott: scottfry@lovingearth.net
Instagram: https://www.instagram.com/loving_earth/
Website: https://lovingearth.net/
Crowd-Source-Funding Information: Available in next week’s “special” Episode
Netflix documentary: Rotten/Season2/Bitter Chocolate: https://www.netflix.com/mo-en/title/80146284
Transcript
Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interests for you.
Putting the Environment First
Michael McGrath: Hi, welcome to the Troubleshooters podcast with me your host Mike McGrath. Now, today’s guest has a fascinating story. Scott fries is the founder and co-owner of Loving Earth, a plant based regenerative chocolate and functional food business in Victoria. Scott has pioneered dealing directly with indigenous communities and ensuring people in other parts of the world less fortunate get a fair go. Listen to Scott as he tells us that what Loving Earth are doing must become the standard for other chocolate and confectionery businesses. Scott Frey Welcome to the Troubleshooters podcast.
Scott Fry: Thanks, Mike. Great to be here.
Michael McGrath: You’re very welcome. I’ve been trying to get you on for a little while. Now, I do have to declare an interest. We’ve been working together for a few years, so I know you quite well, but I have been wanting to get you on the podcast because I really think you’ve got a great story. So, before we kick off, and we start delving a bit deeper, tell us what Loving Earth is and tell us what you’re doing?
Scott Fry: We’re a regenerative chocolate company based in Melbourne here; we’ve got a great chocolate factory manufacturing facility and we also make functional breakfast cereals and, other functional foods. We’ve really been a pioneer of the organic health regenerative food industry here in Australia and we supply the supermarkets and independent sort of health food retailers and grocers around Australia.
Michael McGrath: So, you’ve really established yourself now, Scott, and you’ve got pretty good distribution. You’ve got lovely facilities down there in Melbourne. I know I’ve been to them on several occasions, so what was the genesis for this business of yours? What got you into chocolate for goodness’ sake?
Scott Fry: Yeah, well, I’d been living overseas, I was in India for quite a few years and then I ended up in Mexico and I was working with indigenous agricultural cooperatives and in Mexico ended up down in Chiapas doing some work with a small cacao cooperative, that was working to rescue the one of the original heirloom varieties that was first domesticated by the Olmecs, you know, a long time ago and that’s what I guess, I got bitten by the bug, so to speak, and just sort of became very fascinated by the whole story of cacao, the history of cacao.
Michael McGrath : So, Scott, for the uninitiated, what’s Cacao?
Scott Fry: The plant that the chocolate beans come from; that chocolate is made of is called Theobroma cacao. The English had a little bit of a challenge pronouncing cacao because that’s the Latin obviously and so, in the English language, it’s more well known as cocoa. Theobroma cacao is the translation from Latin is “food of the gods” and it was named that way because when it was discovered in Central America, the Mayans; it was basically the sort of, one of the basis of their whole civilization. It was used as a currency, was considered very, very sacred, and hence the Latin name “food of the gods.”
Michael McGrath: So, Scott, you are travelling and working in South America. Right? And you came across the communities and the indigenous communities that were farming this, so it’s a big jump from that to I think I’m going to start a chocolate and functional ingredients business. Tell us, fill in the gaps.
Scott Fry: Yeah well, so I guess I started, I guess, as you often do with sort of an intention or a vision and that was really to support these indigenous cooperatives and I very early on, realised that to do that you needed to have a brand in the marketplace, you needed to have demand, established demand for premium products in the marketplace. Then once you’ve got demand, it’s easy to come back and, and work with these communities. Really, I guess, the intention was to try and move the needle in the food industry because you know, these farmers when I was in Chiapas, the ruin that’s really famous is called the Sapa, where they say Cacao was originally domesticated. As I was driving into Esapa there was all these cacao trees, and all the fruit was just rotting on the trees. The price was so low, that it wasn’t even worth people going out and harvesting the fruit. That’s because they planted in all of the high yielding hybrid varieties. and the price of cacao was so low. So that the whole intention was to try and work with the fine aromatic varieties, the fine flavour varieties which are a lot rarer, and to create demand in the market for high-quality, high-priced products that then would enable these communities to benefit from that, and hopefully earn a living wage.
Michael McGrath : Yeah, so you come home, right? And that’s when you start to decide, okay, well what am I going to do based on those experiences? Take us through the genesis of that and how you actually got going in terms of creating a business here in Victoria.
Scott Fry: Yeah so, I was in Mexico, actually working on commercialising organic coffee. That was the main project that I was kind of working on and when I came back to Australia, I sort of started all over again, a little bit, but obviously, I still had all those contacts and I was still looking at how can I get this going in Australia and I guess a lot of things are about timing, right. So, when your confluence of things come together. At that time, there was a fellow called David Wolfe, who had quite a high profile, he was sort of advocating raw foods, and advocating a lot of these super foods and cacao and things like that. He’s quite charismatic, and he had just published a book. So, there was those things kind of going on that was developing some interest in cacao and these different things and a lot of these foods that that were sort of being advocated came out of the Amazon and Central South America. Because I spoke Spanish and had all those contacts, I guess I kind of saw the opportunity and jumped in. You know, the market was just ready for it, it was just a perfect time at the beginning of 2007. I just started, I built myself, a website on Dreamweaver, I got small volumes of material in, you know, just packing it in the spare room of my house and going down to the post office and shipping it out. Yeah, it was sort of a new trend. It was a whole new movement, particularly around raw foods, minimally processed foods. We were kind of right there at the right time and I had all the contacts. It just kind of scaled. I managed to get my first little kitchen that we were in for a bit over 12 months, and I moved to another facility that we were in for 12 months, and then I moved again to a bigger facility. At that facility, we had the opportunity to expand a little bit without moving so I was able to kind of expand the business without having to invest too much money in capital infrastructure. Because food manufacturing, obviously can be quite capital intensive and because the business is all self-financed. Yeah-we’ve managed to just kind of grow that way.
Michael McGrath: It was the beginning of a groundswell, I guess. So, you must have thought at that point, okay well I think we’re onto something.
Scott Fry: Yeah, definitely, and then we kind of focused on the integrity, just sort of really maintaining those relationships with the growers and focused on sharing those stories with the people that were behind the products and building community. I remember, there was a point this was a few years in, and Instagram was a thing, and I hadn’t really gotten on to it. But by this time, we had some people, a couple of people working in, the sort of marketing area, and I overheard someone saying, oh, we’ve got 50,000 followers on Instagram. I was like oh wow I better have a look at that. The team had really kind of worked with and sort of built up a community around like, people that were sort of experimenting with recipes and posting them and kind of doing really good work. We team up with them and help promote them and they’d help promote us and there was this kind of great ecosystem of people that were using the product. That’s kind of how the momentum of it all grew.
Michael McGrath: When did you start to branch out into retailers? I know you had a decent presence in the independent retail sector early on, didn’t you? So that was that groundswell and how did that happen for you and then, tell us a bit about when you began to formalise your procurement of cacao with the Ashaninka community.
Scott Fry: The retailers all started coming on board and then we sort of had quite a bit of growth. Then I remember 2013 was a year where we had just been smashed. We got to the point where we decided not to take on any more wholesale customers, because we just we just couldn’t keep up. So, for six months, we didn’t take on any more wholesale customers and we just consolidated our systems and then when it was time to start taking on new customers, again, I think we had a list of about 100 customers.
Michael McGrath : That, Scott, that’s a very high-quality problem. I mean, you know, when you get to the point where you have to pretty much close your doors, you know that there’s something going on, don’t you?
Scott Fry: Yeah, there was, there was a lot of growth. Then during that period, because we sort of obviously had more cashflow, we were able to do more things. I’d been sourcing cacao from the region of Satipo in Peru by a company called Ecoandino, and the guy that set up that had worked for the UN his whole life, he was an elderly, kind of Professor of agriculture, an Andean fellow, a beautiful man. So he really introduced me & the first time I went there was with him. He took me and showed me everything and took me down to Satipo and showed me the cacao and introduced me to the woman who was heading up the Ashaninka community, she had the office beside the mayor’s office in Satipo. So I met her and that was my first introduction into the Ashaninka community. I know that Carlos through Ecoandino was buying some of the cacao from the Ashaninka via another cooperative. But then in 2015, I was in Peru, and they have a sale on chocolate in like a chocolate show in Lima, where they showcase and I was invited to go and I met at the time the President of a kind of newly formed cooperative of the Ashaninka called Kemito Ene and also a fellow from the Rainforest Foundation out of the UK, and the Rainforest Foundation had really worked a lot with this community over the years. And so in 2015, my goal was always to try and work directly with the community, suddenly, I had this opportunity to work directly with them, which took the whole thing to another level. So we started to buy beans directly off them, and we were making our chocolate bean to bar in our factory and it was the whole process of helping them get set up, you know, they didn’t even have a bank account to be able to receive foreign funds and we had to get them certified organic and then it was like getting the first container out was just a little bit of a nightmare, you know, because they put all the bills of lading into an envelope and sent it through the postal system and the bills of lading is a legal tender to the container. So, the container arrived here in Melbourne, but the bills of lading hadn’t arrived! They were missing in action. We had to call the postal system and they said Well, they’re actually not missing, it takes them three months to get there. So, issues like that, so many things along the way. But, you know, what I discovered was that each of these things, they would persist, they would work it through, and we would work it through with them.
Michael McGrath: You’ve clearly made a big difference to the Ashaninka community and that small part of the world. There are pressures aren’t there in terms of people want to see healthy, organic produce and products, the prices that are demanded to do that well and to genuinely source, what you would say correctly in a regenerative fashion- that’s a challenge and from time to time, that’s hurt you hasn’t it?
Scott Fry: Yeah and I think I guess my vision for the future, (and I think this is really the only way we can kind of resolve a lot of the issues that that we’re facing) is to have a lot more transparency-if we can develop as much transparency and give the people that are investing in our products every day as much visibility into where their money is going and how it’s being used to sort of do good, you know, to produce social and ecological impact. Then I think people will continue to make that investment because you know that they see that it’s making a difference. The challenge, at the moment for us is, it’s hard to do that in a supermarket aisle where you’ve got limited space, and everyone else is kind of copying you and pretending to be the same. But really, they’re not. So, this is where, as you know, over the years, I’ve really had my head in some of this new technology that’s coming out, and fintech and stuff like that. Because I feel like that’s where the solution can be. As you know, it’s always a matter of timing and as sort of these things hit the market, I’m hoping over the next 12 months, there is going to be a bit more of a digital transformation in retail. We’re already starting to see it with Shopify and different places in the sector, where you’re able to use some of this technology to really expose the supply chain and show what we’re paying to the growers, what that means and what impact that’s creating to people; such that you create a model, create a standard so people begin to demand that from other businesses.
Michael McGrath: You mentioned earlier about the challenges with greenwashing where there’s a growing trend for ‘better-for-you’ type products, and people jump on that bandwagon and start quoting on packaging, vegan and bean to bar and all the rest of it but aren’t necessarily subject to the same kind of rigor and cost demands that that you might be. So, what you’re talking about is how do you differentiate? I mean, this is a quite a challenge, isn’t it?
Scott Fry: Yeah, the bar is set so low with chocolate. It’s the worst legal supply chain on the planet. Yeah, there are 25 million people in West Africa, in Ghana, and the Ivory Coast, that are living off less than one US dollar a day so that everyone can have their cheap chocolate! And Fair-trade labelling organisation, which is great and fantastic; but their big, audacious goal is that those people earn $2.50 a day, right? That’s how low the bar is and the fact of the matter is that chocolate shouldn’t be so readily available. It’s just, you know, it’s and yeah, you got people in North Queensland here in Australia trying to grow cacao, and there’s no way in the world they can compete. If they want to try and earn a wage of 50 or $60,000 a year, there’s no way in the world they can possibly compete.
Michael McGrath: What we have gone and what you’ve got, in your favour is a growing number of consumers, who are beginning to be much more astute and much more probing about the products they’re buying and how they’re being originated. I mean, there’s no doubt its growing. Now we’re also dealing with, you know, cost pressures in other areas and busy mums that don’t always have the time to absorb that. But certainly, that appears to be in our future, doesn’t it- an increasing demand?
Scott Fry: The way I see it working is a little bit like how we started the business. It’ll start with ecommerce. So, it’ll start with the direct relationship with people that are loyal to the brand. And it’ll be them that become advocates and tell their friends and, you know, we’ll be doing it directly to them online and communicating with them directly and exposing to them the impact that their investment in the chocolate is making. Everyone, or a lot of people I know at least, are frustrated, because they don’t know how to help solve the climate crisis or the health, you know what I mean? They’re kind of like, well, what do we do? This stuff is grown in the Amazon, you know, this community is the custodian of half a million hectares of Amazonian Forest, that they’re protecting, and that we’re empowering them to protect and regenerate. The Amazonian Forest is being destroyed at an incredible rate. So, you know, this, this is an opportunity for people just in the way they’re doing their daily shopping can make a difference. Our challenge is how we can communicate that with them and allow them to experience that in a compelling and user-friendly way. Which is kind of what we’ve been working on trying to develop some mechanisms to do that.
Michael McGrath: It’s interesting that isn’t it? Because I mean, as an example, because I know you guys quite well, I know that you use compostable packaging, right, which is up to five times or more expensive than the alternative and yet you guys have been committed and demanded that despite the cost pressures. So, you know, how do you explain to a consumer? How do you communicate to a consumer that is a fair price and that the price that’s being set for your chocolate is a fair price. Whilst it looks expensive, in reality, it’s the only way to sustainably support a supply chain.
Scott Fry: Yeah, I think four or five years ago, I got involved in the regenerative movement pretty heavily in the US. So, we were selling the products over there. So, I was spending a bit of time over there and I went to the inaugural regenerative Earth Summit in Boulder in 2017. I sort of had my head in the space, I managed to trademark regenerative chocolate for Australia and the whole regenerative movement is starting to really gather momentum, especially in Melbourne now. What I’m hoping to do is, is to be able to really leverage that and say, Okay, we hold the trademark, let’s set the standard for regenerative chocolate and let’s take the people that are buying that chocolate on that journey with us. So you know, a lot about education and the idea with that is create a model, not only for chocolate, that’s a whole food industry and yet for the whole, like a model, that could be far reaching, in the sense of, you know, not only how you produce a product regeneratively and what that means, but how you deliver that to people in the market in a way that’s compelling. Then they can see the benefit of it. So, there’s two parts to that and the second part; it’s the most challenging part of it, because the two of them, are important. If you don’t achieve the second part, it’s very hard to achieve the first part, right? If you don’t, if you can’t get people to see the value in it, and to understand that, then it’s very hard to finance actually making it happen. If you can get people to see the value in that and understand that and find that compelling and worth in, you know, then, okay, if you’ve got a mechanism that makes that work. I believe that part of the way that can happen is using innovative FinTech and digital assets. Using a digital and ethical digital wallet, that’s user friendly. It’s, you know, it’s a custodial Wallet so the person doesn’t have to know any of secret keys or anything, it’s all super user friendly and we attach to the digital asset, media, that document the impact that exposes the supply chain in a really entertaining, compelling way. So that as people invest in the product, they receive these digital assets into their wallet, that shows them the difference that it’s making, and then the digital assets give them certain privileges. It’s kind of little bit like a loyalty program or reward program, a frequent flyer. So, these digital assets then become the things that people can use to, you know, we get we get an ecosystem of businesses on board with this, then these digital assets can be used to get special offers across a variety of businesses. Because the problem at the moment is that ecological and social impact doesn’t have a value, we have no value that in the current economic climate.
Michael McGrath: Do you think we’re at the early stages of being able to, and you can see a time when you can actually monetize and value the assets beyond the product or the value that’s been paid for a product?
Scott Fry: What’s happened is that all the collateral damage, for instance of the West African Cacao operation, it’s all externalized so no one is paying for that collateral damage, that industry is causing. Right? So hence they’re the big problems that we’re facing.
Michael McGrath: We’ll put some notes in the show notes, but it would be worth for anyone that’s interested in that, at looking at that, West African problem, there is a documentary on Netflix, isn’t there, called Rotten?
Scott Fry: So, there’s the Rotten series, and it’s the chocolate one.
Michael McGrath : Okay, so we’ll put a link in the notes. But certainly, if you’re interested in, in delving into some of the challenges this six and a half billion dollar, which is a pretty big number by Australian standards. So, chocolate manufacturing in Australia is a six and a half billion industry, if people want to become more informed on that, that’s probably the place to go. But what you’re saying, Scott is that you can see a time when that communication issue would be solved?
Scott Fry: Yeah, because the sector has to transition to being more regenerative. Agriculture is one of the major ways we can solve the climate problem because it uses photosynthesis that draws carbon out of the atmosphere and locks it up in the soil environment. Right. But what we must do is we have to change the model. So that is going to require innovation, it’s going to require education. That’s been the role of Loving Earth since we started.
Michael McGrath: Just coming back to that Loving Earth. So how did COVID treat you?
Scott Fry: With tough. Definitely it was, it seemed like it was a tough right across the retail sector. Yeah, particularly with grocery, I think, you know, a lot of people just started going to the main supermarkets. So, a lot of the independent retailers we’ve noticed have kind of disappeared.
Michael McGrath: I mean, it went on for a while, didn’t it? I mean, year two seem to be worse than year one for many businesses.
Scott Fry: In fact, it was, over the summer, when we didn’t have lock downs- that Omicron wave, I think that retail was down, I think it was like 15 or 20%, compared to the hardest lock down.
Michael McGrath: Scott, just talk a little bit, I know that you and your board have got some amazing plans, and I know that you’re really out there in terms of where you think this can go. But right here right now, I know you’ve got 300,000 Instagram followers, and you’ve got a great distribution in Australia in terms of the grocery sector, and the independent sector and some other areas. But you’re looking to the future again, and you think you’re about to embark on a fundraising exercise. Tell us about that?
Scott Fry: Yeah, we are going to be running a crowdfunding exercise to help us finance the next phase of the business. We’ve had a lot of great success with Woolworths, we’ve developed a very good relationship with them and we’ve been supplying them for I think, three years now. Finally, the buyer understands what regenerative is, and the buyers really want to hear what we’re saying and they’re actually really supporting us and getting behind us; because they’re seeing that this is the way the industry is going. They see that we’re the Pioneer. We’re kind of leading the way. So yes, to me, what I see is we really want to double down on regenerative, on really pioneering the new economy. I’m really excited about kind of getting more people into the business, on board with the business and invested in the business. I think the best thing I ever did with the business was to, you know, get you on board and really help us kind of create a board. Yeah, that was a real game changer for me. For anyone out there listening who doesn’t have a board, I really, really recommend it. Because it really takes the whole thing to another level!
Michael McGrath: Certainly, crowdfunding seems to be a way to connect you much more with some of your consumers and don’t have to invest a lot of money and you can come on that journey with Loving Earth. I mean, certainly, we’ll put some notes on this in the show notes, Scott but I know that some of the things that you’re going to do with the money, you’ve got a whole list of stuff to do but one of them is to find ways of telling your story and connecting with your consumers better and more directly. As you’ve grown, this has become more of a challenge. The space is busier, people are busier, they’re getting hit with all kinds of messages from various platforms. So that’s something I know that you’re keen to do. I think you’ve started the registration for a B Corp very recently and you’re very committed to the highest standards and to transparency which I think is going to be important and I think the opening up to shareholders drives that further, doesn’t it?
Scott, it’s been an absolute pleasure. I’m sure you’re going to go from strength to strength with Loving Earth. You’ve got great plans; wonderful vision and we wish you well until next time.
Scott Fry: Thanks, Mike.
Michael McGrath: Well, there you have it, Scott and the guys at Loving Earth are really walking the talk, aren’t they? I hope you enjoyed Scott’s thoughts on the future and learnt something of how stepping out, being different and helping others can work in spite of all the challenges. If you want to know more about Loving Earth and maybe you’d like to take a look at their crowdfunding exercise, the details will be in the show notes.
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