If This Cookie-business is so Profitable, Then Why Aren’t we Rich?

If it wasn’t for the factory it wouldn’t have been more than a bump in the road. Nørre Snede is a village at the most, located in the middle of nowhere. Nowhere, in this case, being northern part of the flat, gray, Danish countryside. If it wasn’t for the factory chances are that you’d whiz through, never giving a second thought to the empty streets and an air thick with the smell of manure used to fertilize the fields.

But then there’s a factory. A long, low, inconspicuous building, from which flows a constant stream of eighteen-wheelers. Throughout the town, the air carries a scent of butter, vanilla and cocoa. Inside over 400 people labor around the clock to keep Nørre Snede at the epicenter of Danish Butter Cookies. What started as a small, mom&pop bakery in 1933 has grown into a international cookie-monster churning out more than 25,000 tons of baked goodness annually.

I’ve personally consumed my share of Danish Butter Cookies when visiting my grandmother, in hotel restaurants, and (in various shapes, forms, and wrappings) on airplanes and trains. Needless to say, I’ giddy at the prospect of sampling the freshly baked variant, straight from the oven, and (as they say at Kjeldsen’s Cookies) with the taste of home. imagine my disappointment at discovering that this is not possible: Rather than offering me a freshly baked batch of cookies with a glass of milk, the receptionist directs me to the local supermarket a bit further up the road. Which makes sense: The supermarket shelves provide a good selection of Danish Butter Cookies (matching any other supermarket in any other village). They got there the same way they get to any other supermarket: via central distribution almost 120 km. away. There are several things wrong with this scenario.

 

Distribution

One could be the environmental implications of sending goods via central distribution. Central distribution also has it’s benefits; reducing waste, for example. But it puzzles me that the product is forced on an extended field-trip only to end up on a shelf less than a kilometer away. Regardless of the reasons, I’m pretty sure the system could be improved by allowing delivery straight from the factory to retailers in the local community.

 

Financial

There’s also a financial problem. By selling a local product through a large, national retailer, less proceeds make their way to the local community. It’s simply part of the business model of large corporations to channel money back to HQ, shareholders, and the Cayman Islands. A recent study by Michigan’s Local Fist initiative estimated that buying local will keep 68% of the money in the community. In contrast buying non-local keeps only 43%.

It’s like the miner in Kentucky who asked: “If this coal mining industry is so profitable, then why are we so poor?”. The answer is “Because the money is going somewhere else”.

Ressource distribution

Click for enlarged version: Ressource distribution - Local vs. Non-local shopping

Experience

There’s also a real missed opportunity here. Why can’t Kjeldsen’s open a Cookie Experience Center complete with Experimentarium, blind-tasting, and theme ride? Granted, it’s unlikely that cookies will draw the same crowds as the Heineken Experience, or the Samsung Experience Center. But it doesn’t have to go so far either. And an experience center could serve a double function in spreading brand DNA to employees or showing off to potential customers.


Scent testing at Amsterdam’s House of Bols branded experience

 

Mandate

In my situation the only real problem was that nobody at the factory has the mandate to sell a bag of cookies. And this tiny improvement would have have been enough to satisfy me in my situation. I know that the company has standards, and that pulling product off the assembly line can be like asking for a class-action lawsuit. Sure, the cookies have to be tested and wrapped (and radiated, if that’s your thing). But for Christ’s sake: Stop whining, and make a special box or something…

 

Engagement

Which brings us to the biggest issue: I honestly can’t come up with anything better than a cookie when aiming to engage and build a relation to the people around you. Here’s a unique opportunity to get the community involved – hell, you might even instigate a healthy bit of local pride while you’re at it…

Yes, the factory (being the biggest employer in town) supports loads of initiatives already. Their logo can be found on anything from sports teams to the Christmas raffle. But that’s just communication, and a logo is – at the most – a highly diluted version of your brand.

 

What to do?

There’s something wrong with the picture, and this doesn’t just count for a cookie factory in the middle of nowhere. It counts for all the companies in the world that have grown to the point of being swallowed by their own supply chains. Sure, they might engage in local society, but the local society can no longer engage in them. Which is what we’re missing.

In the coming months, I’ll be looking at ideas and models that aim to decentralize business and reengage communities. I’ll go through cases, and try to pinpoint what the future could hold for a wide range of sectors. I’m still trying to get an overview, so I’ll publish on this site as the project takes shape. But I’d be glad to hear from you. Examples, ideas, and reactions are more than welcome.



2 Comments

  1. Charlie wrote:

    Great article. You should take a look at the People’s Supermarket here. Not really local when it comes to assortment, but still a pretty nifty local initiative. To shop there, you have to be member, and to be a member, you have to put in a few hours of work every month. The pay-off is lower prices. True community thinking.

    I can’t wait to hear more!

  2. elneff wrote:

    Charlie,
    Thanks for the input. I’ve had a look at them, and am actually including them (somewhat) in my next post. It’s really interesting how FMCG deals with localization, because they need to rethink their entire supply chains. The question – form a branding perspective – is how you can ensure brand continuity – while simultaneously increasing flexibility in regards to product range, supply chains, and revenue models. More to come, so stay tuned!