This week’s Green Scene column in Crain’s Chicago Business: Artisanal candymaker leaps into bricks and mortar

When you walk through the front door of Katherine Anne Confections’ new storefront in the Logan Square neighborhood, it’s immediately obvious why the young entrepreneur took that big step to open a shop of her own.

The aroma of fresh-made chocolate truffles and exotic caramels and marshmallows hits you like a wall of sweetness and compels you to take some home.

Katherine Anne Duncan
Photo by: Judith Nemes

Katherine Anne Duncan, 28, launched her small-batch, locally sourced line of confections six years ago in Chicago and has been gradually building her business through sales at other small retail outlets around the city, as well as Whole Foods Market. About half of her revenue comes from direct sales to consumers through her website, food shows, and farmers markets in the summertime.

Sales have grown steadily. In 2009, revenue rose 50 percent from the year before, says Ms. Duncan, but she wouldn’t provide specifics. Since then, sales have increased between 30 and 40 percent each year. She expects the new store opening will propel direct-to-consumer sales to double this year from the year before.

Ms. Duncan, who grew up on a sustainable farm in Wisconsin, has been making caramels and other confections since she was about 8 years old. Back then, she set up a pretend shop in her home and sold them to her siblings.

She never attended pastry school. Instead, Ms. Duncan learned her craft making caramels and chocolates alongside her mom, as well as through trial and error. She read some chemistry books too. An entrepreneur long in the making, she began selling her creations for real at her dad’s workplace when she was 15.

Before leasing her current spot on Armitage Avenue in Logan Square, Ms. Duncan was producing small batches of traditional and offbeat flavors of her confections at area professional kitchens where she rented space by the hour. Some of her favorite local sources for sustainably produced ingredients come from Seedling Orchard in South Haven, Mich., May’s Honey Farm in Marengo, and dairy products from Kilgus Farmstead in Fairbury, Ill. This week’s selection of goodies includes hand-dipped truffles made with peanut butter and apples, goat cheese and walnuts, and espresso beans. Fluffy pillows of marshmallows include some blended with Earl Grey tea, lemon ginger and salted caramel.

The doors open officially on Saturday, but Crain’s got a sneak preview — and a tasting of truffles and hot chocolate — with Ms. Duncan earlier this week. She shared some of her startup challenges along the way, as well as what may come next.

Crain’s: Your chocolate isn’t locally sourced, but much of your other ingredients are. Why is sourcing close to home so important to you?

Ms. Duncan: There isn’t any local chocolate, so the one I use comes from Guittard Chocolate in San Francisco. Aside from that, the first reason I use local is for the taste. I use fresh fruit because it tastes 20 times better than frozen pureed fruit. If I can get peaches so juicy that tomorrow or the next they’re going to be bad, that flavor is going to be awesome today when I use it.

The second reason is because I like to know what I’m eating. I like to know my farmer, and say, “Pete, have you sprayed any fruit this year?” He’ll tell me what has been sprayed minimally and what hasn’t been sprayed at all and I can make my choices from there.

Isn’t it more expensive to get sustainably grown and natural or organic ingredients for your treats?

Of course it’s more expensive. But you’re not eating truffles every day, so it’s easy for me to justify than someone who might be trying to make an entire meal out of organic foods. This is a luxury, so if you’re going to eat these kinds of calories, it should be worth it.

We get pushback on the price all the time. A truffle costs $2.50. But I can’t get excited about a product that I know is not the best. We talked about using cheaper cream, but Kilgus’ cream is just gorgeous. I pay twice what everyone else pays for sugar because I’m buying organic sugar that’s less refined, but it has some of the molasses still in it and it tastes better. If we used pureed fruits from Sysco, we’d lose half our customers.

Who do you consider your competition and is the local, artisanal market getting more crowded?

Companies like Vosges (Haut-Chocolat) are on a different level and I don’t see them as direct competitors because they’re so huge. In the last five years, because of the economy, more people are going back to school and learning how to do this. There are about 20 small, local truffle makers. I see some of these artisans using fruit extracts made from corn syrup and they’re charging prices for truffles that are the same as my cost. I know they’re not using the best ingredients that I’m using.

What was the catalyst that led you to open your own shop?

It goes back to that 8-year-old girl trying to sell sweet things to her family. But seriously, a lot of consumers go to the bigger names because they’re more well-known. It’s essential from a branding standpoint. I don’t think people take you seriously unless you have a storefront. It makes people think you’re established.

Also, we sell chocolate and you have to be able to see it and eat it. It might look good on a website, but you have to think about whether you’d spend $19 for seven truffles. That’s a hard leap to make. You really need to be in a storefront so people can come in and try a truffle and come back the next week and buy 10 boxes because they’re going out of town.

Besides, we were already here in this space for our production, with my desk and a couch upfront for our bridal tastings. But the wall wasn’t beautiful and we didn’t have chandeliers. We’ve been building our brand for six years, so we’re really excited to open this store.

Speaking of design, you worked with 2 Point Perspective, an eco-friendly architecture and design firm, on the look and feel of your new space. Can you describe some of the green features and why it was important to focus on sustainability there too?

Growing up on a farm, you know you can’t just throw everything in the trash when you’re done with it. You should find a way to reuse it. It hurts me to see new lumber cut down when there’s so much great stuff already out there.

All the wood in our space is reclaimed. My husband and I made the tabletops and hanging wood panels. The chandelier is made by a local artist who uses recycled chandelier crystals. We have ice cream chairs from the 1950s and a vintage couch too.

What do you see as one of your biggest challenges going forward?

We’re so specialized I worry about how I can succeed. But I’ve always been a big believer in “do one thing and do it really, really well.” We work on products a long time before we launch them. Is it going to be enough? We’ll see.

Where do you see your company five years from now?

I’m basing my five-year plan off of what happens in the next little bit. I’d love to open a dessert lounge and be open till midnight so people can go somewhere for dessert. Not everyone wants to go to bars.

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