The cocoa crisis caused by weather, disease, and corruption destroyed 27% of Midday Squares' gross margins overnight
Nick describes how cocoa prices surged from $4,000 to $32,000 per kilo due to a perfect storm of weather events, disease, and corruption in the supply chain, devastating their margins just as they reached profitability. ✦ AI generated
Nick · My First Million · 2026-08-17 · original ↗
starts at this moment · 21:38
“What's special about the product?”
Chocolate went parabolic. The cost of cocoa and that means we lost like 27% of our gross margin overnight. We were killing it and chocolate we were paying $4,000 a kilo for cocoa butter went up to 32,000. It starts off with like a real mismatch in terms of weather will come in, disease will spread, then there won't be enough cocoa coming to the ports, and then corruption kicks in though. And corruption usually takes about 2 years.
verbatim transcript · starts at 21:38
21:18the Kardashians. I mean, we were sending her product for years and years and years. >> No, >> the influence the influencer strategy. So cool. >> Who who influences the influencers and then you actually influencing them is a lot easier. >> But you find who the chefs are of celebrities. >> There's a lot of chefs on on Instagram and Tik Tok that you can see who they're cooking for,
21:39>> athletes and and other chef >> and you just DM them say, "Hey, can I send you some?" >> Yeah. >> What's special about the product? >> Well, what is the product? Okay, so we started out as chocolate bars and uh crazy thing happened, you know, since we started this business in 2018. Chocolate went parabolic. The cost of cocoa and that means we lost like 27% of our gross
21:58margin overnight. We were killing it and chocolate we were paying $4,000 a kilo for cocoa butter went up to 32,000 just to give you. >> So there's like a cocoa >> crisis. >> Cocoa crisis. What? What? Why is there Why was there the cocoa crisis? So, it's the cycle that happens all the time, which is super interesting. It starts off with like a real mismatch in terms
22:17of weather will come in, disease will spread, then there won't be enough cocoa coming to the ports, and then corruption kicks in though. And corruption usually takes about 2 years. I I got stories. I went into the Ecuadorian forest, so like if you ever want to go there, we could go there. But basically, you know, when your back's against the wall, I remember we started this thing with like no UT in
22:40economics kind of like I'm not comparing this to Tesla in any sense, but build the product, no gross margin, nobody wanted to manufacture this thing. Then we went to a big kitchen and then we built the plant and we had finally reached profitability everybody and then we get smashed by this coco thing. >> Did you raise money or is this whole thing bootstrapped? >> No, no, we raised money through quasi