Baklava Done Better LLC (BDB) is a supplier of agave-based syrup to producers and retailers of Middle Eastern sweets including: Baklava, Maamoul, Deblah, and Makroud.BDB wasincorporated in Dubai in 2013 by fivemembers of the Kachab familywhom all became shareholders. The business operated by importing raw agave that was then manufactured into three types of syrups: Agave Syrup (AG), Agave-Lite Syrup (AGL) and Agave Super-Lite Syrup (AGSL).After five years of success, BDB faced a major disruption in the supply of its key ingredient raw agave (RAG) . During the first quarter of 2018, BDB will be unable to procure the amount of syrups they need to meet forecasted demand for their three products. BDB now needs to decide how to best balance its production to maximize its profits & keep their customers intact.

Product Innovation History

BDB was founded on the belief that there was an opportunity tointroducethe popular "natural" and "organic" trend to the Middle Eastern sweets category. After several iterations of consumer tasting samples and perfecting their formula, BDB launched an agave-based syrup as a substitute for traditional refined-sugar-cane syrup. For the first two years, Agave Syrup (AGS)was the only product they manufactured.

AG has more calories than traditional refined-sugar-cane syrup.However, clients of BDB reported that Agave Syrup had increased the shelf life of their sweets, which in turn decreased losses on expired product. BDB's clients were happy with the Agave Syrup innovation but wanted a product that was lower in calories. After several months of trials, BDB was able to refine the raw agave in a different way which reduced the number of calories in the product. In 2015, Agave-Lite-Syrup (AGL) was introduced and Agave-Super-Lite-Syrup (AGSL) was added the following year. DBD buys raw agave in larger containers and sell the different syrup products in containers of 10 kg each.

The lighter versions of the products were more expensive, hence not all existing BDBclients adopted them. However, other manufacturers who were at first reluctant to adopt a higher calorie Agave started buying Agave-Lite and Agave-Super-Lite syrups. Overall, both lighter versions were an overwhelming success and BDB had enough production capacity to meet the demand for all products.

The Kachab family members were happy introducing an innovative product in what many would consider a traditional niche. All products were doing well, serving different segments and consumers tastes. There was virtually no overlap in the products due to their different tastes, calories and selling prices. In fact, when each new product was launched, there was no cannibalization of sales of the previously existing products.

Furthermore, because of the longer shelf life, Baklava producers were now selling their sweets outside of the Middle East.

The Kachab Family

Bilal Kachab had the original idea of revolutionizing the baklava sweets industry. As a child, he would spend the summers at his grandmother's house in Lebanon. Playing underneath the high table, he would catch and devour all the ingredients that spilled off the table while his grandmother handmade baklava sweets for her own shop. From those early memories, he knew that he wanted to be a part of the sweets business.Bilal quit his business development job in the energy industry in October 2012 to pursue his entrepreneurial dream by founding BDB.

Bilal was ready to put the required sweet equity into a start-up but lacked the funds to do so. He persuaded his aunt Sara and Sara's husband to invest in the business. The couple was about to retire after having done significant savings and owning their own properties which they rented out. They both agreed to invest, provided that Bilal could produce a solid business plan. They also requested to be part of the management team involved in making strategic decisions. Furthermore, they also asked for their son Mahmoud Kachab - who had just graduated from a reputable Business School - to join the management team.

Bilal, now joined by Mahmoud, moved next to assess the baklava market. After talking with five of his childhood friends, Bilal learned that they had stop eating baklava long ago because of concerns of ingesting refined cane sugar. Bilal was prone to make rushed decisions. For him, this anecdotal evidence was enough to conclude that a substitute for cane sugar was the solution to revive the baklava industry.

Mahmoud on the other hand, wanted to do more thorough and extensive market research. Mahmoud was concerned that perhaps there were other reasons why baklava consumption was dropping. After several weeks of arguing, Mahmoud conducted a study and distributed surveys to learn more about baklava consumers and producers.

Without waiting for Mahmoud's findings, Bilal reached out to his cousin Abyr Khaled. She was a biologist who spent years studying the multiple uses and properties of Agave in Mexico. Bilal commissioned Abyr to start formulating an agave-based syrup using Bilal's small kitchen in his one-bedroom apartment. After just two weeks, she found a recipe for an agave-based syrup that was well received among the extended Kachab family. They liked the taste. Bilal thought it was even better than his grandmother's version!

While Mahmoud continued working on the market research, Bilal launched a quest to develop relationships with Middle Eastern baklava producers. Bilal had charisma when dealing with people. He was a very good listener and demonstrated genuine care for others. In a short time, Bilal had built strong relationships with most baklava producers in the region.

A few weeks later, Mahmoud concluded that the trend of organic and natural was growing among both consumers and non-consumers of baklava. His study predicted an increase in sales if baklava were to adopt the labels of "Organic" and "Natural". Mahmoud's study also favored agave as the main ingredient to support the claim of "organic and natural baklava." Bilal said: "I knew it, you just waisted time and burned some of our savings doing that research." Despite this comment, Mahmoud's findings served as the input to prepare the business plan that would secure the funding from auntie Sara and husband.

By February 2013, Baklava Done Better LLC was incorporated in the Dubai Emirate with a capitalization of AED 3,000,000. The business flourished for four years. The income statement of the last quarter of 2017 is shown below:

Income Statement for last quarter of2017