Small Ax Pepper aims to spice up the traditional small business model through community gardens across the country.
The Bronx-based business started in 2014 after donating Serrano pepper seeds to seven community gardens in the Bronx. In the year Beginning in October 2022, it will donate seeds and then purchase locally grown pepper from more than 122 community gardens across the country to grow up to 15 tons of pepper.
The CEO of smaller Ax Peppers said it is not immune to the headwinds affecting its biggest rivals, such as Conagra ( CAG ), Kraft Heinz ( KHC ) and Campbell Soup Company ( CPB ).
“Like many businesses these days, transportation costs have increased and we’re in the process of adjusting to some of that. [cost]. “We’ve done some price adjustments with our distribution partners to make sure our costs are in line with what we’re going to use in this new environment,” CEO John Crotty told Yahoo Finance (video above).
At the end of each harvest, the company buys about $83,000 worth of peppers, but that number could rise this year due to rising commodity, shipping and labor costs.
The US Bureau of Labor Statistics’ (BLS) latest Consumer Price Index (CPI) report for August 2022 shows that fresh vegetable prices are at an all-time high.
“The orchards are still getting more of a premium than they used to be and there are more orchards coming in this year than in previous years,” Crotty explained.
The trip to bring all the peppers back to their production site north of the Bronx to create the hot sauce is costly. In August, gas prices fell by 10.6% per month, but still increased by 25.6% year-on-year. Now, gas prices are up again, as AAA announced plans to cut crude output by 2 million barrels per day this fall at the OPEC+ meeting on Wednesday. The national average currently sits at $3.89 per gallon.
Despite its impact, Small Ax Pepper is determined to bring this model to more community gardens, or what Crotty calls “green oases” in urban areas. The chili is now grown in more than 42 cities, including Chicago, Detroit, Atlanta, Los Angeles, Phoenix and more. In addition, the list of regional produce offerings is expanding, including Serrano pepper seeds for customers to grow their own.
According to Crotty, word about the mission is spreading fast. “It’s amazing how many gardeners around the country know people in the Bronx, so as the model expands, word of mouth is expanding.”
Brooke DiPalma is a Yahoo Finance reporter. Follow her on Twitter at @Brooke DePalma Or email her at bdipalma@yahoofinance.com.
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