Grom Gelato: Creating a Stir in New York
Would Americans spend $4.75 for a single scoop of premium, handmade Italian gelato? That was the question that Guido Martinetti and his partner, Frederico Grom, asked themselves a year ago when they decided to bring their popular Italian gelato chain, Grom, to New York City. As it turned out, the answer was a resounding yes.
When the first shop opened on Manhattan's Upper West Side in May, the pair tested the waters by giving out free coupons to lure customers in to try their product. "On the first day," says Martinetti, "there was a line of people 70 meters (about 229 feet) long down Broadway." The second day, paying customers without the benefit of a coupon returned in droves. And ever since Grom opened for business, lines for the artisanal gelato shop have continued to run around the block. Now Grom is planning to open two more Manhattan locations before branching out to Tokyo in the next few years.
Grom began in Turin, Italy, five years ago when the two friends—Martinetti, a former winemaker, and Grom, who had worked in Italy's financial industry—lamented the scarcity of gelato made the old-fashioned way: with premium ingredients and processed by hand. The pair decided that instead of talking about what didn't exist, they would start their own gelato company. They very quickly put together a business plan and borrowed the startup money to do so. In 2003, they opened their first shop in their native Turin. It was an immediate hit.
Ingredients from Far-Flung Places
Inspired by Slow Food, a global association and movement that seeks to preserve regional foods and small producers, Grom's founders decided at the outset to use only the finest organic ingredients and local artisanal purveyors as much as possible. For instance, the pair scoured Italy for hazelnuts that come from Langhe, peaches from Leonforte, and pistachios from Bronte.
Grom's 20 different flavors (containing about 8 to 10 grams of fat) are incredibly inventive, packed with such ingredients as washed Arabic coffee grown on the volcanic slopes of Guatemala's Antigua region, French Valrhonà chocolate, and Sfusato lemons from the Amalfi coast. Only San Bernardo mineral water from the Italian Alps is used to make Grom's sherbets. The firm's signature Crema di Grom is made with biscuits from Piedmont and pieces of dark chocolate. "Behind every ingredient is a story," says Martinetti. "I'm the guy who looks for the ingredients. Fortunately, all of our clients are curious and want to know why we make our ingredient choices."
By 2005, the pair had opened five more shops in Italy (today, there are 14 across the country). Wanting to maintain strict quality control and consistency, they purchased a small workshop in Turin and came up with a system to liquefy the gelato mixture, so that they could distribute the mix to the stores several times a week, then cream the mix into the final product in each shop. When they opened Grom in New York, they decided to maintain the same procedure. The shop receives its liquid gelato mixtures from Italy three times a week. "We ship the liquid gelato, and we make it fresh every day in the New York shop," says Martinetti. "Everything comes from Italy: the cones, the nougat, everything. Because we wanted to offer real Italian gelato."
Riding an Artisanal Wave
When Grom launched in New York this spring, the small chain had already brought with it some transatlantic buzz. During the 2006 Winter Olympics in Turin, the Today Show interviewed the founders and featured their gelato. They are something of a hit on the foodie circuit, having earned plaudits and awards from Slow Food as well as the province of Turin as "Master of Food" in 2005 and 2006. Their New York debut earned the pair much praise and ink, including plaudits from The New York Times. Martinetti considers Grom lucky that it has earned such outsize recognition. Of the $500,000 that he says they invested in opening Grom, none went toward publicity.
Indeed, Grom entered the U.S. at a time when both the organic and artisanal movements are gaining increasing currency (see BusinessWeek.com, 4/19/07, "A Growing Appetite for Specialty Foods"). And they weren't reinventing the wheel, as gelato has been around for a while. At the same time, ice cream and frozen desserts remain a huge market segment. According to the NPD Group, a market research firm based in Port Washington, N.Y., Americans spent $21.6 billion on the ice cream and frozen dessert category in 2005. "Forty percent of the U.S. population will eat ice cream at one time during the next two weeks," says Harry Balzer, a vice-president at NPD. "The thing about the category is that there are already people interested in it when something new happens [that is, there is an existing market]."
At Grom's bustling New York store, it seems like they have reinvented the category. Martinetti says that customers are extremely curious about the ingredients and the process. In fact, he says one of the biggest challenges in starting his business here was educating the store workers on the philosophy behind the gelato. The Manhattan location is spare and clean. The walls have big blown-up images of the ingredients along with information and descriptions about each of them. The kitchen in the back where they prepare the fresh gelato daily is behind large glass windows visible to customers.
Investing in the Future
Martinetti expects Grom will break even in its first year of business and expects to see a return on the initial investment in two or three years. "We've only been open for three months. We have to see how much gelato we sell in the winter," he says. "That will be important data." There is interest in rolling out more stores in the U.S., but one stumbling block is ingredient sourcing. "Our problem is that we only use a few suppliers. We only use top-quality artisanal purveyors, and they can't increase their volume 10 times for us with the same quality. It's not a financial problem for us, it is a problem of [locating] suppliers." He compares the process to cultivating vineyards for wine. "We ask farmers to plant the best varieties for us," says Martinetti.
To that end, Martinetti and Grom recently purchased 20 acres of land in Italy's Piedmont region, where they have an organic farm called Mura Murato and plan to grow six types of fruit—such as peaches, figs, melons, and strawberries—specifically for Grom's ingredients. "We will have the first melons this year," says Martinetti, "and will be at full capacity by 2009."
Now, Grom's lines can only get longer when curious ice cream eaters discover the new flavors and want to taste more.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.