Grom Gelato: Creating a Stir in New York

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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.

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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.

Perman is a staff writer for BusinessWeek.com in New York.