Hotel Chocolat - British Chocolatiers on the March!

Angus Thirwell the co-founder and CEO of Hotel Chocolat is immensely grateful to Joanne Harris and Juliet Binoche. respectively the author and star of the hit film Hotel Chocolat. The movie educated a generation of aspirational chocolate lovers in how to pronounce Hotel Chocolat and has helped millions of consumers in Britain and around the world advocate the hit chocolate retail brand without committing a pronunication faux-pas! I wonder how many satisfied customers realise that Hotel Chocolat does not exist? Perhaps they have typed the name into Trip Advisor hoping for a review of a retreat flowing with rather wonderful chocolate made from a St Lucian plantation?

Hotel Chocolat is a British cocoa grower and chocolatier and undoubtedly one of the big retail success stories in recent years when our media has been peppered with closures, businesses tripping into administration and thousands of jobs lost in a nightmare on the high street. The business has annual sales exceeding £70 million and looks set fair to have another successful Christmas in 2012.

Angus Thirwell and his team have built an outstanding brand. Indeed a study from Bain and Company published in Marketing week recently placed Hotel Chocolat as the 4th most consumer advocated brand in the world, and the only UK brand to appear in the top ten. Angus Thirwell exudes passion for chocolate and over 250 students and teachers were lucky last night to gave a taste and flavour of his business acumen and sense of what lies behind the Hotel Chocolat growth story.

A key ingredient has been a willingness to take risks. Angus Thirwell argued that the French, Italians and Belgians - with decades of market leadership in confectionery - have been too conservative in their chocolate products and that other countries are now poised to eat into their dominance. There is a strong appetite for risk from UK and USA chocolatiers.

Hotel Chocolat is a vertically integrated business that owns and operates cocoa plantations in St Lucia (the Rabot Estate pictured above) and which roasts and manufacturers chocolates at a new factory in Huntingdon in Cambridgeshire.

The business started with producing peppermints for the corporate market and Hotel Chocolat was one of the early adoptors of online e-retailing in the UK in the early 1990s. Digital channels have proved effective throughout the growth story and sales from the web site now account for around forty per cent of the total.

Consumer awareness has widened as the portfolio of bricks and mortar stores has increased over the years, but Angus Thirwell recongises a need to be balanced in a digital world. Too many large outlets risks diluting what remains an aspirational luxury brand. Hotel Chocolat will probably keep around 70-100 stores rather than 200 and focus on increasing the size of some (to allow fine dining and enrichment services for consumers who want to learn more about chocolate) whilst reducing the size of others and locating them where impulse buying is strongest - for example in department stores (John Lewis) and at airports.

The main supermarkets will remain a Hotel Chocolat free-zone!

The brand name Hotel Chocolat was created in-house. The hotel idea was intended to be purely metaphorical although the business has opened a new hotel and spa at their St Lucian cocoa plantation. The new hotel Brand is Boucan - a word for a cocoa drying shed - the root word for buccaneer. Hotel visitors from the USA provides an opportunity to crack into the US retail market especially foodie obsessives in the States who spend much of their lives tweeting about their favourite meals

Thirwell argues that the firercest battleground in super premium chocolate is about one thing only - authenticity. More and more consumers want to know the provenance of the products they buy.

The power of instinct in business is more powerful rather than the process of business. Hotel Chocolat commits to a fast speed to market, creating and getting into store a collection of chocolates for every event. 40% of the product range from Hotel Chocolat is changed every Christmas, following the Zara fashion retail concept. Many of their in-house design team have been recruited from the fashion world - creative people on macs working constantly on fresh ideas ideas

Angus Thirwell also touched on the financing of business expansion. Hotel Chocolat was in the news recently with the successful launch of a chocolate bond that raised £4 million to cover the cost of a 3 year investment programme. Chocolate bonds were sold to their existing customer base with individual loans of 2,000 or 4,000 pounds for a three year period. Interest paid purely in chocolate! This is one example of small and medium sized businesses using alternative forms of finance than reliance on a broken banking system.

UK Chocolate Industry

1. The UK is the seventh biggest consumer of chocolate in the world getting through about 660,900 tonnes of chocolate a year - that's around 3 bars each a week.
2. The industry is now worth £3.7 billion in the UK alone