Innovative Retailers – Hotel Chocolat

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The Name: Hotel Chocolat

The Place: 62 stores in the UK and two in the US plus three franchises in UAE

The Story: Founders Angus Thirlwell and Peter Harris began selling confectionery together in 1988 and via Geneva Chocolates and ChocExpress they arrived at Hotel Chocolat in 2003/4. The first shop arrived shortly afterwards and in 2006 they upped and bought their very own cocoa plantation, the Rabot Estate, in Saint Lucia. Since then they have launched a hotel on the Estate, added lots of new stores, bought a second estate, piloted a ‘cocoa house’ chain (don’t call them cafes – no one will be your friend), and very recently opened a chocolatier’s store in Covent Garden where customers can see the chocolate making process. Phew. Still, it’s nothing for the man who puts raw cocoa nibs on his muesli every morning.
Angus Thirlwell: cocoa maestro.

They must be running to the bank every 10 seconds to finance this kind of expansion non? They say a resounding ‘pah’ to normal fund raising channels. It’s their own customers who fork out when they need money. In 2010 a truly revolutionary idea was presented for FSA approval – a chocolate bond. With interest paid in chocolates. There were two levels of bond value – £2,000 and £4,000 – and an extraordinary £3.7 million was raised from members of the company’s Chocolate Tasting Club, which funded a lot of the big projects happening at the same time. Thirlwell says that the idea of paying interest to their own customers instead of a bank was a very attractive one. There are some regulatory hoops but they heartily recommend it as a form of connecting with customers.

Blimey. How big is this Chocolate Tasting Club? 100,000 persons strong. They recently wrote to all the bondholders of the £2,000 level to ask if they wanted to upgrade to the £4,000, which gives a better rate of return. And immediately they raised another £500,000. As Thirlwell says, not bad for the cost of a stamp. The Bonds last three years and at the end of that period customers can elect to get the money repaid in full.

Crikey, if they started a tasting club all round the world think of the money they could raise? Hmm, not as easy as it sounds. Hotel Chocolat is indeed building a base in Scandinavia and North America but a lot of Europe has been ruled out. Delivering chocolates in hot countries is a messy business. But he says it can work anywhere with a commonality of approach to chocolate, a good delivery system and a sound economy.

That lets out Greece then? For sure. In revenue terms the international club is still an ‘embryonic’ part of the company but it is now the focus as Thirlwell feels the optimum number has been reached in the UK.

So, it’s not every chocolate manufacturer who ups and buys an actual plantation? Certainly not. This kind of vertical integration is unusual but Thirlwell says it evolved organically partly from customer demand and partly his own instincts. The huge pros for him are that it protects their intellectual property. No one knows what is about to hit the market until bam, it’s there. And as they control supply of their core ingredient the right stock is always there at the right time. This is very important at key times like Christmas.

Sounds like hard work? Yes, but they have already done it again. Buying another estate on St Lucia, which the existing team are bringing up to scratch to plant different varieties of cocoa bean.  And of course you can now stay at the Rabot plantation and fully indulge your love of chocolate. It soft launched all through 2011 as of January 1 this year it is totally open. Agro –tourism is a long term prospect for the company but as Thirlwell says ‘everything we do has the potential to be scaleable’. The beauty is that you can relax in luxury but are safe in the knowledge that the workers outside your veranda are not being ripped off. It’s the way forward. And the company is pretty confident that bookings in 2012 will reflect that.

And what do I hear about chocolate beauty products? Yup. There’s nowhere they won’t go this lot. They make cocoa butter products in St Lucia for the hotel guests but see no real reason why they should not spread chocolate beauty to everyone including their new European customers in Copenhagen and Amsterdam.
Roast + Conch Covent Garden.

The first stores? Yes, and the Copenhagen store will also feature a pilot of the Roast + Conch brand.

Which is? Hotel Chocolat is the master brand but Roast + Conch is the casual food and drink offer that sits underneath it. Thirlwell says they can only go in stores where the footprint is large like Copenhagen and Kensington but ongoing they will actively look for sites that are big enough to take on more than just the chocolate range.  

And where does that place the cocoa house brand? Keep up, that is different again. The pilots of the Coffee vs Cocoa bars are in Covent Garden and Edinburgh. Thirlwell says that the café experiment has been going on for five years with the first attempts not quite right. But he thinks he may have cracked it with the original idea of offering a normal coffee menu but with the option of having your latte made with cocoa beans instead of coffee beans, or with a shot of each. He would like to ‘dispel the comfy myth of cocoa’ – It’s more powerful than coffee and a super-food to boot. So don’t mention slippers and a milky drink.

I won’t, but I will ask what do you do with a problem like Thorntons? Ah, Mr Thirlwell goes quite coy on this point but will concede that to lose touch with what your customers want is the death knell. He sees his customers as a constant trigger to innovation and would consequently never sell through supermarkets (although he is approached all the time) because you have no idea who is buying your product or why.

It sounds like a retail jungle out there in artisanal chocolates. Correct? It’s certainly crowded but Thirlwell has just one word for you – fillings. Other people’s chocolates are about the filling. His are about the chocolate and that’s just the way he likes it.

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