Hotel Chocolat – growing nicely
Read an interesting interview with Angus Thirwell, CEO of Hotel Chocolat. This premium quality chocolate maker is clearly doing some smart things, as they managed to grow from £44million in sales in 2008 to £53million last year, despite the recession.
Here's some of the clever stuff they do:
1. Owning the route to consumer – Like Nespresso, who I posted on here, Hotel Chocolat controls the route to the consumer. It sells online and through its own boutiques. This has huge advantages over most consumer goods brands battling it out with the retail giants, such as:
– You can create perfect presentation of your brand
– 100% distribution of every SKU you want
– The ability to trial new products for real, not in an artificial and expensive market test
2. Club members, not just consumers – Hotel Chocolat use their online store to offer a sort of subscription service, called "The Tasting Club". 100,000 people have signed up, paying a monthly fee to become a "member", a term of also used by Nespresso. They get a selection of different chocs each month, and other benefits such as a 5% discount on other purchases.
The Tasting Club a way of breaking the rules of loyalty, as rather than hesitate over which premium chocs to buy each month, you get them in the post. The company are also smart in using members to give feedback on the selection of chocs, using this learning for future development.
3. Sourcing as a point of difference – Hotel Chocolat already is already committed to improving the livelihoods of cocoa farmers in St Lucia and Ghana, using what they call "Engaged Ethics: a hands-on, sleeves-rolled-up approach". The company has now gone a step further in controlling sourcing by buying their own 140-acre cocoa estate in St Lucia. They grow cocoa here and may also open a factory on site. This means they can control quality, enforce good ethics and also demonstrate true passion for the product and how its made.
4. Avoiding "the tyranny of growth" – I like the way Angus talks about the growth of Hotel Chocolat. It seems to be a place where growth is a result of doing the right thing, rather than an end in itself. This is the benefit of being independent, and so not having to chase quarterly results. They can avoid what I call "the tyranny of growth".
So, Angus is not planning rapid expansion of his store network. He has 50 stores now, and would be happy with 100: "We don't want to be ubiquitous. We just want to be where our customers want us to be." And I love his views on the idea of floating the company or growing through acquisition: "We have no plans to sell the business because we are having a great time."
In conclusion, Hotel Chocolat is another Nespresso-like example of a true 21st century brand, with a high quality, premium product sold direct to members, not in supermarkets.