Hotel Chocolat considers overseas expansion and downplays Brexit impact

Retail Week can reveal that the chocolatier quietly made its debut on the island at the end of May through its partnership with Channel Islands-based Sandpiper, which also works with retail names such as Marks & Spencer, Jack Wills, Asda’s George, Moss Bros and Costa Coffee.

Hotel Chocolat boss Angus Thirlwell told Retail Week that early sales performance at the store had been “very encouraging” and revealed that the retailer was now “fielding enquiries from people all over the world who want to work with us.”

However, despite interest from across the globe, Thirlwell insisted that Hotel Chocolat would focus on “getting match-fit” at its three stores in Denmark before moving into other markets in a “disciplined” way.

Overseas admiration

Speaking as Hotel Chocolat unveiled a 12% rise in sales to £92.6m in the 52 weeks to June 26 – its first financial update as a public company – Thirlwell said: “The store we opened in Regent Street is really starting to get the brand out there. We can see international business people taking notice, thinking ‘I wonder whether that would work in our country’ and making an approach to us.

“We’re not in a position to do anything immediately about it, but we can certainly get to know each other and we can ask them to do some research in their market, or study a particular part of importing rules.

“So there is loads we can do to advance things, while still having this ‘get match-fit’ plan in Denmark.”

“We can see international business people taking notice, thinking ‘I wonder whether that would work in our country’ and making an approach to us.” 

Angus Thirlwell, Hotel Chocolat

Thirlwell said franchise agreements, like the one it has in place with Sandpiper, could become “a sizeable part” of Hotel Chocolat’s business, because it is “a good way of sharing risk and the rewards” of expanding overseas.

“It’s a question of matching the best methodology with the opportunity from the location,” Thirlwell added.

“The reason we are doing Denmark as a company-owned strategy is because we believe we should know how to do it internationally ourselves before we start engaging with partners.

“I can foresee a scenario in the future where we have a combination of some territories that are purely digital, other ones that are multichannel and company-owned, and others that are multichannel or single-channel franchises.

“There are loads of options at our disposal.”

Brexit

Thirlwell downplayed the impact that Brexit could have on its European aspirations.

“Trade is going to continue in a major way between Britain and the rest of Europe no matter what the results of the negotiations are,” he insisted.

“The question is: is that trading going to be with tariffs or without tariffs?

“At the moment, when we send Hotel Chocolat products into Denmark, the Danish government already has a 6% tariff which applies to all products with a high level of fat.

“Despite that, we are trading in Denmark and growing a business there. So, taking a strategic and medium-term view, we see through that and say: ‘whatever the outcome of those negotiations is going to be, we will be able to trade there one way or another.’”