Credit: Lee McCoy/Flickr

Hotel Chocolat founders land tasty £40m payday

Peter Harris and Angus Thirlwell have floated the company today at a value of £167m. Will it be able to avoid the mistakes of Thorntons?

by Jack Torrance
Last Updated: 17 May 2016

Hotel Chocolat started as a mail order business but things began to really take off after it opened its first shop opened in Watford in 2004. Now it has more than 80 of them and today it floated on AIM with a tasty valuation of £167m – netting founders Angus Thirlwell and Peter Harris a pretty epic £20m each.

The duo will retain two thirds of the company and will use the remaining £12m to expand the business. ‘We have clear plans to invest further in our British chocolate manufacturing operations, in new stores and in our digital offering,’ said Thirlwell. ‘We welcome our new shareholders and look forward with confidence to the next phase of our growth and development as a listed company.’

The founders’ payouts are particularly tasty because they don’t have to share with any venture capital backers. Until now the company totally shunned corporate financiers, instead raising £6.9m through its innovative ‘chocolate bonds’ scheme, which allowed customers to invest in return for annual interest payments in the form of – you guessed it – chocolate.

Hotel Chocolat is a quintessential example of a company that rode the wave of ‘affordable luxury’ products. Its mantra is ‘more cocoa, less sugar’ and it even grows some of its own cocoa at a plantation in St Lucia, but its prices aren’t disgustingly astronomical. The question is whether it can maintain that balance as a listed company with shareholders that expect a return.

It will need to be careful not to replicate the trajectory of Thorntons. The older chocolatier still has substantially more stores than Hotel Chocolat but it has had a torrid time of things and was acquired by the Italian confectionary giant Ferrero last year for a pretty unspectacular £112m.  

Part of its problem was relying on sales via supermarkets, most of which have been reducing their ranges of branded products. Selling to other retailers also took the exclusivity out of Thorntons’ brand – why buy from their shops when you can get their products on offer at Tesco? Hotel Chocolat has wisely avoided such a move, selling only to John Lewis and some smaller retailers in the UK. 

It's not a great time to be on the high street but Hotel Chocolat is a rare ray of sunshine. And with enough cash to buy themselves around 166,000 Adventures in Chocolate hampers (each!), Thirlwell and Harris will be feeling pretty pleased with themselves today. 

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