In May this year, Hotel Chocolat raised £55m in a £167m flotation that turned its two co-founders into overnight multi-millionaires - a windfall that came after two decades of gradual innovation and slow growth for the British chocolatier.
Angus Thirlwell, the son of Prontaprint and Mr Whippy founder Edwin, and his business partner, Peter Harris, took home £20m each in the IPO. Another £2.5m was split between 15 Hotel Chocolat directors, while £12m was put straight back into the company’s ambitious expansion plans.
"We have been saying it is like walking through a door into a much bigger opportunity," Thirlwell told Portfolio.
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So how did Hotel Chocolat become one of Britain's biggest and best-known chocolate companies?
Seed of an idea
Hotel Chocolat began in 1993, as an online chocolate gifting service called Choc Express. It rebranded as Hotel Chocolat ten years later and opened its first store in London in 2004. Over the course of the next decade, the company expanded swiftly and now has more than 80 stores across the country – overtaking its older rival, Thorntons, as the UK's biggest chocolate retailer.
Thirlwell attributes much of the business's success to Hotel Chocolat's "Tasting Club" – an innovative subscription service that allows cocoa-lovers to try out a new box of chocolates each month. In return, their feedback helps the company test and refine its products.
"It is the number one thing everyone is interested in and is regarded as the most intelligent part of our business model," Thirlwell says. "It allowed us to test new recipes.
"Only the chocolates with the best scores make it into our main range."
Sugar, sugar
According to Thirlwell, Hotel Chocolat also benefitted from an early decision to create a chocolate that puts cocoa at its core, rather than sugar.
Discussions around the health impact of sugar began in the early 1970s, but it's only in the last decade that a growing body of expert opinion - the "No Sugar" movement – has begun to really gather momentum and warn that too much can represent a genuine threat to health.
Hotel Chocolat's commitment to "more cocoa and less sugar" - whether through health consciousness, a savvy reading of the market, or pure good fortune - coincided perfectly with both the advice of experts and the culinary and nutritional zeitgeist.
"Our mantra of 'more coca less sugar' began by appealing to a sector of our customer base, but not all of them," Thirlwell says. "A lot of them thought it was interesting, but didn't quite understand what it meant.
"Now clearly there is a real focus on the impact of sugar in a real stealth way. So the future for us is to continue to go more strongly on that. And our ambition is to use even less sugar and more cocoa without challenging it as a luxury food."
A buoyant mood
Despite the uncertainty of Brexit, Hotel Chocolat this week reported a rise in sales of 12 per cent – an incredible £92.6m in the year to 26 June.
Analysts at London-based equities brokerage and investment banking business Liberum told the Daily Telegraph the company’s sales update was “reassuring."
Hotel Chocolat "possesses the many attributes of a high-quality business", they added. "It is a highly disruptive business and has proven defensive attributes irrespective of the economic backdrop."
The next stop appears to be international expansion, but not before Hotel Chocolat reinforces its position within the UK – and its reputation as a British brand.
"I have spoken to other brands about international expansion," says Thirlwell. "They all agree that being a British brand is an asset. We intend to keep that. We want to maintain ourselves as a British chocolatier, not merely Swiss or French chocolate made in Britain. But we can now see that we could bring this proposition to international markets."
Angus Thirlwell spoke to Portfolio the week after Hotel Chocolat's IPO
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