Cadbury’s may no longer be British but there is another confectionery business on these shores that shows little sign of melting away.
Hotel Chocolat is on a roll. It’s among the elite few companies at present to open new shops on the UK’s battered high streets and to expand abroad. Although CEO Angus Thirlwell may not quite possess the quaker’s zeal of George Cadbury, he and co-founder Peter Harris are indubitably men on a mission.
The company has been profitable for every year bar one since it was established 20 years ago. Sales are currently around £55 million and there are 500 employees working across its shops, chocolate factory, website and a cocoa estate in the sunshine of St Lucia. Softly spoken and mellow, Thirlwell comes across as a man who is mentally and spiritually in a good place.
‘Peter and I are in this business for the long term and we want it to be sustainable in the future,’ says Thirlwell. ‘We can employ people responsibly as our horizons go way beyond the next three to five years. To do that, we need to give customers what they want, and I believe that is to see a company which is committed and caring about what it does.’
No tea party
At the tail end of 2009, two stores were opened in Boston, Massachusetts. ‘The reception has been amazing,’ he says. ‘The Bostonians are very interested in what we’re doing in growing our own cocoa. The whole British thing is going down very well, especially as Ted Baker and Ben Sherman just opened on the same street. The local press are saying, “Here come the Brits again.”’
Skip forward to this summer and a ‘boutique hotel’ will be opening on the Caribbean plantation. ‘It’s a cocoa-growing experience for people who appreciate the hedonism of chocolate,’ he comments. The Hotel Chocolat brand will also be appearing in the Middle East as two new stores are opened in Kuwait and Bahrain (these will be franchised, unlike in the US). Thirlwell is anything but soft-centred when he says that ‘the vision five years from now is to be recognised in the major markets as one of the top high-end chocolatiers in the world’.
Step back to 2004 and the situation was altogether different. Hotel Chocolat did not exist. Thirlwell and Harris ran a company called ChocExpress, which delivered via the web or by mail order catalogues. The company was profitable and growing, but something wasn’t quite right. ‘From an outsider’s point of view it was perfect, but we just knew that the brand wasn’t going to take us to where we wanted to go. It was like wearing a coat that was too tight.’
The name seemed dated and the connotation of cheapness was the polar opposite of what Thirlwell saw for the company in his mind’s eye. ‘If our customers ever told us we needed to rebrand, it would have been game over,’ reflects Thirlwell, who canvassed the opinion of business owners in the UK and the US about creating a fresh image and brand for the company. ‘To a person they said I shouldn’t do it,’ he says. ‘With a catalogue business, you never do that as it unsettles your customers. The view was that if you have a brand, stick with it.’
No matter which way Thirlwell looked at it, ChocExpress just didn’t convey the sense of luxury he wanted. ‘I was in torment for months over this,’ he admits. ‘Should I listen to these people or the voice inside my head telling me the brand wasn’t right? Fortunately, I showed a little bit of courage and listened to myself, and it was the best thing we did.’
There were other choices that crystallised the company’s long-term prospects. In the early days, Thirlwell won a deal with a supermarket, but after 18 months he realised the fluorescent lights and symmetrical, scientific blandness of shopping aisles were plainly inappropriate for his chocolates. ‘There was no connection with what people really wanted,’ he says. ‘We had to rely on a buyer in the supermarket to tell us what they thought the customers desired. Essentially, we felt we were wage slaves.’
A line in the sand needed to be drawn. ‘It was a profitable deal but I had to phone the buyer up and say we wanted to stop supplying them. They pleaded with us to do it for another season and I had to tell them we had made our decision and it was final. We moved on and it meant that all of our energy and time could be focused on our having a direct connection with our own customers. That was a real turning point in the company,’ he states.
Likewise, the overtures of venture capitalists have been spurned from day one. ‘If you can make your business generate enough profit and cash to drive its future growth, then there is no need to go to VCs or private equity. You would only do that if it was the sole route to find investment capital,’ he comments. ‘We’re privately funded and we can maintain a strong growth rate from our own internal resources. I think that’s important as it has enabled us to do really adventurous things without the risk of losing our jobs if we got it slightly wrong.’
In the blood
Thirlwell hasn’t been afraid to take a chance or two. After quitting his French and economics degree at Sheffield University, he worked in France as a salesman. Two years into the job, he had a major bust-up with the boss, who declared that the uni drop-out was destined either to end up in prison or start his own business. That he chose the latter (Thirlwell and Harris set up a money-making peppermint venture) was no surprise given that his father, Edwin, was the man behind the Mr Whippy ice cream franchise and printing company Prontaprint.
‘My father was an inspiration. I can see that I was drawn to what I do because it was clear that my dad loved what he did and had fun doing it. The idea of doing your own thing seemed natural,’ says Thirlwell, adding that his father – who is now in charge of an ice cream company in Barbados – wasn’t always a fan of his son’s tendency to do the exact opposite of what was expected. ‘Fathers and sons being what they are, he was always telling me to be more risk-averse than I wanted to hear. He didn’t want me to cock it up but he was very supportive.’
That penchant for risk continues to this day. It’s evident in the hotel he’s building, the decision to be a manufacturer in the UK and the push for expansion internationally when most entrepreneurs are trimming the fat. Thirlwell says he is fully aware of the dangers of over-stretching: ‘If we ever did allow VCs into the company, they’d say, “Stick to the knitting, guys.” But the reason for this approach of ours is that sustaining a strong brand for decades is very difficult, and you don’t do it in the short term.’
The business is a labour of love and Thirlwell’s fascination with chocolate can’t be anything but authentic, although he admits that he was equally ‘evangelical and mad about mints’ when he and Harris first started out. ‘We still do mints on the corporate side. With that first business, we got sales to about £1 million and then our customers asked us if we did anything apart from mints. The obvious thing was chocolate, and it became so seductive and interesting as it’s a great medium for creativity,’ he says.
Once the decision was made, Thirlwell was typically hands-on, going on a course and speaking to independent chocolatiers in Switzerland and France to properly immerse himself in the dark art of chocolate. ‘One of the things the Brits do very well is they take from international styles and give them a British look,’ he says.
These leaps of faith, switches in direction and reinventions are finally paying off, and the mistakes along the way make Hotel Chocolat a better business, says Thirlwell. ‘When you see a new name on the high street, you think it’s a start-up, but we have many years of experience behind us. Having developed an exciting brand, we already had momentum in the shape of resources and an established customer base. With the brand, we’ve been able to push really hard, and I think that’s what has surprised people.’
That a company for luxury products has grown like it has during such a fierce recession is impressive, especially if the investment back into the business is taken into account. Thirlwell is convinced that people will always pay for something that gives them pleasure: ‘Our policy is that we are fair in pricing, but we’re certainly not cheap. Our customers are telling us very strongly that they don’t want us to cost engineer the products by compromising on ingredients or shaving weight off the chocolates. When we have to put our prices up, customers understand that good things do cost money.’
When Thirlwell talks about Hotel Chocolat, he says ‘we’ a lot. Staff turnover at the company is low and he claims there is ‘good stability among the directors and senior managers’ in the business. However, it’s the working relationship with Harris, who is the financial director, that’s been a vital ingredient in the Hotel Chocolat story. ‘He’s been my business partner right from the beginning and we own the company 50-50. I tend to be more about the bigger picture and strategy, but it’s not as straightforward as that as he does get involved too.’
It may have taken a little longer than they expected, but between them, Thirlwell and Harris appear to be tasting success on their own terms. ‘It has been quite a journey,’ says Thirlwell. ‘But when we look at where we are, we are basically in control of our own destiny as we make and retail our chocolate direct to our own customers. It’s a position of real strength.’
Not a bad place to be, then.
Vital statistics: Angus Thirlwell
Born: Newcastle, 1963
Marital status: Married
Guilty pleasure: Eating my own chocolates
Pet hate: People who don’t care
Childhood ambition: To be an inventor