Hotel Chocolat sold to Mars for £534m

Luxury chocolatier Hotel Chocolat, which is headquartered in Royston and has a manufacturing plant in Huntingdon, has been sold to Mars Incorporated in a deal worth £534million.

The takeover will help the brand expand both in the UK and overseas, with the potential that it could open in more countries.

Angus Thirlwell, co-founder and chief executive of Hotel Chocolat, said: “We know our brand resonates with consumers overseas, but operational supply chain challenges have held us back.

“By partnering with Mars, we can grow our international presence much more quickly using their skills, expertise and capabilities.”

Hotel Chocolat’s first shop was opened by Mr Thirlwell and fellow entrepreneur Peter Harris in north London in 2004 as they aimed to begin a “revolution in British chocolate”, although they had been selling chocolates online since 1993 - making it one of the UK’s earliest ‘etailers’, predating Amazon and eBay.

It created a Chocolate Tasting Club in 1998 - a community of chocolate tasters who receive unique monthly selections and launched the Hotel Chocolat brand in June 2003.

Today, it operates about 130 shops across the UK, including one in Cambridge’s Lion Yard, and has a distribution centre at Alpha Park in St Neots in addition to its HQ at Mint House in Newark Close, Royston, and manufacturing site at Huntingdon’s Hadley Park.

It also has cafés, restaurants, outlets and factory stores, more than 40 stores in Japan and a luxury eco-hotel on its working cacao farm in the Caribbean.

But the chain has been operating at a loss after major restructuring efforts last year which helped to bring down costs.

It agreed to a new tie-up in Japan in January following the costly collapse of a previous joint venture in the country. The previous partnership led the group to write off around £22million and it was forced to restructure the deal.

The group’s share price has also suffered, trading almost a quarter lower for the past six months after two profit warnings earlier this year.

However, last month it said sales grew by more than a tenth in the three months to October and stores opened this year have been performing better than expected.

The co-founders are expected to get £144m each from the deal, as theyeach have a 27 per cent stake in it. Mr Thirlwell has said he will invest 80 per cent of his windfall back into the company, while Mr Harris – who is to retire – will also reinvest some of his.

Mars, which employs about 10,000 people in the UK, and also also owns the Celebrations, Dove, M&Ms and Snickers food brands, said Hotel Chocolat’s luxury gifting and immersive brand experiences will boost its own presence in the region.

Andrew Clarke, global president of Mars Snacking, said: “The Mars and Hotel Chocolat businesses are highly complementary, and during the course of our discussions with Hotel Chocolat’s leadership it has also become clear that there is a very strong cultural fit – with purpose at the heart of both organisations, and a shared passion for quality and sustainability.”

Hotel Chocolat shareholders will receive £3.75 per share as part of the deal. Its shares were trading at about £1.39 when markets closed on Wednesday.

The company has described its approach as one of originality and authenticity.

It says: “Right from the start, we’ve never played by the rules of what people said a chocolate company should be.

“When we first started making our Easter eggs more than a decade ago, we were advised by experts to make them as thin as possible. We did the opposite, opting for ridiculously thick shells that are still satisfyingly snappable.

“Everybody said a bar of chocolate should be regularly divided into bite-sized pieces – but squares are boring, so we broke the mould and made our now iconic Giant Slabs, inspired by the shape of molten chocolate when you pour it onto the cool marble of a chocolatier’s table.”

“We’ve also created the world’s first single-côte chocolate, developed our own chocolate genre, Supermilk, created our own vegan milk alternative, nutmilk, innovated with cocoa cuisine from spiced cocoa nib ketchup to white chocolate horseradish and even cocoa gin, and the invention goes on – we’re constantly embracing new technologies and ideas.”

With its Rabot Estate cacao farm in Saint Lucia, it is also one of the few chocolate makers to grow cocoa. It says its mantra is ‘more cocoa, less sugar’ and it pledges a fair deal for cocoa farmers and its partners.