It’s the end of the road for British chocolate. Thorntons, Cadbury and Rowntree, early pioneers of British confectionery innovation, have now been followed by Hotel Chocolat, the last bastion (and once the new pretenders), in selling out to foreign owners.
So it’s a shame. Over 30 years, the Wonka-esque Angus Thirlwell and his co-founder Peter Harris have built an original, playful and distinctive premium British retail and manufacturing chocolate confectionery brand.
On the other hand, and talking of premiums, the £144m they will each pocket, in a £534m deal struck this week with Mars, is a handsome return on the recent Hotel Chocolat share price, which had crashed from a high of over £5 in December 2021 to a low of £1 in August. Even with the share price recovering somewhat since then, the Mars deal still values Hotel Chocolat at a tasty 170% premium.
But they should have done this years ago. As a plc, Hotel Chocolat was always too small and too difficult to understand for institutional investors. The only way to survive on a stock market at their size was either to have a totally solid performance every quarter and/or to be a tech stock/enjoy stratospheric growth. And the cost and complexity of building a supply chain in the US and Japan to support its global ambitions – with its vision to “make people and nature happy through reinventing chocolate” – was impossible with its limited funds.
That won’t be a problem with Mars – the world’s fourth biggest privately owned business – as its new owners; and there’s a ready-made supply chain to tap into in the US. What’s more, the opportunity to upsell US consumers to its premium proposition is compelling when the quality of chocolate in that market is so very poor.
With Mars also insisting on its “cultural alignment” and “shared values”, let’s hope it will support but not interfere too much in how Hotel Chocolat is run. And as such perhaps the most intriguing part of the deal is that Thirlwell is staying on. And investing 80% of his own funds. It seems Wonka’s dream can still come true. Even with an American accent.