Yahoo Finance British love affair with premium chocolate boosts Hotel Chocolat sales
British chocolate lovers and gift-buyers can’t seem to get enough of Hotel Chocolat’s premium offerings.
The British chocolate store chain reported on Tuesday that sales in the second half of 2018 surged by 13% compared to the same time last year as consumers stocked up on fancy packaged chocolates.
This comes as the overall market for chocolate in the UK has posted much slower growth, rising just 1% last year, according to research firm Euromonitor.
Liberum analyst Adam Tomlinson said consumers flock to Hotel Chocolat (HOTC.L) because its offerings are considered to be high-quality, yet reasonably priced.
“It is a premium chocolate product, but it is still materially cheaper than what you might call high-end, like Godiva. It’s about getting the price point right. You’re not charging extortionate prices,” Tomlinson told Yahoo Finance UK.
Plus, the company appeals to chocolate lovers because it’s seen as a special indulgence as opposed to a quick, unhealthy sugar hit.
“They’re focusing on more cocoa, less sugar. That plays nicely into the healthier eating trend,” said Tomlinson.
Hotel Chocolat’s reported sales in the final six months of the year rose to £80.7m and pre-tax profit was up 7% to £13.8m.
The company saw especially strong sales for its new Velvetiser Hot Chocolate maker, a £90 machine designed to create in-home “barista-grade hot chocolate.” Sales of the device, which launched ahead of the Christmas season, exceeded initial expectations six-fold.
Hotel Chocolat co-founder and CEO, Angus Thirlwell, called out the Velvetiser for giving the company a sales boost, and also noted success with a customer loyalty programme called VIP Me.
“Both developments will also support our plans for the key spring seasons of Mother’s Day and Easter,” Thirlwell said in a written statement.
International expansion underway
The vast majority of Hotel Chocolat sales are in the UK, which is the world’s third largest chocolate market. Sensing new opportunities, the company is now exploring expansion in the US, the world’s largest chocolate market, and Japan, the sixth largest market.
The firm opened its first Japanese store in Tokyo’s largest mall in November 2018. A new shop in New York City followed the next month and is currently Hotel Chocolat’s only US store.
Thirwell said on Tuesday that both shops are “showing encouraging early signs, in terms of customer response and the initial store sales performance.”
READ MORE: The heart of Pandora’s woes stem from common problems in physical shops
READ MORE: Russian diamond giant hopes politics won’t wreck US expansion plans
