Yahoo Finance Hotel Chocolat agrees new Japan joint venture
Retailer and chocolate maker Hotel Chocolat has agreed a new tie-up in Japan after the costly collapse of its previous joint venture in the country.
The chain unveiled a deal with Tokyo-based Eat Creator Corporation which will include 21 Hotel Chocolat-branded shops across Japan.
Hotel Chocolat will hold a 20% stake in the joint venture and will receive brand royalty revenues.
It said Eat Creator will provide “growth capital, new supply-side know-how and proven expertise in food brand development for the Japanese consumer”.
Hotel Chocolat’s previous partnership in Japan with Chris Horobin, the former boss of shopping channel QVC Japan, hit the buffers last year, leading the group to write off around £22 million.
This pushed it to a pre-tax loss of £9.4 million in the year to late June, down from a £3.7 million profit a year earlier.
It was forced to restructure the joint venture – launched in 2018 – under bankruptcy protection after its then-partner demanded a hefty sum of investment to keep going, which Hotel Chocolat said at the time was not viable.
Hotel Chocolat said the new agreement with Eat Creator will see its partner provide the funding for it to grow and apply the “key business learnings from the first four years of trading in Japan”.
Hotel Chocolat’s previous attempt at cracking the Japanese market was hampered by Covid in 2020 and 2021 and then the Japanese government reinstated movement restriction guidance in 2022.
Speaking to the PA news agency, Hotel Chocolat co-founder and chief executive Angus Thirlwell said: “During Covid, it became really difficult for the (previous joint venture) business.
“We were providing all the funding from the UK.
“We figured out that, having got to the first chapter of the business, what we wanted to do next was to find a partner that could bring… expertise on the supply chain side.
“The new partnership brings skills, connections and fresh capital as well.”
While Hotel Chocolat’s Japanese arm suffered three years of badly hit sales and profits, the group built up a database of more than 200,000 registered Japanese consumers.
Eat Creator’s chief executive, Satoshi Nagasuna, said he had watched the “positive impact that the Hotel Chocolat brand has made in our market over the last four challenging years”.
He added: “When the opportunity presented itself to become directly involved with the business, we realised that our skills would be a good match with what was needed to take Hotel Chocolat Japan to the next level. We are excited to get started.”
Eat Creator already has food ventures in Tokyo, including Neki, Social Kitchen, Unis, Bank Kabutocho, Songbook, Teal and Ease.
The deal comes after Hotel Chocolat reined in its global investment plans in 2022, also shutting its direct-to-consumer business in the US.
But trading has been more resilient in the UK, where sales rose 23% in its previous financial year.
The group hinted that it may also make a comeback in the US consumer market in the future.
Mr Thirlwell told PA: “It was always our plan to take stock of what we learned in the US.
“We said we wanted to learn and adapt and come back with something better.”
