ANGUS Thirlwell Hotel chocolat CEO

Angus Thirlwell: “We’re trying to make chocolate exciting again by focusing on ideas, innovation and underpinned by really good quality.”

UK chocolate retailer Hotel Chocolat has just one airport store and 12 railway station outlets, but its travel retail offering is set to grow fast as the brand targets international expansion.

CEO and Co-Founder Angus Thirlwell told The Moodie Davitt Report that demand from international shoppers for the company’s chocolates and other ranges across the UK has influenced plans for global development.

The success of the Copenhagen Airport store, opened in 2014, and the robust performance of UK railway station shops, has given the company confidence in the fast-paced travel retail sector, he said.

“Over the next decade, we anticipate making some significant moves in international growth – and travel retail is going to play a big part in that,” Thirlwell explained.

Hotel Chocolat at Copenhagen Airport5

Pick up a gift before you fly: Hotel Chocolat’s CEO views Copenhagen Airport as “a glamorous, Nordic travel hub”

“We’re seeing high numbers of overseas visitors come [to our UK stores, particularly in London]. Our thoughts are increasingly turning to international and, within that, international airports can play a very big part in bringing the brand to lots of people.”

Hotel Chocolat Timeline

1993: Co-Founders Angus Thirlwell and Peter Harris started selling chocolates online, pre-dating many of the internet giants such as Amazon and eBay.
2004: Opened first retail store in North London, UK
2006: Thirlwell and Harris bought a 250-year-old cocoa plantation in Saint Lucia – Rabot Estate. The move was in line with the business model to have an integrated supply chain.
2010: Opened first Café
2014: Opened first stores outside the UK, including Copenhagen Airport.
2016: Listed on the London Stock Exchange, providing new funds for growth. The flotation valued Hotel Chocolat at £167 million (US$206.8 million) but Thirlwell and Harris retained a 66.6% stake in the company.
2017: Interim results announcement for six months to 25 December 2016 reported revenue of £65.2 million (US$79.3 million) and profit before tax of £11.2 million (US$13.6 million).

He added that anecdotal evidence from UK credit card spending has shown Hotel Chocolat “over-indexing in visitors from Asia” compared to other regional nationalities.

Analysis of shipping destinations, which frequently feature Asian addresses, has led to that region becoming a target area, noted Thirlwell. Hong Kong, in particular, has been on the company’s radar for some time.

“Looking at the opportunity opening up in front of us, we’re piecing the bits together,” he said. “Clearly we see we have an appeal to the international traveller. The other data point is we know we can make railway stations work well – it is intensive trading and on-the-go retail but we know operationally we can cut the mustard.”

Travel retail experience

The Copenhagen Airport store, situated airside at one of Europe’s fastest-growing airports, is one of three Hotel Chocolat shops in the Danish capital.

Thirlwell said he’s pleased with the airport performance and described the gateway as “a glamorous, Nordic travel hub”.

“You’re getting a lot of Swedes, Norwegians and Americans and Japanese coming through, for example. The fact our brand can resonate seemingly effortlessly with that crowd is very encouraging to us.”

Hotel Chocolat’s typical UK store, located in shopping centres or high streets across the UK, offers customers around 350 SKUs, but the Copenhagen airport shop operates with approximately one-third of that range.

“The affluent traveller is typically time poor and they want to see an edit of your whole range and things that are most suitable to them right now,” noted Thirlwell.

He added that the airport range is assessed for size, suitability as a gift and “overall robustness” to ensure purchases can complete their journey in “tip-top condition”. The retailer has primarily targeted business travellers through its offer of discretionary gifts between £10-£50 (US$12-US$60).

Railway station stores, which include Birmingham New Street, Manchester Piccadilly and many of the busiest London terminals, are set to feature further. To date they have also helped the brand drive interest in innovative concepts.

One of those concepts is the Hotel Chocolat Cocoa Bar Café. Of the ten stores the company opened in the second half of 2016, seven had some form of café, allowing customers to either sit down to enjoy a range of food and beverage options or grab and go.

The video below offers an insight into the café concept, which Hotel Chocolat plans to continue rolling out across the UK.

“We have been making a big push on our café model and it’s been working well up and down the UK in locations, including train stations,” explained Thirlwell.

“We’ve really nailed the operational side of that and it’s hitting the spot for the consumer – the idea of ‘the best Hot Chocolat on the planet’ is really working. It would be an ideal treat for people just before they jet off to somewhere exciting.”

Hotel Chocolat range

Broad range: Hotel Chocolat sells a variety of chocolates, buts its range also includes cocoa gin, cocoa-infused tea and cocoa-related beauty products

Ranges that suit airport retail?

Aside from Copenhagen, Hotel Chocolat has operated an airport store before, at London Luton in the UK. It closed in 2016 after a four-year run.

“It worked to a certain level but we think we work better in the larger international airports,” said Thirlwell.

“We’re always quite adventurous as a company. We try lots of things – some things work, some work as a pointer to help us find the ultimate model.”

Having been an early player in e-commerce, Hotel Chocolate launched its first physical shop in 2004, in the process bringing something new to the UK chocolate market.

A partnership takes flight

Hotel Chocolat has supplied British Airways Club passengers with complimentary inflight chocolates for the last three years.

The brand’s chocolates are served on the Club food tray, and the partnership has been beneficial to both parties, according to Thirlwell.

“It’s been very important for us in getting our brand out there under the noses of premium business travellers,” he noted. “More than that they are getting a sample of what makes us different via a taste profile. It’s a partnership we value very highly.”

Thirlwell said the company would consider other airline partnerships but cautioned it would have to be respectful of the arrangement already in place with British Airways.

At the time the sector was perceived as mature and difficult to disrupt, but Thirlwell said his company disproved that notion.

Can the same thing happen in travel retail? It is a market where the players tend to follow the same model of offering travel shoppers “just a box of chocolates”, according to Thirlwell.

“One of the things I like about what we’ve been able to do with our brand is embrace the power of the cocoa bean in a much broader way.

“Our cocoa gin is of great interest to the international traveller and we have a whole range of speciality alcohols, a beauty range all about cocoa butter and cocoa shells as an exfoliator and items such as cocoa tea infusions. There is a broad range of cocoa and chocolate lifestyle gifts that are unique and give the buyer an opportunity to demonstrate more thoughtfulness in matching the gift to the recipient.”

Those items fit into some of the largest-selling brand categories found in airport shops and duty free – alcohol, gifts, confectionery and beauty.

“We’re open to ideas. We have partnerships in the business – not travel retail – but if someone’s got some particular skills we’re very happy to partner with them, or equally we’re happy to plough our own furrow if it’s the most attractive route.

“We’ve got real momentum with nearly 100 locations open but just a tiny toe in the water in travel retail.”

Hotel Chocolat at Copenhagen Airport4

Hotel Chocolat’s Copenhagen Airport store is one of three outlets it has in the Danish capital