UK Chocolate retailer, Hotel Chocolat, who has a direct relationship with their farmers, is doing the unthinkable. It is raising prices for their chocolate!
The subject of raising the price consumers pay for chocolate, in order to ensure cocoa farmers can earn a living wage, induces much hand-wringing among some chocolate companies, who believe consumers will not be willing to pay more.
Hotel Chocolat however, who controls their own cocoa supply, did just that. Although cost considerations are at the heart of the decision, the company also said it didn’t want the company’s increased costs to impact farmer livelihoods, and that’s why they will raise their prices before the all-important Christmas shopping season starts.
Angus Thirlwell told the PA news agency that the luxury chocolate retailer is responding to higher costs, including the need to retain lorry drivers with higher salaries, and to make additional investments in its cocoa farming communities.
Thirlwell explains. “We’re moving to increase prices now, to protect quality, and make this important investment into sustainable cocoa farming.”
This flies in the face of the big chocolate companies, who say that any price increase will put them at a cost disadvantage in a competitive industry. But nobody told this to Mr Thirlwell, who is marching ahead, with the confidence of its investors, who have supported the business through the pandemic.
We’ll have really good availability of Hotel Chocolat products for Christmas, and there won’t be any empty shelves…There’s quite a bit of inflation around in the supply chain – some of it is temporary and will unwind, while some isn’t. – Angus Thirlwell
We agree with Mr Thirlwell’s strategy – he is taking risk out of the business at two ends. By investing in farmers and sustainability, he is bolstering the brand’s green credentials, which will put the company in a good position with consumers. By giving double-digit pay rises to lorry drivers, he is de-risking the potential of losing drivers and having a disrupted logistics network, in the lead up to the industry’s busiest time of the year.
His strategy is borne out in the numbers.
Pre-tax profits leapt to £10.1m ($13.7m) in 2021, with the year-end in June. In the previous year, the group’s profits were substantially lower at £2.4m ($3.26m)
Revenues are up 21% to £164.6m ($223 m), and crucially, the business, which saw itself as a bricks & mortar retailer before the pandemic, now reported it made more than 70% of those sales online. Pre pandemic online sales were a rather anemic, 15%!