Mars Set to Purchase UK Chocolate Brand Hotel Chocolat
Mars is making moves to purchase Hotel Chocolat, a high-end British chocolatier and retailer.
The manufacturing giant will acquire the chocolate company, which began online sales in 1993 and opened its first shop in 2004, in a deal of around $662 million. The co-founders, who each hold a 27.1% stake in the business, will share more than half of the total buyout amount.
The acquisition is expected to enhance Hotel Chocolat's growth potential in the U.K. and in new overseas markets, with the deal set to close in the first quarter of the following year. One of the co-founders, Angus Thirlwell, will remain CEO after the deal is complete.
“We know our brand resonates with consumers overseas, but operational supply chain challenges have held us back. By partnering with Mars, we can grow our international presence much more quickly,” Thirlwell said, in a statement.
The chocolate maker has 124 shops in the U.K. and several international locations. The news of the deal comes after a period of transition and change for Hotel Chocolat, following a September 2022 announcement it would be ceasing U.S. direct-to-consumer website sales and closing its retail stores in the country.
“We are confident that Mars will be an excellent long-term home for Hotel Chocolat, providing a like-minded, entrepreneurial, and purpose-led environment in which to maximize the potential of the Hotel Chocolat brand which is already so beloved by consumers,” Andrew Clarke, global president of Mars Snacking, said in a statement.
What the Hotel Chocolat Acquisition Could Mean for Mars
Interestingly, Hotel Chocolat’s extensive store presence and reputation as a key gifting destination contribute to this playing out as a strong brand acquisition for Mars, Nick Gladding, lead analyst of retail at GlobalData, tells CGT.
Hotel Chocolat also carries a wealth of industry knowledge, and its vertically integrated structure from cocoa plantations down to store operations provides great control over product, he said. “It also benefits from longstanding employees who have worked at [Hotel Chocolat] since the beginning. These structures and employee knowledge will be crucial to retain to not lose the values and uniqueness of the brand.”
That’s not to say that this deal, as with all M&As, doesn’t come without risks. Though Hotel Chocolat is a household name with a loyal customer base, their premium price points are currently a deterrent to shoppers at a time of high inflation and squeezed disposable incomes, said Gladding.
What’s more, Gladding, who said the acquisition is reminiscent of Kraft Food’s takeover of Cadbury in 2010, described Hotel Chocolat as being in a period of retrenchment, as they culled their U.S. operations last year to instead invest heavily in U.K. store openings. The company has invested in a new distribution center, store locations, and manufacturing in the last year, “which may have caused management to lose some focus on trading. Mars must see that there is a potential to fast track growth and improve ROI,” he noted.
“The re-jiggling of strategy over the last three years has been akin to whiplash. Structure and a clear, long-term strategy plan will be much needed to restore company morale.”
