Chocolate and Love, the chocolate firm launched by Scots e-commerce pioneer Richard O’Connor, is preparing to sell a £300,000 minority stake to its Chinese distributor as it seeks to consolidate its position in China’s fast-rising luxury chocolate and licensing market.
The firm, co-owned by O’Connor and his Danish partner Birgitte Hovmand started trading in 2010 and sells its award-winning bars of organic ethically sourced chocolate in over 35 countries worldwide. The company has two brands:“ChocStars”, a novelty gift range, and the premium Swiss-made "Chocolate and Love" bars. In recent months the firm's strategic focus has been on the high-growth but hard-to-penetrate Far Eastern markets, particularly China and Japan.
Having booked a record £336,000 in sales in August, the firm is on course to grow sales to around £1.4m in 2015, up from £970,000 last year, and is targeting £6m turnover by 2018.
Declining to identify his new Chinese partners on the grounds of commercial confidentiality O'Connor said: "They are a Shanghai company and they love our products, which are respectively their first and third best-selling lines. We don't need the investment, but they are our biggest customer and we are doing it for the sake of a closer relationship."
Perth-based Chocolate and Love is also exploring the potential of China's multi-billion pound licensing market, following interest from partners in taking the award-winning design of the brand's packaging, developed with a New York-based artist, and applying it to other products such as a iPhone covers, fabrics and wallpaper.
O'Connor has spent time researching the US market, which he said was "massively complicated."
"It's not 50 states its nine sales regions, and there are many layers of main importers and sub-distribution networks as well as hidden obligations in the contracts for example to take out advertising."
After months of research into trade credit and shipping technicalities, the duo have just dispatched their first £20,000 consignment to Japan - also a notoriously complex but highly profitable market for Western premium products - where they have signed a distribution deal with the giant Nishimoto Trading Co.
Chocolate and Love distributes "ethical and exquisite" fairly traded chocolate and has a range of seven organic bars made from cacao beans from Peru, Panama and the Dominican Republic. The firm has won 17 awards for taste and for packaging.
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