The chocolate scene in Japan is rumored to be undergoing a bit of a shift in its big premium chocolate brands. Godiva chocolate owner, Yildiz, is reportedly exploring the possible sale of its Japan business in a deal that could fetch as much as $1.5 billion, according to sources.
The Godiva brand sells luxury chocolate through boutiques in more than 80 countries around the world. Godiva’s Japanese business alone has revenue of around $350 million a year.
Yildiz is one of Turkey’s biggest conglomerates, and in addition to Godiva, it owns the McVitie’s biscuit brand. The company purchased Godiva in 2007 for $850 million.
Japanese people love their chocolate
Japan is the world’s sixth-biggest chocolate market, according to Euromonitor International, with an estimated 2018 retail sales of $5.2 billion. That is 5 percent of the world’s total in chocolate sales.
In fact, according to the Chocolate and Cocoa Association of Japan, more than $500 million is spent on chocolate by Japanese consumers on Valentine’s Day each year. It is a tradition in Japan for the women to buy the men chocolate on Valentine’s Day. The obligation also includes buying for colleagues and friends, making it a very expensive day for women, but very profitable for chocolate retailers.
Japan’s reputation for innovation extends to its chocolate, with Nestle selling hundreds of KitKat variations, such as green tea, soy bean and citrus-flavoured chocolate.
Premium chocolate is seen as an indulgent treat, so it is less price-sensitive than other luxury items. Therefore, it is more profitable for retailers in that line of work.
More than $500 million is spent on chocolate by Japanese consumers on Valentine’s Day each year
Hotel Chocolat is branching out to Japan
Hotel Chocolat is planning to expand its brand by opening shops in Japan and the US later this year. The British chocolatier, which boasts 110 stores in the UK and some in Denmark, has ambitions to become a global brand like Godiva.
Co-founder and CEO, Angus Thirwell, wants Hotel Chocolat to become a global leader in premium chocolate. In addition to the expansion abroad, Thirwell believes there is still room for the brand to grow in Britain.
Business is certainly doing well at home. For the year ending July 1, the company reported a pre-tax profit of £12.7 million ($16.6 million), which was a 13 percent increase on last year.
Looming Brexit is having an effect
While business may be good, many companies are already feeling the effects of Britain’s imminent exit from the European Union. With six months until the UK is set to leave, businesses have been impacted by the fall in the value of the pound. For Hotel Chocolat that means it’s making raw materials more expensive to source.
However, the company has offset the added expense with increased scale and improvements to productivity. The company manufactures 97 percent of its product in the UK and will continue to find ways to improve its efficiency.
The chocolatier is confident that it will have success with its expansion to these global markets as many Japanese and American consumers shop their stores in London and online.