Following the excesses of Valentine’s Day, Mother’s Day and Easter, Britain’s chocoholics don’t miss an opportunity to indulge in their favourite treat.
And, as their tastes have become more discerning, suppliers have become more diverse, giving rise to a growing number of artisan chocolate businesses.
For fans of Willie Wonka, the idea of running a chocolate business must seem like a dream. But, in reality, success in this competitive sector is hard won and dependent on exceptional organisational skills.
From sourcing and storing the right amount of raw ingredients, to manning a production line and delivering the finished goods in perfect condition, efficiency lies at the heart of the artisan chocolate business.
Yucoco is an online business that allows customers to design and personalise their chocolate gifts and purchases. Founded by three chocoholics and backed by a Virgin Start up loan and mentoring support, the company is now in its second year of trading.
They currently outsource production to a chocolate manufacturer who handles the orders taken directly through the company website.
“This means that although we are only using small quantities of ingredients, we can benefit from his [the chocolate manufacturer’s] quantities of scale,” explains co-founder Sophie Frost.
“One of the biggest benefits of working with this chocolate manufacturer is that he has built up a solid relationship with our chocolate supplier.”
“The cocoa market is a volatile one and the price can vary a lot month-on-month,” says Frost. “Our manufacturer fixes the chocolate prices at the beginning of each year, which means we have no price fluctuations to contend with, which in turn helps with the our cashflow forecast.”
When the team launched their business early in 2014 they had considered the idea of setting up their own production facility, but were deterred by the high costs and significant risks.
Frost says: “We may pay a higher price per unit for our manufacturer to create our chocolate bars for us, but right now it is more efficient to keep our overheads low while we grow as a business. At some point in the future, when we know we can really benefit from economies of scale, we may reconsider.”
In 2013 when Mike Peates founded Basingstoke-based Owow Chocolates, which makes branded and personalised chocolates, he had his own production facility – in his own kitchen. That put the onus for efficient supply and storage firmly on his shoulders.
“We are very lucky with our chosen suppliers as they all deliver within 48 hours,” he says. “When we first started this wasn’t too much of an issue as the number of orders didn’t warrant buying huge stock.
“However, since moving to commercial premises and producing higher volumes, we can be confident of getting the supplies we need should a large order suddenly come in.”
This also allows you to maintain a stock level that is suitable for the amount of space you have, which, when you are working from home, may not be that big, he adds.
Distribution is another area where there is no room for inefficiency. Sophie Frost says: “The most efficient and cost-effective way of sending our chocolate parcels is via Royal Mail. We don’t need to log each parcel, saving us time, our parcels arrive within two to three days of posting, and we have designed our packaging to fit within their ‘large letter’ size criteria, and through our customers’ letterboxes.”
Because Owow Chocolates caters to a mainly B2B market, Peates needs a variety of mailing options.
“Customers might want cellophane wrapped or boxed gifts, so we have to store a number of different types of mailing boxes. Around 65% of our storage space is taken up with packaging materials, and it is the most costly area of the business.”
Peates’ advice to other chocolate entrepreneurs is to send themselves a parcel through the post so that they can see how well it travels – it provides a good insight into how goods are being received by their customers.
Another option is to set up a shop and sell the chocolates direct, as chocolatier Bianca Marton now does.
Five years ago, Marton left a corporate career to set up a home–based business specialising in making chocolates that are dairy free. As demand outstripped the capacity of her kitchen facilities, production was relocated to premises in Brentford, London. This doubled up as a basement factory and ground floor chocolate shop.
Director Jeremy Nicholas, a regular customer who joined the business last year, said: “We sell a lot of chocolate online, but since we opened the shop last November sales have really soared.
“Dairy-free chocolate is clearly an in-demand niche market, and having a physical shop in a nice location, where people can come in, enjoy a coffee and buy their chocolates, with the reassurance of knowing they have been made here, has made a real difference.”
Several times a month the basement factory is opened up to the public for chocolate workshops, creating an additional revenue stream.
Regardless of the model, there are challenges that virtually all chocolate firms must overcome; not least the dramatic peaks of seasonal demand around Christmas, Valentine’s Day, Mothers Day and Easter.
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