Montezuma’s is entering a new era under the auspices of private-equity ownership as the UK chocolate maker approaches its twentieth anniversary. Simon Harvey speaks with Bruce Alexander, who was recently installed as managing director to kick-off the next development phase.
Almost two decades since founding Montezuma’s, husband and wife team Simon and Helen Pattinson are stepping aside from the day-to-day running of the UK-based chocolate business and handing over the baton to a new management line-up.
And Montezuma’s, based in Birdham in West Sussex in southern England, also has cash in hand after private-equity firm Inverleith took a majority stake last year, the size and value of which were undisclosed. Montezuma’s has since fortified its operations and acumen too, bringing in ex-Kerry Group and Nestlé executive Bruce Alexander as managing director, along with new chiefs to steer finance, marketing, sales and digital applications, key areas identified to accelerate growth under a five-year development plan.
The centre-piece of the Montezuma’s product offering is Absolute Black, incorporating 100% cocoa, complemented by milk and dark chocolate bars, some of which are filled with truffles, and another unique proposition with ‘British pudding’ bars. The company aspires to use organic components where possible and says it is committed to a sustainability agenda in sourcing ingredients.
Montezuma’s is generating revenues of around GBP8m (US$10.1m) and has been growing at a high-single-digit pace in recent years, with aspirations, Alexander tells just-food, to achieve double digits in the “longer term”.
But how does a chocolate maker differentiate itself from all the other brands on the market?
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“It’s a huge market,” he says in an interview. “There’s plenty of room for very large players and smaller players. While we are relatively small compared with the Mars and Nestlés of this world, we are certainly not at the very small end in the GBP2m territory either.
“In the way we have differentiated, we are all about product quality. We do not compromise where we source our cocoa from, it’s the best cocoa that we can find. We are all about flavours and tastes.”
Montezuma’s has set its stall out in dedicated shops primarily centred around London and the south-east of England, and is also listed in retailers Sainsbury’s, Waitrose and John Lewis, as well as online platform Ocado. However, plans are in place to expand its customer reach by way of a “massive brand relaunch” and marketing campaign entailing changing the brand design and reviewing the product range, Alexander says.
“Once all of that materialises in September time, then we will go back into retailers with our revised proposition,” he adds. “One of my initial jobs is to see how we can expand our retail listings.”
The dedicated stores are located in Spitalfields and Kingston in London, along with Winchester, Chichester and Brighton, which are within easy reach of the capital. Montezuma’s plans to open two to three more a year, with two possibly coming on stream during the course of the fiscal year that started in June. “We are actively looking at new sites,” Alexander confirms, although for the time being, they are likely to be situated around the same region in the UK.
“In the short term, it will be in the southern half, but we would certainly look to expand further north in due course,” he says. “But that’s probably not an immediate aspiration.”
“Logistically it makes more sense for us for replenishment and so on,” he explains the rationale behind the plans. “We are still a relatively small business, so that does make sense as it’s easier for us to manage. There is plenty of scope in this house for us to expand.”
So what about other aspects of the five-year business strategy under new ownership and management?
Carl Moore was recently appointed as finance director with Debbie Epstein as head of marketing. Michael Taylor, an ex-Mondelez International managing director and commercial director, has also been brought in as chairman.
Moore’s previous experience includes cosmetics giant L’Oreal and the Body Shop, while Epstein has worked for UK-based protein snacks maker Bounce Foods and has also served as a consultant with baby-food brand Ella’s Kitchen, now owned by Hain Celestial in the US.
“We have invested in people, hence why there is an aspiration to grow on the back of that sort of investment,” Alexander says.
While expanding the customer base makes up one element of the Montezuma’s development strategy, the company is also looking to boost its online presence and enter new international markets. Taylor played a key part in formulating the five-year plan launched in January and which identified “significant opportunities in multiple areas”, Alexander says.
“It’s about taking the Montezuma’s brand beyond where it’s been for the last 18 years,” he adds. “I would say the brand is well known by a relatively small number of consumers who are incredibly loyal and keep coming back. And we believe there are many more consumers who, if we made them aware of the brand, would love it. And so our five-year plan, very simply is to exponentially grow the business.”
The online operations of Montezuma’s only account for around 5% of the business, Alexander explains, meaning it’s “relatively immature versus our competitive set, so we know there is a load of headroom in that particular space”. And overseas, the company is limited to one customer in the US, “so again we know there is headroom in that sort of area too”.
The Pattinsons were actively involved in formulating the investment strategy with Edinburgh-based Inverleith, having sold a “large” stake to the private-equity firm, Alexander says, and they will remain engaged in the business, albeit in the form of ambassadors and directors.
“There has been a huge amount of investment in marketing……and the brand relaunch is all about growing our business in all of those four areas, which is the retail trade, our online business, our retail stores and international. It’s multi-faceted and it’s not just about throw everything and see what sticks. We’ve got very clear strategies for all of those four channels.”
In the global arena, the new managing director suggests North America, Australasia and Asia are all interesting propositions, although he didn’t directly make any commitments to those markets. But he omitted any mention of Europe, which seems to be off the Montezuma’s radar for the time being.
When challenged over any aspirations within Europe outside of the UK, Alexander responds: “There might be some opportunities in the short term, but we think that probably the Commonwealth nations are probably more preferable. Clearly, there are many European countries who are excellent at producing chocolate – Switzerland, Belgium and France to name but a few. It’s not to say it’s not possible, but we think there are other opportunities that might be probably preferable in the short term.”
However, Montezuma’s is in the process of building contacts “in a number of different countries” with a view to acting as agents for the company, he reveals.
Like most reputable chocolate manufacturers around the world, Montezuma’s is committed to limiting the environmental impact on the planet from extensive cocoa farming practises, which in many cases have led to deforestation, and stirred speculation of slave labour among certain producing countries and companies.
So Montezuma’s has a strong sustainability agenda, and, according to Alexander, it will shortly be making an announcement with respect to corporate social responsibility, or CSR.
The company sources its cocoa from around the world, mainly Central America, he confirms, and is seeking to look at other certifications than the Fairtrade International system, a non-profit organisation that promotes fair-trading practises including decent prices for farmers, better working conditions and sustainability initiatives.
“We aspire to go beyond Fairtrade to be honest,” Alexander explains. “We buy a lot of cocoa from the Dominican Republic … we don’t buy any product from Ghana and Ivory Coast simply because there are issues over there with forced labour and slavery, and consequently we don’t buy any product from there at all. In terms of sustainability and CSR, watch this space. We will have some new news in the next two to three months.”
Montezuma’s also strives to be an organic chocolate producer where possible as long as it can source appropriate ingredients “that meet our criteria”, which isn’t always the case and is why the company’s range is not fully organic at the moment, he says.
So what would be the company’s unique proposition if it was to expand into Europe? Alexander reverts back to the 100% cocoa Absolute Black range, which he says includes a hemp and sea salt variety, a comment that threw up an unexpected question of any plans for the nascent, yet fast-developing CBD market, or cannabis-infused products?
It’s an area where Montezuma’s new majority owner Inverleith has already invested via a majority stake in UK-based hemp food and drink brand Good Hemp last summer. But it remains to be seen if the category will become an option for the company now headed by Alexander.
“We haven’t got CBD at this point, but Inverleith has also invested in Good Hemp, so there’s a natural cross over with that business as well,” he says.
Ultimately, Montezuma’s hopes its chocolate bars will stand out from the crowd in whatever new markets the company chooses to enter, and retain its element of being “fun, unique and different”, as its managing director describes it. Those are attributes imbibed by Simon Pattinson, who always sought to come up with unusual names for the products, Alexander says.
Summing up his new role and the aspirations of Montezuma’s, he adds: “For me it’s really exciting. We are investing a huge amount of money in marketing that has never been invested before. We think we have a great proposition and hopefully consumers will love it. There are some big targets ahead but I think they are eminently achievable.”