Strategic Assessment of Godiva UK (FMCG)

CHOCOLATE COMES TO ENGLAND (HISTORY)

In 1657 the first UK chocolate house opened in London; a Public Advertiser statement reading:

“In Bishopsgate Street, in Queen’s Head Alley, at a Frenchman’s house, is an excellent West India drink called
chocolate to be sold, where you may have it ready at any time, and also unmade, at reasonable rates.”

‘Chocolate Houses’ were born, but they weren’t as quaint as they sound. They were often populated by boorish
gentry, with atmosphere comparable to a modern rowdy pub on match day.

They were, however, hugely popular; in the Tatler’s first ever issue, ‘White’s Chocolate House’ – the most famous
of the houses situated on St. James’s Street in London – received a note of recommendation (“All accounts of
gallantry, pleasure and entertainment shall be undertaken at White’s chocolate house”).

As demand for drinking chocolate among Britain’s high society increased in the late 17th century, plantations in
the West Indian colonies sprung up to satisfy their hunger for cocoa and chocolate.

Back in Britain, grocers began selling the brown gold. One of those grocers was John Cadbury, who opened up his
Birmingham shop in 1824, selling cocoa which he ground himself using a pestle and mortar.

UNWRAPPING THE HISTORY OF GODIVA CHOCOLATE:

This year marks the 90th anniversary of Godiva chocolate; nine decades of pioneering pralines,
luxurious truffles and innovative confections, hand-crafted with uniformed precision and
characterful flair.

What began as a modest boutique in Brussels is now a booming chocolate-coated empire, with
450 shops across 80 countries, including the decadent chocolate café in Harrods. Since 1988,
Thierry Muret, a trained chemist as well as chocolatier, has held court as development chef,
steering the brand into a new age of contemporary design and inventive recipes.

Godiva was founded in 1926 by Joseph Draps, a master chocolatier who developed a unique
recipe for silky chocolate that poured easily into shell moulds. He chose the name as a tribute
to the bravery of the English during the bombing of Coventry. Legend has it that English
noblewoman Lady Godiva boldly rode naked through the streets on horseback, provocatively
covered only by her hair.

Spanning nine decades, the history of Godiva flickers in its ornate designs: Signature Lait, a
coffee ganache with serious panache, was created for Gone with the Wind in 1936. The dainty
confection is hand-decorated with a feather as a tribute to Scarlett O’Hara’s iconic hat. Nippon
(1972) is a rectangular, hearty hazelnut praliné encased in dark chocolate with milk chocolate
stripes, launched to herald Godiva's arrival in Japan.
The oldest of the pack is Lady Noir, which dates back to 1926; a seductive, creamy, white
chocolate ganache flavoured with exotic Madagascan vanilla, embossed with Lady Godiva
herself, scantily clad on horseback. More recent creations include the feminine Egérie Noir, a
smooth raspberry with exotic rose extract, encased in dark chocolate.

Godiva applies a fine-dining approach to chocolate; a sensual and gastronomical experience in

To celebrate the 90th birthday, Godiva has released a special box of anniversary truffles: 12
immaculately crafted mousse and multi textured truffles, housed in a ciricular box designed by
Belgian artist Oli-B.

The chocolate master has also launched G by Godiva (pictured above); a delectable selection
created using single-origin cocoa beans from Mexico. It has been created with Mexican flavours
in mind, and includes salted caramel, toasted coconut, orange and ginger and hazelnut crisp.
“When I bite into a chocolate, I want to be able to single out each individual flavour," says
Wilmots. "It’s all about back to basics right now – letting just a few high quality ingredients
speak for themselves.

MISSION STATEMENT

Godiva’s mission statement is to “go global and to promote a high quality product and service”.
Godiva chocolate is made to bring sheer delight to their customers. Their slogan sounds like:
“Look, smell, listen, feel and taste that’s what Godiva chocolate is all about.”

PRODUCTION FACILITIES AND GLOBAL COVERAGE

Godiva products are to be found in the United States, Canada, Europe, The Middle East, South-
Africa, Hong Kong, Taiwan, Singapore and Japan; distributed from the two production units in
Belgium and the USA. The US production goes out to markets in the United States. The Brussels
production goes out to markets in Europe, The Middle East, and Asian market; very soon into
South-Korea. In these regions, Godiva has developed three distribution channels: its own shops,
counters in big stores (Harrods in London, KDW in Berlin and Galleries Lafayette in Paris) and an
ever increasing network of franchisees in the United States.

The Brussels unit also supplies the fast growing sector of international travel and duty free
shops for destinations outside the EU. Godiva chocolates are to be found in the main
international airports and on board the most popular airlines. Special packaging has been
developed to respond to the specific needs of this market.
CORPORATE OBJECTIVES

Godiva’s objective is to further enhance the expansion through the opening of more chocolate
shops in the world.

In the United States, The Pennsylvania plant supplies more than 3,000 points of sale spread
across the whole North American market; ninety-five percent of the chocolate is supplied in
stores and five percent are franchises (Godiva boutiques). A number of the Godiva chocolate is
directly imported from Belgium to the Pennsylvania plant.

Additionally, it has begun franchising which is discussed below. There are currently 300 places
in Michigan where you can buy Godiva. The store locators can be in Godiva Boutiques (Total of
23 franchises) as well as fine department stores, duty free locations and other gourmet shops
that carry Godiva pralines (total of 277 stores).

CHALLENGES FACED BY THE SELECTED COMPANY:

Chocolate bars have been getting smaller in the UK, creating public outcry and even petitions (a
petition to the government was taken down, on the grounds that it’s really not the government’s
problem). Now chocolate bar sizes are threatening to shrink again thanks to several new
developments, much to consumers’ dismay, as chocolate consumption in certain parts of the UK
remains high.

The main challenges faced by the UK Chocolate industry are:

 Decrease in productivity and increased cost which makes the prices inflate
 Separation of UK from EU and its markets’
 Threat to health due to increased use of sugar giving rise to obesity in UK
 Worldwide recession
 Increase in the cost of raw material

Between these new developments, the recent recession, and rising ingredient and transport
costs, UK consumers are likely to see their favorite snacks continue to shrink. The future of
chocolate sizes and prices will remain uncertain, however, until a trade deal is struck with the EU
and manufacturers know what their costs will be going forward. Chocolate manufacturers will
need to find a balance between price, size, and sugar content that will satisfy both their needs
and the demands of consumers, and will have to keep an eye on ongoing Brexit talks and conflicts.