Wednesday January 1st 2020

 
Directorzone GRID company interview series: Matt Legon, CEO and co-founder, Gnaw Chocolate.

• The story
• Export success
• Innovation
• The future: 100% growth
• GRID co-ordinates and relationships

The story

Passion. Fun. Great brand. Awards. No debt and with 40% + revenue growth each year since its launch in 2011, “Muncharific, chompably lovely chocolate” maker GNAW CHOCOLATE has it all.

It’s a lot of fun to visit a chocolate factory, but even more fun in the company of Matt Legon, co-founder of Gnaw Chocolate, who speaks with Directorzone in between Friday afternoon production, distribution and tasting issues. There’s a tray of hand-made chocolate pieces – new ideas from the in-house chocolatiers – in the marketing department beside his office. “Here, try one. What do you think?” Well, yummy of course – like the Gnaw story.

Matt and his wife Teri set up a 7,500-square foot factory in the outskirts of Norwich with their own savings and then set out to build a chocolate business around it. “We built our first factory in 2011 without 1 single customer and thought right, now what do we do? It’s been a hard slog and we were told ‘No’ so many times, but we’ve gone from £123,000 turnover in our first year to £1.5m now.”

Isn’t that a rather competitive business to break into? “Listen, we found that the chocolate industry was boring: dark packaging to create a premium feel. There was gap in the market for something really cool, fun and quirky, with flavours, creations and concepts that people want.”

Business acumen helps of course. Matt studied Business Administration at the University of East Anglia (UEA), worked for an investment bank – Commerzbank – in the City and now sits, at the relatively young age of 35, on the board of the UEA Enterprise Fund that helps other young businesses to grow and to succeed.

Export success

The Gnaw Chocolate founders had the confidence not just to build a successful business very quickly, but also to export from an early stage. Now 50% of revenues come from exports to 23 countries. China is a relatively new addition, Scandinavia is the largest overseas market - “we sold 300,000 units in Denmark in Q4 2016 alone” – and Gnaw is currently trialling its products at 91 Casino stores in France.

“We want to keep growing, we want to work with the right partners and we want international growth.” Shouldn’t Gnaw Chocolate be a poster child for government agencies like UKTI (UK Trade and Investment)? “We think we should be.”

Gnaw Chocolate has worked with UKTI for 5 years. “I think the support mechanisms they offer are great” and some UKTI advice is “fantastic”, for example about the French marketplace. Matt, however, expresses frustration: “We as a country are now quite competitive in terms of exports and, in China and Asia, British companies are synonymous with quality. But we have to become a country that supports entrepreneurs. It’s funny how the Government pushes for a trillion pounds of exports by 2020 and then finds themselves falling behind as they cut the budgets. There are a lot of companies that could export a lot more if they just got a little more funding support.”

To illustrate the point, Matt explains that a small stand at a tradeshow typically costs £10,000 and UKTI used to cover 15% of these costs, i.e. £1500, per tradeshow for 12 shows over a lifetime for selected companies. “That could be 3 shows a year for 4 years and now they’ve just cut it to 6 over a lifetime”. He adds that there are many other countries in Europe and elsewhere that cover 100% of stand costs and which have not cut back. For example, a Turkish company at a recent show whose efforts were fairly lacklustre, but could afford to be relaxed, given that the Turkish Government covered all of their £50,000 stand costs.

Innovation

For Gnaw Chocolate, innovation is simply business as usual: how any new kid on the block breaks into a traditional industry and succeeds:

PRODUCT

• Hand-crafted. Each item of chocolate is hand-made in the Norwich factory. That’s rare: “Most UK brands use other companies to make their (mass-produced) chocolate.”
• Experimentation. “We test every day, with constant trialling of new tastes & flavours, often with flavour concepts that other companies wouldn’t dare use.” Examples of current flavours include: Mint Choc Chip, Peanut Butter, Banoffee Pie, Chilli & Lime, Lemon Meringue, Caramel Hazelberry and Cranberry + Hazelnut Nut. 
• Provenance. “We use ethical and local suppliers wherever possible….it’s in the DNA of Gnaw”. 
• New product. The company was so taken with the striking taste and dynamic flavours of Grenadian and Venezuelan chocolate, that it is now launching a new brand: Brooke & Amble - a pure chocolate with a “single origin” provenance.

MARKETING

• Customer dialogue. “We listen to our customers and what they want using Focus groups. We send new product samples to 80-100 customers and ask for feedback. The majority rules: we find that that 80-90% of people move in the same direction. It’s Important to avoid the answer that you think you want. We change all the time, we have a big social media presence and a very large database of loyal consumers. 
• Secret weapons: the Gnaw logo (with nibble marks), the silent G and Norfolk. Hardly anyone at overseas trade shows that the team meets knows where Norfolk is or how to pronounce “Gnaw”, they invariably come back to their stand intrigued and charmed by the “Gnawfolk” brand.

The Future: 100% growth

“We have a unique brand and a unique product and we are successful commercially. But we don’t want to be that big and we’re not trying to be a mass-producer”. In the next breath, Matt Legon adds that the company plans 100% growth over next 3 years, targeting £3m turnover by 2020.

Whilst developing the Gnaw Chocolate brand is the short-term priority, the new Brooke & Amble brand will play a strong part in the company’s growth as it targets up-market retailers such as Selfridges and Harvey Nicholls. This growth means that Gnaw Chocolate will start looking for a new factory within 18 months.

What about being taken over, is there an offer you can’t refuse? “Of course there is” replies Matt, but adds that the Gnaw brand has so much potential - even beyond chocolate - that it would take a lot to cede control and to forego the fun of taking Gnaw Chocolate all the way.

“There’s a greater opportunity out there and we want to work with the people who can get us there, to accelerate our growth”. What, like a Non-Exec director? “Yes, it could be”. Are there any inspirational role models that come to mind? “Yes, people like William Kendall” - the driving force behind the transformation of the NEW COVENT GARDEN SOUP COMPANY and GREEN & BLACK'S chocolate into major brands, and the chairman of CAWSTON PRESS.

It sounds like a potential marriage made in chocolate heaven…

GRID co-ordinates and relationships

Founded: 2011
Sector: Food products
Location: Norwich
Size: £1.5m annual revenues
Staff: 20+
Exports: 23 international markets ranging through Europe, North America, Middle East, Far East and Asia

Customer base (selection):
Gnaw supplies 2,000+ UK stores, including Clintons, Debenhams, Dobbies Garden Centres, East of England Coop, Fenwick, Holland & Barrett, Waitrose, WHSmith and Wyevale Garden Centres.

Suppliers (selection):

• UK distributors: Cotswold Fayre, Creme d'Or, Diverse Foods
• Cocoa suppliers: Brazil, Ivory Coast, Grenada and Venezuela.
• Solid Block: Brand Design Agency | Norwich, Norfolk.
• UKTI

Competitors (selection):

• Divine Chocolate
• Doisy & Dom 
• Green & Blacks
• Lily O’Briens
• Montezuma's