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Wed 22nd Feb 2017 - Update: Business rate rises capped in Scotland, Hotel Chocolat results
Scottish government caps business rates rises for hospitality sector: Around 8,500 pubs, restaurants and hotels in Scotland will have a rise in their business rates capped at 12.5% following protests to the Scottish Government, the finance secretary has announced. Derek Mackay made the announcement at Holyrood following sustained pressure from business groups over proposed rate increases. Three out of ten businesses in Scotland are facing a rise in their rates following the first revaluation since 2010. A revaluation was due to take place in 2012 but it was postponed by the Scottish Government. Some of the firms were facing increases of more than 100%. Mackay said: “This is the first business rates revaluation since 2010 and takes account of the changes in property values during the economic recovery. It is conducted by independent assessors appointed by local government. Although councils retain all the revenue from business rates and have the power to offer rate reductions, it has become clear that there are some sectors and regions where the increase in rateable values is out of kilter with the wider picture of the revaluation. I have listened and decided that we will act nationally to tackle the impact. Hospitality businesses, such as hotels and pubs, across Scotland will see rises capped at no more than 12.5%, recognising the concerns that have been raised with me over the scale of the increases and the valuation methodology which sets them apart from other sectors. In addition offices in Aberdeen and Aberdeenshire will see any rise capped at 12.5% in recognition of the effect of the drop in oil price on the local economy.”

Hotel Chocolat reports progress as it grows cafe estate: Hotel Chocolat has reported it now has ten shops plus cafe sites, giving it the opportunity to flex its customer offer for each catchment. Sales grew 14% to £62.5m in the 26 weeks ended 25 December 2016. Profit before tax was up 28% to £11.2m and underlying Ebitda was up 27% to £13.7m. Angus Thirlwell, co-founder and chief executive of Hotel Chocolat, said: “This has been another period of good progress for Hotel Chocolat with strong growth in both sales and profitability. The critical Christmas period was very successful, helped by good availability, popular and innovative new ranges and significantly increased digital transactions. We have strong plans in place for the key spring seasons of Mother’s Day and Easter and are confident of further progress. I am pleased to report continued progress for the Hotel Chocolat brand during the 26 weeks to 25 December 2016. Revenue in the period grew by 14% (12% on a proforma basis) and profit before tax for the period increased by 28%. Hotel Chocolat delivered growth across all channels, benefitting from improved seasonal ranges including new gift hampers, which encouraged customers to “trade up” to higher price points. The business remains focused on the three key pillars of its growth strategy: We opened ten new stores in the period and completed one relocation. Of the new stores, seven included variations of our Hot Chocolat-led cafe offer. The modular design of the cafe allows us to tailor the offer to the site and the catchment; for example our new store at Euston station includes a takeaway-only cafe, whereas our new store in Worcester includes 50 seats and a separate space for tasting experiences. The group also signed a further lease on a 1,500 sq ft unit in a prime location on Buchanan Street in Glasgow, which will open later in 2017.Significant capital investments at our factory were completed in September, on time and on budget, this increased manufacturing capacity by 20%. This increase enabled the group to produce more stock and thus maintain strong availability right up to the end of the Christmas season. Improved efficiency supported a gross margin increase of 0.6 percentage points. Digital revenues, comprising website plus subscription club, grew 11% overall. The website delivered a 23% year-on-year growth driven by a strong increase in customer numbers and increased average transaction value. A new website launched in January 2017 and initial indications are encouraging with mobile conversion increasing significantly, the new site is faster and dwell time has also increased. Subscription club sales declined 6%, while operating profit increased. New customer recruitment activities into the club have been scaled back whilst the model is being improved and reformed around the new website, which launched in January 2017. The next phase of the Tasting Club evolution will improve the online customer experience and integrate product despatch into the central distribution centre, rather than outsource. A new subscription clubs team is now in place to add focus and drive behind this important channel, with good growth opportunities ahead. This is the first reporting period for which Hotel Chocolat Estates Limited, Saint Lucia (HCESL) was part of the group for the full period. Development of a new visitor attraction is progressing well and expected to open in 2018. The group has a Cocoa Spa in Saint Lucia and also sells a range of Cocoa Beauty products. Currently these products represent less than 1% of total sales. The group has entered into a joint venture with its chairman Andrew Gerrie to further develop and grow this category. The group owns 30% of the venture “Rabot 1745 Limited” and Andrew Gerrie holds 49%, with the balance held by other parties. It is envisaged that the venture will operate as a low cost start-up, with the goal of developing an enhanced beauty product range with a view to growth in the medium to long term. Since the end of the period, trading has continued in line with expectations. The plans for the key Mother’s Day and Easter seasons build upon the successes of Christmas, including improved gifts and children’s ranges. The pipeline for new stores is encouraging with the new formats providing increased flexibility to adapt to different locations. We are in the process of finalising our next set of capacity and capability investments for our production facility in order to ensure we can both meet our growth aspirations and improve efficiency in the years ahead. The transition to the new website happened on time and now provides us with exciting growth potential. The headwinds facing all retailers in the UK are widely projected to drive input cost inflation, however the group seeks to mitigate these headwinds through a combination of vertical integration, UK-based manufacturing, and currency hedging. A strong differentiated brand that offers great products and customer service, priced as an affordable luxury also provides further mitigation, giving the board confidence in the group’s continued progress.”

Entries for beer and cider awards leap 25%: Entries to the International Brewing & Cider Awards 2017 have leapt by 15% on the previous competition, held in 2015. This year’s total is comfortably past the 1,100 mark, with ciders up by 30% on 2015, beers up by 12%, and entries received from 50 countries. Brewers and cider makers are now sending their products – draught and smallpack – to Burton-on-Trent, where judging takes place on 7-9 March. Medal winners are announced on 10 March, and the Championship winners in ten categories are announced at a presentation luncheon in April. Ruth Evans, director of competition organisers Brewing Technology Services (BTS), said: “It’s good to see entries to our Awards take this impressive upwards step, in terms of total number, geographical reach and appeal across all sectors, from regional microbrewers and artisan cider-makers right up to multi-nationals. We also received entries from many producers and brand owners who haven’t taken part in the competition before, which reflects the excellent reputation that the Awards have built among the global brewing and cider making communities. We’re especially pleased with the increase in cider entries. We reintroduced cider to the Awards in 2013, after an absence of some decades, and cider makers have been keen to take part. Ours is now, we believe, the most international of all the cider competitions held around the world. The three new classes we introduced to the beer competition elicited a lot of interest, endorsing our belief that there was a need to showcase these new, emerging styles.” The new beer classes were: sour beer, zero gluten beer and extra strong beer (ABV of 10% and above), while the cider competition includes two new classes of flavoured cider/perry or pear cider: one for fruit flavoured cider and one for ciders flavoured with other ingredients. In addition, a new ‘speciality ciders’ class accommodates ciders made using innovative or atypical process, such as ice cider, barrel-aged cider or apple win. The new classes were added to ensure the Awards are always up to date, reflecting current market trends and product innovation as well as brewing and cider making traditions. Judging for the 2017 Awards takes place from 7-9 March in Burton-on-Trent. The competition is unique in requiring that only working brewers and cider makers may join the judging panel. This criteria and the depth of experience of the panel, combined with a ‘double blind’ system for judging and the consensus approach to assessing the entries, has given the competition a reputation for a robust and fair judging process. The overall championship winners in 10 categories are unveiled at a presentation ceremony held at London’s Guildhall on 26 April which is attended by medal winners and others from the global brewing and cider industries. 

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