Luxury chocolatier faces meltdown

Kshocolt, which had a presence in several upmarket retailers, was yesterday placed into administration.

The company was forced to make its 25 staff redundant with immediate effect, putting paid to its "global ambitions" to transport its brand of "minimal indulgence" the world over.

Administrators acting for the firm blamed its failure on the recession.

The high costs incurred by Kshocolt's business model were also a key factor in its demise.

Unlike other chocolate firms, the company did not make its own products from scratch, instead sourcing chocolate from suppliers around Europe, before repackaging it under the Kshocolt label at its Glasgow headquarters.

As well as having its own retail presence with stores in Edinburgh, Glasgow and London, the company supplied a host of major names, including John Lewis and House of Fraser, with other stockists in the United States, Canada and Australia.

While chocolate is often regarded as being recession-proof, administrators RSM Tenon said that a fall in consumer spending had brought about Kshocolt's demise.

Nevertheless, they added that the firm had grown quickly into a well-known luxury brand with a good distribution network and a large following of regular customers.

Tom MacLennan, joint administrator, said anyone looking to take over the stock and brand should come forward.

"Kshocolt is a unique brand that has grown its variety of products and reputation over recent years," he said. "We would ask any interested parties to make contact without delay."

The business was formed in 2003 by Simon Coyle, a former accountant at drinks giant Diageo, and supplied "stylishly packaged and innovative" chocolate products.

Renowned for its unusual take on the confectionery market, the Kshocolt range included combinations of chocolate, chilli and almond, and white chocolate with lemon and pepper.

In 2008, the firm announced significant expansion plans, moving into a new warehouse and office facility on the south side of Glasgow more than ten times the size of its existing premises.

Mr Coyle, the chief executive, also pledged to boost its marketing budget from 40,000 to nearly 500,000.

However, by last year redundancies were being made, with the plans to increase its advertising spend scaled down.

According to research from Mintel, the market analysts, luxury chocolate manufacturers adopted a more prudent approach last year, with just 30 new premium products launched, compared with 65 in 2008.

James Findley, co-founder of Cocoa Mountain, the Sutherland-based chocolatiers, said he agreed with the notion that chocolate was one of those products regarded as being recession-proof, with the firm, based in Lairg, reporting a 60 per cent increase in sales over Christmas.

He said: "We have a different kind of model, in that our chocolates are hand-made in Scotland. People still want to treat themselves and look for unique products to give as gifts."

How pursuit for confection perfection can be a hard nut to crack

KSHOCOLT is not the first Scottish chocolate firm to find that the sweet quest for perfection can often turn sour.

Three years ago, the luxury chocolate boutique and tea house Plaisir du Chocolat went into administration.

The firm, which supplied leading restaurants including Martin Wishart and The Kitchin, as well as Harvey Nichols in Edinburgh and Selfridges in London, won acclaim from its well-heeled clientele, who raved about its gourmet products.

However, the company, which opened in 2000, ran into cash-flow problems over a franchise in Manchester and was forced to stop production at its plant in the Borders and shut its celebrated tearoom and shop on Edinburgh's Royal Mile.

Its former site on the capital thoroughfare has since been taken over by Cafe Truva, which specialises in Turkish food.