Kshocolat - a brand worth saving?

The administration of Kshocolat, a Scottish brand that was well liked but never quite managed to make the cut through with consumers it needed to in order to survive, has been on the whole treated with sadness by marketers.

The company will close after over six years in business and mean the loss of 25 jobs across its shops in Glasgow, Edinburgh and London.

Formed in 2003 by CEO Simon Coyle, the brand aimed to sell ‘stylish’ and ‘luxurious’ chocolates to consumers such as chilli almond chocolate and champagne truffles.

Ultimately, despite receiving investment in 2008 of £1million, the company just wasn’t able to make it work, due, in some part, to the economic conditions.

But is it a brand that is worth saving?

The world is seeing its banks being 'bailed out' by Governments out of neccessity. But what about brands that have potential for success, which consumers - albeit not yet enough consumers - actually like?

Kshocolat clearly had a great deal going for it and had created a strong concept within a very difficult marketplace.

Kenny Allan, former creative director of Third Eye Design (now Marque) which initially devised and developed the brand when it launched and continued to work with it through his own consultancy El Studio, said he was ‘surprised and saddened’ by the news.

“The initial discussions with Kshocolat were always to conceive a brand that reflected a luxury product but, importantly was accessible to a younger audience,” explained Allan as to how the brand was initially conceived.

“We needed to create a systematic approach to the design that initially would work across a range of over fifty products. Creating a consistent look was paramount and it was achieved through a combination of colour, textures and materials. The labels were also hand tipped which reflected a very craftsmanship approach.”

Nick Cadbury, creative director at branding agency Threebrand said he believed that anyone looking to take over the brand would need a full understanding of its marketplace in order to make a success of Kshocolat, but that he felt the brand’s consumers would welcome its revival.

During his involvement with the brand, Allan saw Kshocolat move from its initial focus of the luxury chocolate market, to target ‘a more mainstream’ market, a move he fully supported.

Gerry McCusker, managing director of Glasgow digital agency Dog Digital was also involved in the brand's position when his company was involved in the brand’s online presence.

He that he felt that while the product was heavily branded, the visual aspects of the brand were positioned ahead of the experiential part.

“Possibly consumers felt that the brand was too sophisticated for them, so chose to opt for a competitive product. I know that there was a strong drive to product sampling, but again the entry point may have been a little too refined a taste for the wider market,” explains McCusker when asked why the brand never broke through to the mainstream market.

“I feel they were caught between being something that was a special and infrequent buy, in a market full of frequent & impulsive buyers,” he added.

Asanka De Silva, managing director of brand consultancy Strateegia, believed that the Kshocolat brand has some interesting things to teach many brand owners, especially considering that he believed the brand lived up to the expectations created by its ‘stylish and contemporary’ position.

“A quick look at financial data of Kshocolat available publicly shows a very dismal picture. The company has failed to make any profits since the inception in 2001 despite a gross margin of approximately 44%. Although the company turnover increased significantly over the years, it does seem they’ve failed to get a grip on their cost base resulting in net losses every financial year.

“With increased competition in the modern world, it is no longer enough for companies to just develop superior brands and hope that they would make money. Marketers need to be commercially aware and be grounded in operational realities beyond their traditional communication focused approach.”

De Silva added that marketers need to be held accountable for ultimate profitability of their brands.

“The brand could still have a future under a new management if they were to take a harder look at the entire value chain from production through to consumer to create a sustainable model for future. Perhaps, this could fit well within an existing company operating in the same market or similar market that brings synergies to reduce cost base. Either way, let’s hope this isn’t the last we see of a well thought out good consumer proposition.”

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