Sweet Couple Charlie Invests in Chocolate Factory

Halloren, a tradition-steeped maker of German chocolates, has unveiled plans to break into the U.S. market with the help of its new partner, Charlie Investors. A former Lehman Brothers executive is believed to head the investment company.

It has all the ingredients of a sweet comeback story:  an eastern German chocolate brand with a long tradition; a successful initial public offering; and now a new investor.

Halloren, reputed to be Germany’s oldest chocolate factory, is making yet another critical move in its 200-year-old history to remain competitive.

Chairman Klaus Lellé, who has been at the helm of the company for 17 years and took it public in 2007, has joined forces with a new investor with the aim of more than doubling sales by 2018 to €300 million ($3.7 million).

Mr. Lellé told Handelsblatt that the new investor plans to own a quarter of Halloren's shares, after acquiring 10 percent of its stock in December.

The investor officially trades as Charlie Investors, a newly founded entity based in Luxembourg that is largely unknown. Halloren has not disclosed the identities of Charlie’s principals to other shareholders.

At Lehman’s London group, Mr. Ehlert took care of commercial mortgage-backed securities worth billions. Such securities were among the triggers of the financial crisis that led to Lehman’s bankruptcy.

According to sources in the investment community, Charlie Investors is headed by the German-American real-estate investor Darren Ehlert, 41, together his brother Bill.

Mr. Ehlert is managing director of In-West, a real-estate company in northwestern Germany. He previously worked at the Dutch Bank ING and was with Lehman Brothers in London until 2005.

At Lehman's, Mr. Ehlert managed commercial mortgage-backed securities. The multi-billions dollar business helped trigger the financial crisis that led to Lehman’s bankruptcy.

Halloren's major shareholder, Paul Morzynski, told Handelsblatt that welcomes another major shareholder.

Mr. Lellé said he plans to expand Halloren's export business with the help of Charlie Investors. In addition to money, the investment group has a software provider in its portfolio that can optimize the product range in supermarket chains and contacts to U.S. retailers.

Hans-Peter Kuhmlann, an analyst with Landesbank Baden-Wuerttemberg, called the planned expansion in the U.S. “positive” because it would make Halloren less dependent on sales in its domestic German market.

In China, on average, about 100 grams of chocolate are consumed annually per person. In Germany, it’s 10 kilograms.

Halloren is caught in the mid-price range in a stagnating German market. Stagnating sales are also forcing other small-to mid-sized German businesses in the confectionery industry such as Lambertz and Haribo to look abroad.

Mr. Lellé's goal is to double U.S. sales to $20 million within two years through customized products under the Halloren brand and contract manufacturing.

In addition to the United States, he hopes to expand in Asia down the road. In China, on average, about 100 grams of chocolate are consumed annually per person, compared to 10 kilograms in Germany.

Athough big players like "Nestlé and Mondelez will dominate the Chinese market," Mr. Lellé said Halloren could still to grab a piece of it.

 

Christoph Kapalschinski is an editor on the companies and markets desk. To contact the author: kapalschinski@handelsblatt.com.

 

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