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Food bonds make tasty investments

Monday, April 15, 2013 - 02:36

April 15 - A restaurant chain in London and a quality chocolate maker are offering edible bonds in return for a cash investment. Ivor Bennett reports on what is being seen as a growing trend

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It sounds, and looks, too good to be true. Free chocolate for 3 years. The catch? First you have to lend the chocolate maker some money. The company in question is Hotel Chocolat. CEO Angus Thirlwell's offering customers a chance to invest through its chocolate bond scheme. In return for cash, investors receive interest in ...well, see if you can guess? SOUNDBITE (English) ANGUS THIRLWELL, CEO, HOTEL CHOCOLAT, SAYING: "We wanted to make it innovative and obviously our currency is chocolate so it's the most natural thing in the world to pay the interest in chocolate. Although we have a great relationship with our bank, we don't want to do too much with them, particularly when they're perhaps not as supportive as they used to be." The scheme's raised over 4 million pounds, helping the business expand from 600 employees to 1000. Investors are rewarded too - the largest bond netting interest over 7%. A healthy return... but not a healthy diet. SOUNDBITE (English) IVOR BENNETT, REUTERS REPORTER, SAYING: "The interest equates to a fresh box of chocolates every month. So by the time the bond holder gets their money back, they will have had 36 of these - which is over 700 chocolates...all for free". Chocolate's not the only freebie on offer. Healthy fast food chain Leon has launched it's own scheme with even bigger returns. A 5000 pound investment yields 15% interest. This time it comes in vouchers, which must be spent in store. Finance Director Matt Jones says it's win-win for both company and client. SOUNDBITE (English) MATT JONES, FINANCE DIRECTOR, LEON, SAYING: "Even though the interest rate is linked to spending it in a Leon. If you come to a Leon regularly, there is great value to be achieved from making that investment. Much better return on your capital than you can achieve by putting it in the bank, earning point 0 0 0 0 0 0 0 of whatever percent that the banks are offering at the moment." Despite the tempting returns, Mike Cherry from the Federation of Small Businesses says there are risks. Investors aren't guaranteed to get their money back, nor any of the returns promised should the company go bust. SOUNDBITE (English) MIKE CHERRY, NATIONAL POLICY CHAIRMAN, FEDERATION OF SMALL BUSINESSES, SAYING: "I think anybody in this sector of the marketplace will agree. There does need to be some light touch regulation coming forward so that we don't have any people really going down and putting businesses off from going down this source of funding if that suits them." But despite the risk of meltdown, the bonds are proving a solid investment for now. And with customers still hungry, it's no wonder both companies are considering turning to them again.

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Food bonds make tasty investments

Monday, April 15, 2013 - 02:36