EXCLUSIVE INTERVIEW – Kepak

Micro snacking specialists Kepak Convenience Foods, whose bestselling, quality brands include Rustlers and ZUGO’s Deli Café, are actively redefining the category they are in and reshaping retailers’ thinking on the subject. Last Summer Kepak launched their ‘Hot, Quick & Tasty’ initiative, a raft of moves designed to enable retailers to accelerate their sales of foods eaten as ‘quick, hot meals’ and significantly boost profits from the chiller cabinet. Kepak are pledged to help retailers make the most of these products in their stores. Their latest information recalibrates the HQT category as worth £465 million and growing 5.5% annually, ahead of general grocery, used by 60% of all UK households and on track to break the £1 billion barrier by 2024 (sources: IRI, Kantar.)

DSC_0497Kepak’s ‘Hot, Quick & Tasty’ initiative gathers speed. Meanwhile Kepak continue to put their money where their mouth is with their ongoing mission to build the category, bringing out new products and pulling in consumers with innovative advertising. In 2013 they added Rustlers Hot Wraps Beef Burrito and Rustlers Noodle Pots to the range, and advertised the market-leading Rustlers and the ZUGO’s Deli Café brand on TV for eight months of the year, spearheaded by new TV commercials and sponsorships. This year Kepak are making another major investment in Rustlers, starting with a new TV campaign shifting Rustlers’ hunger solution message from ‘speed-focused’ to ‘satisfaction-focused’, while keeping the hallmark Rustlers humour.

Kepak Convenience Foods’ Marketing Director John Armstrong spoke to The Grocery Trader.

The Grocery Trader – John, we spoke last summer, shortly after you unveiled the ‘Hot, Quick & Tasty’ initiative. What’s been happening in the business since then?

We’ve taken ‘HQT’ from a good idea to put in front of retailers to a concept that’s gaining good levels of acceptance and execution in the market. We’ve been carrying out the development work that led to the new Rustlers advertising. We’ve maintained the focus on innovation across the brands: we’ve doubled the size of our NPD team and appointed a new Innovation Manager focused on additional competences.
We’ll see the fruits later this year and over the next three years. Since last summer we’ve also seen really strong growth on ZUGO’s Deli Café, up 20% in value, and in in 2014 we’re planning for ZUGO’s ex-factory volume to grow an additional 30%.

GT – UK consumer confidence about meat products in general was shaken last year after malpractices by unscrupulous companies. Presumably you have full traceability for the ingredients in Kepak products?

By law all our products have to be fully traceable. All our procedures follow this to the letter, very robustly. Where we go the extra mile is our attention to details. We take the risk element very seriously – the company brand and our individual brands cannot be damaged.

GT – What effect has Horsegate had on the micro snacking category?

The market was down for some four to six weeks. It’s now also made British and Irish beef more expensive. Looking back, Horsegate tarnished the industry and it was hugely frustrating to see it happen, but our reputation for quality, traceability and robust management systems remains as strong as ever.

GT – Let’s go back to ‘HQT.’ To recap, what does the Hot, Quick & Tasty category cover?

The Hot, Quick & Tasty category covers Micro Snacking, as in Hot Snacking products, Quick Serve Micro meals, such as pasta pots and veg pots, cooked and eaten from the pot, Micro Pastry, and Chilled Soup. These are products that can be eaten hot, prepared in under 5 minutes, ideal for the single serve occasion. They are all chilled and nothing needs to be added to them. This is the same definition we unveiled last year: there’s been plenty of innovation since, and it continues to be an active area.

GT – How far have you got with spreading the message about ‘Hot, Quick & Tasty’ to retailers, and particularly the UK supermarkets, Co-ops and convenience store chains?

We’re significantly further down the path than we expected. There’s exceptional acceptance across the board: everyone’s accepted it, and some have taken it into action, recognising it as a growth category in a low growth economy.

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GT – What support have you had from the trade for this initiative?

Tesco are the most positive. Their largest stores have fully embraced the concept: they have merchandised the sector, expanded their range and given it more space overall. The level of involvement is absolute in their supermarket estate, and their convenience estate is close behind. Tesco have seen 33% overall ‘HQT’ value growth, with one third more customers shopping the category than 12 months ago. That kind of growth is hard to come by in this climate.

GT – What about other retailers?

The Co-op has been trialling HQT since November. They have extended the range, merchandised products together and put POS in place. Sainsbury’s Online and Ocado have both adopted the concept in their groupings of hot snacks, and Sainsbury’s on-line category sales are now up 5%. We’re also carrying out focused trials with Mace, Londis and true independents, with a fully-fledged HQT environment – POS, ranging and microwaves instore – and have seen sales increases from 50 plus percent to 130%.

GT – What practical moves have you made in the last few months to help retailers maximise the ‘Hot, Quick & Tasty’ opportunity?

We’ve put out some POS kit, but it’s less about physical material and more about analysis, ranking products and planogram work. People weren’t sure where to put these things before and now they’re much more focused. Retailers have seen the logic and not needed handholding to implement it.

GT – Where will you go from here with HQT?

We’ll carry on as we are. The impact of HQT comes with proper execution. Shoppers have been getting frustrated with the way these products were presented, so we’re helping retailers merchandise products better and add to the range through NPD to enhance choice.

GT – You’re consistently big spenders on consumer research. How are consumer attitudes to quick, hot meals shaping up?

Our latest insights add a new level of depth, to keep the trade up to date on retail performance, product rankings and consumer demographics.

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GT – Coming back to Rustlers and your other brands, how big is Rustlers now in the UK in value terms? How fast are your hot snack brands growing overall?

Rustlers is now up to £85m, Zugo’s £8m and Speedy Snacks £4m. Rustlers’ growth is in line with the category, Zugo’s is up 20%, Speedy nearly 40%.

GT – What products are in the current Rustlers range and how are they performing?

The core three are still Quarter Pounder, Chicken Sandwich and Rib, then Southern Fried Sub, then Big One and Deluxe Burger with Bacon, Noodle Pots and Wraps.

GT – What are you doing to promote ZUGO’s Deli Café in 2014?

We have a big push on the back of our increased distribution, to target greater numbers of Zugo’s consumers. We’re carrying out samplings in nine cities between May and June, and we’re back on TV this autumn with advertising.

GT – You talked before about taking Kepak brands into new areas of hot snacking. What specific initiatives are you planning?

There’s enough headroom on our existing brands to carry on with them. We’ve redefined the Rustlers’ target audience from 16-24 males to 16-34s of both sexes, a total of 15 million people, 40% women. We believe Rustlers is on course to hit £125m by 2018 – as our audience matures, the opportunity trebles. Zugo’s appeal is even broader, 25-55’s.

GT – The biggest Rustlers news right now is of course the new TV advertising campaign, with the theme ‘Rustlers – satisfy your hunger monkey.’ Can you talk us through it?

The ads reflect the new Rustlers positioning, growing up without losing the cheekiness. They’re inclusive, like beer commercials – you don’t see women in beer ads but they still buy it and drink it.

GT – The new commercial moves the Rustlers message away from specific eating occasions like Big Night In to addressing the ‘need state’ for reliable hot snacks for any time eating. What triggered that change?

It goes with the audience shift – the message focus was on speed and ease, now it’s satisfaction. Rustlers still promises instant gratification, but the emphasis is more on ‘gratification’ than ‘instant.’

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GT – Will you be running the campaign on radio as well?

The focus will be on TV for the first year but maybe next year we’ll try radio. The message “Everyone has their own ‘Hunger Monkey’” will be part of Rustlers’ visual branding going forward, starting with our new pack designs, coming on stream this summer.

GT – Are you using the ‘Hunger Monkey’ in point of sale?

Yes, we’ll be featuring it in our biggest ever in store campaign, on shelf strips and barkers.

GT – Are you continuing Rustlers’ links with the UK’s gamers?

We don’t have any plans for specific activity with gamers in 2014, but we haven’t dropped the idea altogether. We’ve featured games on pack before.

GT – What about targeting other special interest groups as the Rustlers user base broadens?

We’re still targeting students, and there are elements of overlap in our current media strategy, which will get the message to them.

GT – How are your sales doing in Europe?

Belgium and Holland are still strong growth markets and we’re number one in microwaveable snacks. In Germany we had a toehold in one retailer, now we’re in three major chains.

GT – Finally, what other excitements can we look forward to from Kepak in 2014 and beyond?

We’re bringing out the new pack designs in the summer and maybe doing some more advertising. We’ve got a big focus on NPD as well, and we’ll be rolling out more products in September. Going forward we’re looking at more specific channel-based activity, including more bespoke products. And we’ll be keeping the momentum going on HQT, which we believe will continue to outstrip total grocery in terms of category growth for the next 10 years. There’s still lots more work to do, but so far so good!

Kepak

Tel: 01772 688300

www.kepaktrade.co.uk   

Twitter: @kepaktrade