EXCLUSIVE INTERVIEW – Kepak

Kepak Convenience Foods, the company behind bestselling microwaveable hot snacks Rustlers and ZUGO’s Deli Café, are on a major new mission – to empower retailers to significantly increase profits from the quick, hot meals they stock in their chiller cabinets by presenting them to consumers as part of a brand new category, ‘Hot, Quick & Tasty.’

DSC_0497Kepak are realistic about the work that must be done to champion the cause and encourage retailers to maximise the potential from the ‘Hot, Quick & Tasty’ opportunity. They certainly have all the credibility they need to convince the trade to take action. First, Kepak are major investors in lifestyle trend analysis and consumer insights, which form the basis for their activity programmes. Second, Kepak’s brands continue to grow in value, up 20% in 2012: their flagship brand Rustlers is now in The Grocer’s Top 100 FMCG brands. Third, consumer awareness of Kepak’s products could not be higher – Rustlers and ZUGO’s Deli Café are advertised on TV, including some closely targeted commercials and sponsorships, for eight months out of twelve, backed by a 20% increase in brand investment this year.

On top of this Kepak have an ongoing commitment to NPD. The latest examples are Rustlers Hot Wraps Beef Burrito and Rustlers Noodle Pots. And we’re promised a further stream of exciting new products, backed by heavyweight brand support, which Kepak are confident will broaden the appeal of the ‘Hot, Quick & Tasty’ category to a wider demographic.

John Armstrong, Kepak Marketing Director, spoke to The Grocery Trader.

The Grocery Trader – John, we last spoke in September 2012. It sounds like you’ve been busy. What’s been happening in your business since then?

We’ve been seeing strong growth on our key brands, ahead of the industry. We’ve recruited 750,000 extra households who are buying our various brands. We’ve redefined the category we’re in, and we’re taking a big part in reshaping retailers’ thinking about it. We’ve achieved a landmark in becoming good citizens: we reuse all our oil, cardboard and food waste, and send nothing to landfill.

GT – Are you changing your team to reflect this growth?

We’re taking on three extra hands in marketing and innovation over the next six months; we have an extra senior person in our category resource, Roger Harrop, who is ex-Muller; and we’re putting more feet on the street in terms of sales people.

GT – Before we talk about ‘Hot, Quick & Tasty,’ I understand that Rustlers is now in The Grocer’s Top 100 brands. Congratulations! What difference has this graduation made to buyers’ acceptance of the brand?

It’s good shorthand for the buyers, and tells them they should be stocking it. It also brings us in touch with a wider range of contacts in store and makes people realise the importance of getting their range right, especially in the independents. We’ve built a level of trust among retailers in the fact that our products will sell – if a convenience retailer is chucking away out of date product, it’s money down the drain. That doesn’t happen with Rustlers.

GT – How big is Rustlers now?

Quarter-PounderThe latest IRI measurement is £86m at retail. It’s not 100% pickup because you can’t measure sales in independents completely.

GT – What are your predictions for Rustlers’ future growth?

Rustlers can only get bigger! Being this big gives retailers confidence in the brand, and justifies us going in with a core ranging policy, especially in the convenience sector.

GT – You’ve been refreshing the Rustlers range with different products. What’s in the range now?

The top three best sellers are Rustlers Quarter Pounder, Rib and Chicken, followed by Southern Fried Sub and ZUGO’s Chargrilled Chicken Panini. The latest new product is Rustlers Hot Wraps Mexican Burrito, launched on the back of Mexican cuisine’s growing popularity. We’ve also added Rustlers Pot Meals, which takes us into a new area, noodle meals. We’ve sold 500,000 units already, 10% over plan, and there’s plenty of room for more.

GT – How fast is the Rustlers brand growing?

Rustlers is growing 12% in value and volume, the second fastest mover in The Grocer Top 100.

GT – What’s driving it?

First, in the short term, we’re benefiting from distribution wins including Tesco Express last October and our London project, which is really gaining momentum. Medium term our NPD is bringing in new consumers: and longer term, we’re benefiting from changing attitudes to food, and more casual eating.

GT – How are your other brands doing?

Subs are still doing well: they are counted in the main figures for the Rustlers brand. They are firmly established, and we’ll continue to link them to what’s happening with the Subway menu. ZUGO’s was up 41% in the year to April, due to increased distribution, heavyweight sampling and a mid evening programme sponsorship on ITV2. We also have Speedy Snacks, an Every Day Low Price brand which is mostly sold in grocery, including Nisa supermarkets, Morrisons and Tesco. Speedy Snacks is up 79% in the last year. And Feasters is doing well in ASDA, where it performs a strong role backed by its own innovation plan.

GT – Let’s turn to your new initiative ‘Hot, Quick & Tasty.’ Last year you were referring to the category your products are in as Hot Snacking. Now you’re calling for retailers to present these products as part of a new, broader category, ‘Hot Quick & Tasty.’ That’s a big step. What’s prompted the rethink?

ZUGO'S-Deli-Cafe-Sampling-Campaign-2013HQT wasn’t a lightning bolt realisation: we took a step back and saw that Rustlers was part of a group of emerging products that didn’t exist 15 years ago, together with chilled soups, micro snacking and pot  meals, but appealed to a particular consumer need. We wanted to understand the needs and motivations of the consumers that bought them, and went from there to a category definition which showed how it all linked together and made sense of what was happening.

GT – You are consistently big investors in consumer insights. Can you tell us about the research you’ve done into consumers’ fridge visits and other aspects of product usage and attitudes? How important were the learnings from this research to the ‘Hot, Quick & Tasty’ initiative?

The following stats from Kantar have shaped our thinking about HQT: the average consumer makes 42 fridge visits a week, 24 cupboard visits and 7 freezer visits. That moment standing in front of the fridge at home choosing something tasty to eat, right now, is a very common experience! Likewise in store the fridge is THE place to be for fast selling food products, and retailers need to populate it with products that excite shoppers, hence ‘HQT.’

GT – What do you define as ‘Hot, Quick & Tasty’?

As we define it, products in the ‘Hot, Quick & Tasty’ category can all be eaten hot, prepared in less than five minutes and are supplied in single servings. They are chilled, and you don’t need to add anything to them.

GT – What products come under the HQT heading?

There are four kinds of Hot, Quick & Tasty products. The first, Micro Snacking, covers hot snacking products such as Rustlers and Rustlers Hot Subs. Then you have quick serve convenience ready meals, such as our Rustlers Noodle Snack Pots, pasta pots and vegetable pots, both of which you can cook and eat from the pot. Next is pastry slices, pies and sausage rolls. And finally, there are chilled soups.

GT – How big is Hot, Quick & Tasty as a category?

HQT-LOGO-COLOURIRI value the category at £450 million, over-indexing heavily into convenience, compared to standard grocery. 65% of HQT occasions are planned versus 35% impulse. ‘HQT’ products are currently used by 60% of all UK households, and the UK market could hit £1bn on today’s prices in the next 10 years.

GT – What kind of investment are you making in communicating the ‘Hot, Quick & Tasty’ proposition?

We’re doing much more than just talking about it in the trade press. Our work with the retailers’ customer marketing teams has an HQT bias, and Kepak is officially a ‘Hot, Quick & Tasty’ company, right through to our business cards. I have strategic conversations about HQT with the board, and on a European level, retailers like Albert Heijn in Holland use the same language.

GT – What changes are you calling for in merchandising at store level?

We don’t expect retailers to rip up their shelves to make way for HQT – we’re in talks to get test work in place across all channels, including Spar members and major grocers. We should have everything in place this time next year. Some retailers have already bought in – it’s easier to implement in convenience retailers, as there’s less reshuffling for them. It’s not just us pushing this, by the way – to reach consensus, we’re letting the retailers drive it.

GT – What increases in sales can retailers expect to see from merchandising these products together as you’re proposing? Have you carried out ‘live’ tests with retailers?

We ran an early version of HQT in the convenience sector before it was fully fledged, and saw 15-30% increases across the piece. We’ll be running more tests over the next few months, and we expect the more progressive retailers will achieve even better results.

GT – Have you discussed the idea of a Hot, Quick & Tasty category with the market research companies? How about the major multiples? How have they received it?

We told the research companies about our insights into consumers’ fridge behaviour. From there IRI and Kantar created an HQT database so we now have a new category, with sales that can be measured. The main people who need to hear the HQT message are the retailers, who we’re talking to on an ongoing basis. The major multiples are now on track with HQT, and we’re very pleased with how it’s been received and it makes sense to people.

GT – How close are convenience retailers at the moment to selling these products as one category? What about superstores?

Rustlers-Wraps-BurritoAs you can imagine retailers fall across a wide spectrum. Retailers really reap the benefit from HQT as a concept when the shoppers can see all the products together in the same field of vision, particularly in smaller stores, which is where ranging and signage matter most.

GT – Over the years people have grown very fond of the irreverent advertising for Rustlers. Is that going to continue?

Take it from me, Rustlers’ irreverent advertising will continue. It certainly won’t get vanilla or dull! Rustlers’ audience might be getting older, but they still like the same things, and we’ll keep them happy.

GT – Where do you see Kepak going from here?

Kepak will focus on HQT for the foreseeable future – it’s what we were doing before, but now we’ve found a name for it that helps explains what the products do for consumers. We have made a five-year commitment to HQT; we’re upping our category resource, and have brought in a new innovation manager to exploit the opportunity, with new formats and technologies.

GT – How near are you to your goal of breaking the £150m barrier?

Kepak is now worth £130m in today’s terms including Europe, and we should be there comfortably in the next two years.

GT – Finally, what are you personally looking forward to most in the next few months?

ZUGOSChickenMozzarellaPestoStdI’m really looking forward to implementing HQT and taking Rustlers to the next stage, setting new directions based on the great work we’re doing. We’re putting a major push behind our innovation, getting ahead of the pack and keeping our brands front of mind. It’s an exciting time for all of us.

Kepak

Tel: 01772 688300

www.kepaktrade.co.uk   

Twitter: @kepaktrade