Kepak Convenience Foods is embarking on a heavyweight programme of NPD and brand investment in 2011, to reinforce its position as the major innovator in the UK’s £107m hot snacking market. Kepak has pioneered the UK hot snacking business with its market-leading Rustlers and ZUGO’s Deli Café microwaveable hot snacking brands, the latter being rebranded in April from UGO’s, and Rustlers Hot Subs, launched 18 months ago.

Kepak is now embarking on a five-year plan to double its UK business by 2016, and as part of its growth strategy is investing heavily in both the Rustlers and ZUGO’s brands. NPD is set to continue: this year’s launches include the brand new Rustlers Hot Wraps and ZUGO’s Deli Café Pasta Pots, both hitting stores shortly. To find out more, The Grocery Trader went to Manchester Airport to meet Peter Jackson, Chief Executive of Kepak Convenience Foods, and John Armstrong, Marketing Director.

The UK’s busiest flight terminal outside the London area, Manchester Airport is a highly significant location for Kepak Convenience Foods: it’s the air link between their UK HQ at Kirkham, Preston and Kepak Group, their parent company in Clonee, Country Meath. And it’s also the gateway to Europe, the setting for the next chapter in the Kepak Convenience Foods story as Rustlers roll out on the continent.

Kepak is a family-owned business, backed by a strong operations and finance team, with the vision and, crucially, the resources to build markets long-term. Reflecting this relaxed confidence, Peter Jackson and John Armstrong are in shirtsleeves when we meet, and there’s no corporate presentation to ensure the trade media is on message. These two clearly eat, sleep and breathe hot snacks: they have a firm command of the facts and are completely at ease throughout our conversation.

Peter Jackson heads up the business overall: John is responsible for marketing across Europe. The other leading member of the team, who we don’t meet on this occasion, is Simon Walker, Kepak’s Commercial Director for Europe. Simon led Rustlers’ UK launch ten years ago and is expert in setting up operations and building markets.

Kepak Convenience Foods may have been built initially on one brand, Rustlers, but as Peter explains, the business behind it has deep roots.  Put in perspective, the Kepak group’s international meat operation is some five times the current size of its convenience foods business. Among their activities, Kepak exports lamb to France and beef to European countries including Italy: here in the UK it supplies meat to Hilton, OSI and other wholesalers, but not direct into retail.

Having established Rustlers as the UK’s number one hot snacking brand, with a 65% market share, Kepak Convenience Foods now has aspirations to be the EU’s largest hot snacking manufacturer. Having developed into Europe over the past four years, it’s already the biggest company of its kind in Belgium and Holland, and following recent sales drives, new retail listings have been confirmed in France and Germany.

“We’ve invested the time and the people to give us the detailed coverage we need in Europe,” says Peter. “It’s vital to go direct to our customers on chilled. The major UK multiples are actively rolling out their operations and establishing their standards there, but in various parts of Europe the retailers look to the British Isles as the benchmark in grocery and chilled, and Kepak can make an important contribution in this area.”


Europe, then, is of major importance in the Kepak Convenience Foods strategy. But for the time being the majority of their activity remains firmly focused on the UK as their biggest market. Inevitably the first question on our list concerns Kepak’s plan to double their UK convenience products business by 2016. Peter and John are adamant that it’s a highly realistic ambition.

They point to their track record of building a £100m plus category from nothing in ten years: household penetration now standing at 20% and potentially going to 30%: and driving sales by winning over more Rustlers users in general, more white-collar consumers to ZUGO’s, and recruiting more of the ‘grey’ audience to the overall Kepak portfolio. Alongside this, they talk about their plans for major retail channel development, including working with retailers to include hot snacks in their online sales plans.

Kepak’s business strategy involves what they refer to as “the 3 Is” – Investment, Insights and Innovation, which they see as interlinking rather than three separate business pillars.

“We overinvest against the industry norms,” says John Armstrong. “As category leaders we believe you have to take a driving position. Taking insight first, you need to have a depth of knowledge about the different consumers who buy our products. We’ve stepped up our spending on consumer research in the last two years, part of future proofing that we’re doing. The trends we work to are rock solid, in terms of the growth of single person meal occasions and food to go.

“We have invested heavily in our Kirkham factory, which has been expanded in recent months, and has been running seven days a week in the first quarter of 2011. We’ve taken on more staff in the first two months of the year. Unlike other companies we won’t let our asset base restrict what we can do. If there’s a product concept we want to go for, Kirkham offers us plenty of capacity for future expansion.

“We also continue to invest substantially in our brands. This is our eleventh year on TV – many other grocery brands came off air in the recession but we’ve been on screen with two campaigns, Rustlers and ZUGO’s.”

Benefiting from the Rustlers brand’s consistently high visibility, Rustlers Hot Subs has also been a big success since its introduction in the latter half of 2009. “Hot Subs demonstrates how we keep the momentum up with innovation,” John explains. “It’s tapped into consumer demand for subway sandwiches, and is now a £12m brand in its own right.” Incidentally the best selling Hot Subs line, Southern Fried Chicken is now Kepak’s second best line, with 50% sterling weighted distribution.

As part of the Rustlers brand’s continued product improvement, Rustlers burgers were given a new sauce in the second half of 2010, which Peter says has elevated the product to a new quality level. Rustlers’ lower price positioning comes into its own against the background of the difficult economic climate: “We’ve kept our pack size and price the same. We overdeliver on people’s expectations and can’t afford to disappoint.”

Kepak know their audiences extremely well. The Rustlers’ demographic is still 16-24’s, 65% of it male, many on shift work or working antisocial hours. “Rustlers products are iconic for their audience, and are always being name checked in the all important social media,” says John. Rustlers Hot Subs are similar to the main brand, but perceived as slightly healthier and have a slightly ‘older’ profile. ZUGO’s Deli Café is more geared to a white-collar, unisex audience for work time eating: finally, Kepak Convenience Foods’ fighting brand Speedy Snacks is more family oriented than Rustlers, with two burgers in a pack selling for £1.89.

The UK market for hot snacks is well developed. We last spoke to John Armstrong towards the end of 2009: since then, he says hot snacking, like much else in the UK grocery world, has seen its share of changes despite the number one grocery retailer currently not stocking Rustlers, the largest brand in the UK market.

Morrison’s, which does stock Rustlers, is now the hot snacking market leader within multiple grocers and is showing strong growth. Led by Kepak’s product range, hot snacking is seeing more segmentation, moving from a market based on a single product format, burgers, to one with multiple formats selling well. Peter Jackson believes some grocery buyers don’t have the time to appreciate the contribution hot snacking can make to their business, “so if we go in with a category focus, we can enlighten them and clear away any misconceptions.”

Peter maintains the larger retailers need to stock for ‘eat now’ and ‘eat later’: “the challenge lies outside the more disciplined stores, but where we are in the driving seat, the product is in the right place.”  The main consumer trends fuelling hot snacking growth aren’t going away, John Armstrong insists. “Part of the task of doubling the size of the category is to take buyers beyond seeing this as a single product, and making them appreciate hot snacking overall. It’s down to us as the category leaders.”

Hot Wraps are the latest Rustlers offering, reflecting the trend in such fast food outlets as McDonalds and KFC. The first two Rustlers Hot Wraps to hit the retail shelves are BBQ Chicken with Cheese and Chicken Salsa with Cheese, both with an RRP of £1.99. They are available now, initially only in multiples and Co-ops. Price promotions will support the launch, with above the line activity planned for next year.

“We’re launching Rustlers Hot Wraps aggressively, just as we did with Hot Subs,” says John Armstrong, “When our products go into the fridges on price promotion, they work. Hot Wraps’ usage is likely to have more of a lunchtime focus than our burgers, but will widen the core Rustlers consumers’ repertoire. We’re committed to giving them more reasons to buy the brand.”

Rustlers’ latest ad campaign broke on 1 March. Traditionally Rustlers’ campaign theme has been ‘1-finger food’, with the spotlight on the male gamers whose lives are built around these products. This focus is here to stay, John explains: “We need to keep pace with our audience and take the right tone of voice. For instance we’ll always have girls in the ad. Rustlers’ ads get people talking every time: they’re designed to capture the imagination and be entertaining.”

Gaming is a big part of the Rustlers users’ culture. Rustlers have well-established partnerships with gaming brands and feature them on pack. “This gives us strong entertainment credentials: our ‘Gamesafe’ sponsorship is now in its third year, and we were part of the recent successful World Gaming Record break attempt.”

Rustlers’ early campaigns were as much about establishing the product idea as the brand. These days Rustlers’ awareness is over 90% among 16-24 males, but John is not complacent: “We reflect the world our lads live in. They go to Subway and the rest, so subs and wraps are a natural fit and developing such products makes perfect sense, but burgers will always be at the heart of the Rustlers proposition.”

ZUGO’s – a brand for Europe

Just when we’ve learnt to pronounce the name of Kepak’s other brand UGO’s Deli Café without stumbling like King George, Kepak have changed it to ZUGO’s.

“We’ve tweaked the brand for the European audience so consumers in different countries can all pronounce it easily,” John Armstrong explains. “We decided now was the time to do it, ahead of a big May TV burst in the UK and Ireland.”

The current ZUGO’s products are Chicken & Pesto and Bacon & Cheese Panini, previously available in UGO’s branding, and a new one, Mediterranean Chicken, appealing to the wider European audience Kepak has in its sights. The new packaging is rolling out now, after which Kepak will be backing ZUGO’s on TV with the familiar “hand with plate coming out of the microwave” commercial from before the name change.

In a separate development, a brand new product range, ZUGO’s Pasta Pots also go into the trade this month (May). These cooked chilled products take the ZUGO’s name into the ready meals arena. The first two lines are Bolognese and Carbonara, selling at £2.49 and supplied with a fork, for added convenience and workplace enjoyment. Trade acceptance so far is strong in the top end of the convenience market, with some strong promotions lined up in key accounts. More new products based on popular recipes are in the pipeline, but Peter Jackson won’t be drawn to reveal them yet.

Living up to expectations

Given their track record there are ‘great expectations’ that Kepak will come up with something new every time, but Peter Jackson and John Armstrong aren’t stressed: “We have a very entrepreneurial culture, and spend a lot of time travelling, looking at what’s working, developing and testing new things and reviewing progress. Kepak’s still a relatively young company: we’ve got where we are through innovation, not sweating assets and turning brands into cash cows.

“On the hot snacking side we’re very focused on understanding our category in a level of detail, with products that on the face of it appear to be simple, but a lot of time and energy has gone into them. Blue sky NPD is exciting, but the NPD that pays the wages is the stuff that works.”

The initial SKUs that Kepak are taking into Europe are the core Rustlers beef range,” says Peter: “We’re keeping it simple and driving distribution first, just as when we started here. We’ve got distribution hubs in Holland and Belgium and are using external supply chain partners across Europe but we are doing the key account sales from Dublin.”

In a sceptical grocery industry, Kepak’s hot snacking proposition is a strong story all round, yet there are still some retailers out there who are unconvinced. John Armstrong’s final words for these doubters are unambiguous: “If you’re not stocking hot snacks, you should be! This is a star performing category, underpinned by solid data. In these difficult times how many other categories can you think of that are delivering this growth?” You tell them, Mr Armstrong.

Kepak Convenience Foods

Tel: 01772 688 300

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