Rustlers - The Interview
The driving force in UK hot snacking
If you've been following recent developments in the convenience food market, you can't fail to have noticed the remarkable success of the Rustlers range of chilled, microwaveable hot snacks. These ultra-accessible products are proving extremely popular with people on the move, and young male consumers and their mums in particular, with their distinctive proposition 'O-tasty in 70 seconds,' highly geared to today's need for convenience.
Launched in 2001, the Rustlers brand is worth £90m at RSP and growing 23% annually, with plenty of room still remaining for further growth. The driving force behind Rustlers' ongoing success story is Kepak Convenience Foods, part of the privately owned, Irish-based Kepak Group. The Grocery Trader went to Preston, Lancashire, to meet Kepak Convenience Foods' Sales Director Peter Fazal and Marketing Director John Armstrong and find out more.
Walking round the Rustlers factory's nine-acre site at Kirkham with Peter Fazal and the factory's general manager Mick Hillson, the most immediately noticeable thing is the outstanding cleanliness of this state of the art plant. It's a very clean environment indeed. As well as the usual food factory precautions of coats, trousers and hairnets, visitors including journalists have to use washrooms and shoe baths every few minutes, and notes must be taken down with specially issued hygienic pens.
Supporting the two eight-hour shifts that work five days a week and 24 hour working at peak periods is a full time on-site hygiene crew, further reflecting Kepak's commitment to every aspect of quality. Another measure of the dedication to quality underpinning the Rustlers brand is the rigour with which Kepak addresses its environmental impact at Kirkham. It has reduced its energy consumption by 13%, water consumption by 21%, waste output by 9% and carbon emissions by 12.5%.
"We had our Carbon Trust audit in May," says John Armstrong. "The report said there were no significant areas of improvement left for us to make - in other words, the auditors found we were already on our 2010 target for climate change. When we built the factory, we consulted on environmental standards, before other people in the industry were making it a public virtue to do so."
This attention to detail epitomises the focused approach that has made Rustlers the successful brand it is today and built Kepak, the company behind Rustlers, into a worldwide force.
KEPAK - THE POWER BEHIND RUSTLERS
The Kepak business was founded in 1981 by the late Noel Keating (hence the 'Ke') and specialises in meat processing and packing (hence the '-Pak.') Still run by the Keating family, the global head office is at Clonee, near Dublin.
In 2007 the Kepak Group has three complementing elements - the Convenience Foods division, spearheaded by Rustlers; meat processing, from slaughter to delivery; and meat trading in over 50 countries, primarily exporting meat from Ireland, with overseas offices in Brazil, Paris and Madrid. Kepak has a total annual turnover of around 700m Euros and is one of Ireland's 100 biggest privately owned businesses, employing over 2,000 people.
The Rustlers story began in 2000, when Kepak decided to market a range of branded hot snack retail products of foodservice quality, based on popular foodservice propositions, to UK consumers. For the first four years, before Kirkham was set up, these products were imported from Kepak Group's plant at Glasnevin in Ireland.
Today Rustlers' UK sales are worth £90m at RSP, with a further £20m of sales in Ireland. The Kepak Convenience Foods national account team cover the grocery sector - the major UK multiples - and convenience, which embraces forecourts, c-stores, symbol groups, cash 'n' carries and wholesalers. Kepak also uses two independent field marketing companies, REL and RSS, to support its own sales force's efforts.
KIRKHAM - A CENTRE OF EXCELLENCE
Kirkham is Kepak Convenience Foods' main UK manufacturing base, supported by a smaller site at Wakefield. Management and NPD are also located here, including the technological side of the company's R&D and an organoleptic panel of trained tasters.
The Kirkham plant was a former Benson's crisps factory. The site was bought as a shell in summer '03, and 50m Euros were spent fitting it out before Rustlers production started in June '04.
Stocks of finished Rustlers products are transferred to Kepak's logistics partner Wincanton Manchester, which handles their supply chain and achieves up to 99.9% service levels. KCF's supply chain team works with individual customers' supply chain specialists, to ensure they achieve their delivery targets.
RUSTLERS - THE DRIVING FORCE
At the end of the factory tour we rejoin John Armstrong, Kepak Convenience Foods' Marketing Director. Together with Peter Fazal John is a driving force behind Rustlers' success to date in the UK and the pair are trusted with driving the Rustlers brand forward.
John was previously with Muller, in a senior marketing role. His other FMCG experience includes McVities and McCain. Peter joined Kepak from Golden Wonder. His CV includes time at Petty, Wood, Remy Martin and Kraft. John's remit is driving brand growth through product development and effective marketing: Peter's brief is building customer relationships and converting the Rustlers brand proposition into individual channel strategies and customer solutions.
The Kirkham plant represents Kepak Convenience Foods' (KCF) largest single investment to date in manufacturing, says John: "There's a similar facility for Rustlers in Ireland, but nothing as big as this."
KCF has recently been investing in product improvements. Salt and fat levels have come down, and it has reduced the additives in its cheese and sauces, and taken the hydrogenated fat out of its bread.
RUSTLERS STARTED IT ALL
"Hot snacks, the category Rustlers falls into, didn't exist when we launched the brand," Peter Fazal recalls. "Rustlers was seen as a small element within chilled ready meals, which at £2bn is a vast, sprawling category. This remained the position for some time, though individual retailers are now coming to a fuller understanding of Rustlers' potential as they see it flourishing in their stores.
"Our vision going forward is for hot snacking to be appreciated as a strong category in its own right, and an area where microwaveable and handheld products are the key performers. We see ready meals thought of as a mega category, within which is our own sub category, convenience snacking, of which we have the lion's share."
The core consumers for the Rustlers brand are 16-24 male consumers, and their mums are the prime purchasers, says Peter Fazal. It's a "massive" opportunity: "To get every retailer to sell Rustlers at the same proportionate level as our biggest account would double the brand value instantly."
Bringing more people into the market would effectively establish a new snacking destination category, says John Armstrong. He believes Kepak is "talking to fifteen percent of the potential market at the moment with Rustlers, and this could grow to sixty percent within five to seven years with the launch of different brands and products."
RUSTLERS ROARS AHEAD
Rustlers' 23% value growth is ahead of both the overall hot snacks category's 18% figure and total ready meals' growth, currently below 5%. The key driver of consumption, says John Armstrong, is the fact that 74% of 16-24 males, Rustlers' core consumer age group, currently live at home, thanks to rising property prices, and are big on snacking. "Mums want to buy their boys things they like, so we've taken this age group's favourites from the foodservice sector into the grocery arena and won over a loyal audience of mums with mature families."
Kepak has an 86% share of the hot snacks market across its Rustlers and Speedy Snacks brands, of which 76% is Rustlers, John continues. "We have Nielsen data confirming that we have seven out of the top ten SKUs in the market and that the Rustlers Quarter Pounder is the single best selling line in the ready meals category in at least one account."
Kepak has recently had success with two limited edition products, Mexican Burger and Oriental Spicy Pork Rib, which have further boosted trial and awareness of Rustlers. The brand mix for the next year will include further limited editions.
So just why are Rustlers so successful? Peter Fazal has the answer: "We've got a great tasting product that's easy to prepare, ready in 70 seconds, and over-delivers against consumer expectations. At the recent Convenience Retailing Show, everyone who tried them was impressed."
John adds: "In the UK grocery trade, there's a prevailing sense that there's only one model for growth, which is organic or healthy, but it's not the only game in town by any means! That said, we take the health aspects of our products very seriously - our overall 'traffic light' position is a lot better than people reading this might expect."
RUSTLERS' ADS FOR THE LADS
Rustlers' key marketing activity is TV advertising, backed by limited edition products and samplings to 200,000 students earlier this year and to 10,000 music fans at the recent Radio 1 Big Weekend, held on Kepak's doorstep in Preston. Rustlers are committed to raising the stakes in hot snacks advertising, with a total of £5m invested on TV over the last three years.
The recent well-publicised Ofcom rulings on TV advertising of food products to children don't affect Rustlers, John explains: "We need to be quite specific that Rustlers' ads don't target children, because we buy our airtime against the adult audience. In our view the Ofcom model seems to be messy and needs a Stage 2, but it doesn't impact on us directly."
Rustlers recently ran some saucy TV commercials, which played on the theme of the products being ready to eat in 70 seconds, and showed the young lads in the commercial being more interested in enjoying their imminent snack than enjoying their female date. This storyline raised a few eyebrows when it was aired earlier this year, but the complaints to the ASA were not upheld, says Peter Fazal: "The target audience of lads loved the ads and got the joke, and their mums recognise the 'cheekiness' as a bit of welcome humour.
WHERE TO PUT THEM?
Kepak recommends retailers dual-site Rustlers in the chilled ready meals section, for mums doing the main grocery shop, and in 'food to go' chillers at the front of the store, as a hot snack alternative for convenience customers.
Different Rustlers products perform well at different times of day, says Peter: "Sausage and Bacon Bap is ideal for breakfast; the core range is perfect for midday, and Chicken Tikka Naan is just right for early evening. It comes down to offering consumers a wide repertoire.
"With sandwiches, morning merchandising has worked well over the years in retail, but Rustlers take it further, adding life to what's all too often seen as dead space in the section at certain times of day, with a broader time window of appeal and the service benefit of a hot snack alternative."
Kepak has a newly appointed Customer Marketing Controller, Stuart Netscher, whose brief includes addressing this area, and working with retailers to encourage them to ensure that Rustlers' shelf space allocation in store reflects their outstanding performance.
Making shelf space allocation reflect a brand's share of sales is an ambition common to many suppliers, but Rustlers has a particularly strong case. In one retail account, says Peter Fazal, Rustlers has 1.5% of the SKU count in the category, but 4% of sales, and its SKUs show the highest contribution to category growth of any of the other 900 lines.
RUSTLERS ADD GIRL POWER
Rustlers isn't just something for the boys, John insists: "Admittedly the Rustlers range is overtly male-focused at present in its marketing, but our consumer research shows there is a seventy-thirty male/female split in actual 'eat now' sales in retail, with Chicken Sandwich being the SKU that sells best to females.
"Beyond Rustlers we're also looking at products that appeal specifically to working women and empty nesters. The possible options include more 'foodie' products and even some meat free products, but whatever happens we'll still concentrate on offering the hot convenient snacking proposition that the Rustlers brand has been built on. This development work will involve different formats and brand solutions."
The 'serve hot' opportunity in the retail market has been something of a Holy Grail for snacking companies over the years. "We're currently doing some work with a forecourt retailer," Peter reveals, "using Rustlers-branded equipment. The challenge is that once you serve the product hot, it attracts VAT. We're focusing on delivering consumer solutions, as opposed to being in business to supply microwaves to shops!"
The powerful prevailing consumer trends that have made the Rustlers brand so successful thus far - convenience, snacking and so on - will continue to drive the UK hot snacks market, says John. "We're keeping abreast of the trends and basing our marketing around them. We're also keeping pace with the health agenda, but we're not letting it distract us from the Rustlers brand proposition. We'll never make Rustlers organic, Fairtrade or anything like that, because it simply wouldn't fit either the concept or the audience. But we do insist on such quality principles as only using British meat."
Rustlers is currently just outside the UK top 100 grocery brands, but "it will be there within two years," says Peter Fazal, "if we get every account working properly! Our vision for the hot snacking category is all about what we can deliver in the space the retailers give us. We need to do an education job on the trade about what the category can do and how retailers can leverage it - some people haven't begun to address its potential."
John Armstrong has the final word: "With the retailers firmly behind us, we can double the size of the Rustlers brand in five years and alongside it, we can also deliver a sister brand of similar size in that time."
Kepak Convenience Foods
Tel: 01772 688300
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