COMING UP FAST: Crisp growth without paying for ads

COMING UP FAST: Crisp growth without paying for ads - Kettle Foods has found that its Chips brand goes down best with no advertising. But will the crunch come when the supermarkets start pushing their own-label versions? Sheri Wynn reports.

Last Updated: 31 Aug 2010

Kettle Foods has found that its Chips brand goes down best with no advertising. But will the crunch come when the supermarkets start pushing their own-label versions? Sheri Wynn reports.

Time was that when you'd had a few too many down at your local, you'd be lucky to get a bag of stale pork scratchings to soak up the booze.

Since then there have been a variety of new contenders in bar-snacks, although rarely more adventurous than salt-and-vinegar crisps or dry-roasted peanuts. But now there are designer crisps. Usually found in upmarket or urban bars and pubs, they're large, gourmet hand-cooked crisps that come in exotic flavours such as creme fraiche or salsa with mesquite.

Kettle Chips were the designer crisp trailblazers and first appeared in Britain in the late 1980s in select bars and delis. Now, they're in pubs, bars, supermarkets, the corner shop - you see them everywhere. What you won't see is an advertisement, on a billboard, across a double-page spread or in a 30-second TV slot. Yet UK sales turnover now approaches pounds 50 million.

The UK snack market is approaching pounds 3 billion a year, of which the potato crisps segment is worth a third. This has shown little growth for 10 years - apart from the premium hand-cooked chips market (overwhelmingly occupied by Kettle Chips), which itself is growing at 30% year on year. Kettle Chips may not be advertised, but their maker must be doing something right.

Kettle Foods isn't the only company to have grown bigger without advertising - an expensive business where famously only half your efforts work ... but you never know which half. Like Kettle, PizzaExpress is a company with a keen and loyal customer base. Its 'word of mouth since 1965' strapline is printed on napkins and place settings, and the company prides itself on a reputation for quality and value. Its customers, ABC1s, comprise 15% of the UK population and visit the restaurants 12 times a year on average; 85% of visits are repeat business.

Two years ago, the introduction of PizzaExpress product in Sainsbury's supermarkets resulted in an immediate 35% share of chilled pizza sales.

'It was one of the best launches ever of a retail product,' says the pizza-maker's chief executive David Page. 'Over the first 18-month period, restaurant sales were eroded by retail sales. However, restaurant sales have now rebounded massively, because we've got this whole new customer base that knows about our product and how good it is.'

Sales may have been strong last year, yet PizzaExpress made its first-ever foray into advertising in October, when it launched a campaign using national press ads, cross-track advertising on the London Underground and roadsite billboards.

Is Page pleased with the way it's going? 'No. We're embarrassed by the idea of advertising,' he says. 'But we thought we ought to try it, as we haven't done it for 35 years. It doesn't seem to have had any real impact - probably because our customers have been coming to PizzaExpress for a very long time. We're not advertising beyond the M25 and our sales are still very strong outside this area. We'll probably go back to not advertising again.'

Unlike PizzaExpress, Kettle Foods has not been tempted to advertise.

At its HQ in Norwich, joint MD Josh Layish arrives in a T-shirt and open-neck shirt and goes off to make some coffee. There's an easy, friendly feel to the place.

The company has its origin in America. When Cameron Healy founded Kettle in Oregon in 1978, selling roasted nut and trail mixes on Interstate 5, he had no working capital and possessed only a beaten up van. But he had a vision - of a world in which baby-boomers matured into a market that demanded quality lifestyles, and would be willing to fork out up to pounds 2.39 for a bag of crisps.

By 1982, Healy had developed Kettle Chips, the only hand-cooked potato crisps in the US, pioneering what is now a multi-million dollar segment of the market. A six-week motorcycle trip with his son around Europe to research the 'natural food' market brought him to Britain in 1987. Together with partner Tim Meyer, Healy began production in Norwich in 1988 in the corner of another crisp factory.

Kettle outgrew its original facility and in 1998 moved to new premises.

For the past few years, annual growth has been 30%, and exports to continental Europe are growing even faster.

Layish believes Kettle's business model is unique. And because it is privately owned, it has enormous independence. 'We don't get blown off course with a quarterly results issue,' he says. 'Financial disciplines are essential, but they can't form the vision and direction for the company. We're not a volume-driven business.'

The high quality of the product apparently encourages a loyal fanbase.

'Our customers are prepared to pay for premium products,' explains Layish.

'They're ABs - foodies and prosperous. Typically they haven't yet had kids, or they're older and their kids have left home. They watch little commercial television and want to be communicated with intelligently.'

He describes the philosophy of not advertising as intuitive, understanding the way people like to discover a brand. 'We do a lot of communication with our customers,' says Layish. 'Any firm with a message like ours has to communicate it, but that's not the same as advertising in the traditional, 30-second commercial sense.'

Kettle's communication has three pillars: direct mail, a web site and a programme of shows and exhibitions. Its database of 40,000 names is growing as enthusiasts sign on at food fairs, county shows, English Heritage Concerts, the BBC Good Food Show and events like the National Wedding Show. Its recipe book and a quarterly booklet with questionnaire have proved a fantastic direct marketing tool. So specifically targeted is this marketing that Kettle regularly has a 60% response rate. An 0800 enquiries number and the Kettle Chips web site lend support.

'We've put a lot of work into the web site,' says Layish. 'It's a big part of our communication and of trying to enhance our message intelligently. People love the brand. We communicate directly to people who care. They'll pass on that message to others.'

And no advertising doesn't mean no PR. In 1999, Kettle Chips took on Communications Plus, a PR agency specialising in food and drink, to handle all the company's communications.

Like PizzaExpress pizzas, Kettle Chips have been selling well in supermarkets.

But although Kettle Foods is aiming for high levels of sales at the major supermarkets, it's keen that this should not be the first place where people discover its product. Whereas you might once have come across Kettle Chips at the local deli, you'll now find them in the upmarket retail environments of Coffee Republic, All Bar One and Ha Ha's, as the exclusive product on offer.

But what of increasing competition from supermarket own brands? 'We're conscious of this, but we believe we can stay ahead on quality and innovation,' says Layish. 'Our seasonings are second to none.'

But will good seasonings be enough to keep Kettle Chips on top in the face of a potentially mortal threat? It's a subject on which Layish will not be drawn, but it's clear that Kettle Foods will have to put up a strong fight against own-label rivals.

This might need a more aggressive marketing approach than it has used until now. With 30% growth from a firm that seems genuinely happy, what else could Kettle do? Observes Phil Teer, head of planning at new-wave ad agency St Luke's Communications: 'Kettle Chips is an innovative product with a modern pack, but we live in accelerated times. Things that are fashionable and contemporary one year can go unmodern very quickly. With Kettle, it's about the relationship between the brand and its audience, building that audience and creating a deeper and better relationship. The key factor is how contemporary that relationship will be in two or three years.'

Teer suggests building a strong online community, much like the Friends Reunited web site, along with the branding of a television programme.

'They could create a strand of programming around Kettle or its audience - like a deli-culture.

'I associate Kettle with the home,' he elaborates. 'Kettle parties or events, at venues such as the NFT, would enhance its out-of-home role and deepen the relationship in a contemporary way. You'd look to ensure that Kettle is a part of peoples' lives in a way that reflects how they're living it. People are smart. They look behind the brand and see that it's not some big corporation, but a small team who believe in what they do. That's a marketable quality.'

Layish is unconvinced. 'Of course there's potential for a more targeted message, but we believe it's not a sufficiently rich message. We communicate a lot of information, but the more we have pulled back from volume-chasing, promotional activity, the faster our acceleration in growth has been.

We've seen real organic growth. If you have people who are passionate about natural products or the ethics of a company, it becomes a natural network.'


- Create an unsurpassed and desirable product.

- Know who you are and believe in what your company stands for. Deliver results, but not at any cost.

- Build a real emotional link and sense of ownership for your brand.

- Nurture long-term relationships: communicate with your customers and treat them with respect.

- Benchmark regularly on your customer response. Answer each complaint individually.

- Be patient and have the funds to last while you build up word-of-mouth trade.

- Keep your relationship with customers contemporary.

- Explore other avenues - marketing, PR and exhibiting at trade shows can all be as effective as advertising.

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