Set up in 2013 by the couple behind the Debbie & Andrew's brand, UK sausage maker Heck Foods has succeeded in becoming a national business and is eyeing expansion into its first overseas market. Dean Best spoke to one of the company's founders, Andrew Keeble, about Heck's growth, the competition in the UK and its bid to crack the Australian market.
Andrew Keeble is – now – sanguine about his first experience of owning, developing and then leaving behind his first UK sausage business.
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Keeble, alongside his wife Debbie, were the couple behind the Debbie & Andrew's sausage brand. Established in 1999, Debbie & Andrew's enjoyed early success. The couple, looking for help expanding, sold it to J&J Tranfield in 2005 and stayed on to run the business. Two years later, Vion snapped up J&J Tranfield but differences emerged between the couple and the Dutch food giant – "we lost control," Keeble says – and they left in 2012. The brand subsequently got a new owner – ABP Food Group – in 2013.
The passage of time helps but perhaps Keeble's acceptance of what happened with Debbie & Andrew's has been helped by the early inroads made by the couple's new business.
Its name is, in a way, inspired by how they felt after their departure from Vion. "That's how Heck as a name came about – as in 'what the heck?'" Keeble tells just-food. "We were forced out of the business and lost all of our autonomy in there. It was quite hard to see your brand on the shelf but we look at it now and the quality's gone. We think they'll just do what they do, they are actually moving away from premium to more mid-tier, standardised products, becoming average as a brand. We've moved on really but it wasn't easy. It took me 12 months to move on."
Heck Foods has developed into a brand with a nationwide presence and is set to generate sales of around GBP7m (US$10.7m) in its current financial year, which ends in July, Keeble says. For the last eight months, Heck has also been in the black, which Keeble says, "gave everybody a good feeling" after months of seeing "loss, loss, loss" on the company's accounts. He has forecast sales will the following year hit GBP12.5m, with consumers taking to the "young, fun" nature of the Heck brand.
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By GlobalData"We set up Heck in April 2013 specifically to engage with 18- to 45-year-olds who weren't engaged in the category in the UK," he says. "It's the incremental growth of the category that we're really good at. People who haven't bought sausages for the last 12 months are actually buying into the Heck brand."
Heck is marketed as a premium brand operating in a UK sausage category that already some well-established upmarket names – including their old Debbie & Andrew's brand and The Black Farmer – but which is a heavily-promoted market.
Keeble believes Heck can thrive against larger competitors because of its focus on building a brand. "We admire Cranswick trem and they are a brilliant business. They make really, really good products but they don't do brands. They're a plc who I admire enormously but at the end of the day they don't do brands and don't get brands. They'd probably take that as rather rude but they've had brands and just haven't invested them and they haven't worked."
Keeble says Heck has managed to attract and retain shoppers and can show its retail customers it can create growth in the category. "If you look at the amount sold on promotion last year, in sausages it was high as 70% across all retailers," Keeble says. However, he adds: "You have to do some price promotion to drive trial and that's fine. In one of our retail customers – our second biggest – we're actually selling more off-deal than we were on-deal a year ago. I read that as the promotion has worked. It'd driven trial and off-promotion and loads of people are staying with it. We're building a brand loyal shopper. We sit in front of a Tesco, Asda or Waitrose and say 'We are bringing new shoppers into your categories.' We actually grew Tesco's category a little bit last year and that was against the run of play."
Keeble does have a word of caution about the promotional activity in the sector and the wider impact it could have on the sector. "That's not good for anyone. The biggest scourge of UK retail is Aldi and Lidl because they are actually devaluing food. A lot of the big boys are watching them and I don't think they should be still watching them. There has to be a good deal in the food chain for everybody – the primary producer, to farmer, to processor, to retailer."
Heck has been steadily expanding its range, which includes chicken sausages, meatballs and burgers. Keeble claims Heck has established the chicken sausages segment in the UK and has attracted shoppers back to burgers. "We launched our burgers into Tesco last year. Sixty-one per cent of those sales was of people who hadn't bought burgers in the last 12 months."
And the business is planning a move into the vegetarian category, attracted by the number of meat-eaters who are cutting back on their meat consumption. Keeble is "hoping" Heck's first vegetarian products could hit shelves in October.
"We're not focusing on purely the vegetarian sector. A lot of people are buying vegetarian but aren't necessarily vegetarian. There's a big market there," he says. "The vegetarian market in the UK is dominated by two brands owned by one company, so there's room for a third brand to give really fresh delicious food that is different."
Heck's expansion has been assisted UK private-equity firm Panoramic Private Equity, which last year invested GBP1m in the business, securing a 25% stake. Keeble says Heck sought investment to put resources into building the brand.
"We are up against it. We are the only independent premium brand on the shelf nationally in the UK. All the rest are under the guise of big companies. The Black Farmer is made by Cranswick, our old brand is made by ABP. To actually get the brand awareness and the marketing going, we needed to have some investment," he explains. "I think looked at 300 businesses last year and invested in three. They are very, very picky. They want to invest and everybody is on the same page – we want a profitable business and make it grow quickly."
While Keeble expects Heck's top line to hit GBP12.5m in its next financial year through sales in the UK, the company has its first overseas market in its sights. Heck is in talks with three companies in Australia with a view to locally produce sausages.
Keeble declines to identify Heck's possible partners – describing them as "the usual suspects" – but expects production to start in 12 months. Australia, Keeble says, will "go" as a market and Heck wants to "get in there at the beginning".
"It's slightly quicker than we'd want and normally really do things to look at that," he says. "[But] Australia is one that is screaming out to us we should be doing something with it. We'd be looking to … use the language and the tone of voice that we use in Heck in the UK. We've got quite a lot in common in the way the Australian mkt is at the moment. They're very into gluten-free – all of our range is gluten-free – and health is a big one. There's only really one British brand operating there – The British Sausage Company – and they are very much standard bangers, they are not really doing anything."
Australia is – at the moment – the limit of Heck's international ambitions. Weighing up possible markets on paper, Keeble lists Germany – but says consumers would be unlikely to choose a non-German brand – and China but says Heck may have been too slow to target the market, to which, he adds, the UK is exporting only limited production.
"Everyone is saying at the moment you should be looking at China but there's loads of people rushing in there and business is done very differently [there]," he says. "I think we've probably been a bit slow on it. There are producers that have gone out there and grabbed a little piece of the market [but] If you look at the tonnages of UK sausages going out to China, it's small. We have to make something work well and I think Australia is a huge place. That would do me for now."
