Integration cuts costs at Gressingham Foods
For Gressingham Foods, the UK’s leading retail duck producer, expansion has been an ongoing theme.
Established as Green Label Foods by Miriam and Maurice Buchanan in the early 1970s – the name change to Gressingham came in 2006 – the company has always been on the lookout for ways to grow sales.
The business was initially based around broiler production, but moved into duck in 1989 when, in the wake of the salmonella in eggs scare, the family decided to diversify its income stream.
It started taking 500 Gressingham ducks a week – a relatively new breed based on a cross between a wild mallard and a pekin – processing them for wholesale at the family farm at Debach in Suffolk.
“Our big breakthrough came when we started doing portions instead of whole birds,” says William Buchanan (below left), who now runs the business with his brother Geoffrey (below right). “No one else was doing it at the time and sales grew.”
The next lift came in 1996 – the year BSE hit the headlines and the year the company bought the exclusive rights to the Gressingham breed. “The duck market got a bit of a lift from BSE, and we also took the opportunity to launch into retail.”
But the biggest step up came in 2007 when Gressingham bought the Kerry Foods duck factory at Redgrave, near Diss, swiftly followed by Manor Farm Ducks. The two deals more than doubled annual sales to £67m.
“Since then we’ve grown organically and now turnover £97m,” says William. The vast majority of this is raw duck, dominated by fillets, though the company also does turkeys, geese, guineafowl and game.
But the past 12 months have been a real challenge, despite the success of a rebranding and marketing initiative (see opposite), as growth in the overall duck market has slowed and feed costs have escalated.
“This in turn has made it difficult for us to fund promotions in supermarkets,” says William. “Combined with the lack of consumer confidence, we’ve had to look at ways of cutting our operating costs.”
Following a lengthy review, last month the directors took the difficult decision to restructure processing, moving year-round production to Redgrave and retaining the Debach slaughtering and processing facilities for the peak Christmas trade only.
“Both our factories have been running at less than full capacity,” explains William. “Our site at Redgrave has all the capacity we need for most of the year.”
The move is expected to result in the loss of some 90 full-time jobs out of a total 550 company employees, though some slaughtering and butchery jobs may move from Debach to Redgrave.
To deal with the changed market circumstances, Gressingham is also planning to scale back some of its promotional activities in retailers.
“We work in partnership with our customers and they do recognise the feed cost issue,” says Geoffrey. “But they also have to deal with the fact that their customers’ pockets are being squeezed and consumer confidence is low.
“Supermarket promotions will continue in 2013, but will not be so ‘deep-cut’.”
Despite this, the brothers insist that the duck market is not in a bad place and will continue to expand, albeit at a slower rate for the foreseeable future.
There is also scope for further export growth, especially whole duck to Denmark and Germany, and by-products such as feet and tongues to China. Last year the company did £5m in exports and was in the Sunday Times top 100 for export growth.
Contractor view: Integration from breeding stock to retail pack
Gressingham is a fully integrated business, controlling duck production from breeding stock to retail pack.
The farming division trades as Green Label Farms, with two hatcheries, 10 breeding units and 15 production farms. It also has 22 contractors spread throughout East Anglia.
One such business is at Gosbeck Hall, where Alistair Turnbull has one barn of 10,000 ducks, which fit in well with his 140ha of arable and 1,500 pigs.
Gressingham provides the day-old ducklings, feed, technical advice, veterinary input, catching team and transportation, while Mr Turnbull supplies the labour, water, gas, electricity, straw and the building.
He is paid a fixed rate per bird, less any rejects, with the price calculated to deliver about a 10% return on investment.
“We put this building up in 1999 and had paid it off in less than 10 years,” he says.
Ventilation is entirely natural, with side inlets and a ridge outlet. The birds are brooded under canopies for about 10 days before they are given the run of the shed, with chopped straw added daily.
Like most of the supplying farms, the ducks are reared to Duck Assurance Scheme standards, rather than Freedom Food. This means they drink from nipple drinkers, but are also provided with troughs from 21 days. These are covered with a grill to allow the birds to get their heads in the water, but not to actually climb in.
The ducks are kept for 42-45 days and fed a 22% starter pellet, then an 18% grower pellet.
Maximum stocking rate is 17kg/sq m, FCR is put at about 2.3 and mortality comes to 4%. Target slaughter weight is about 3kg.
Marketing
By any measure, duck is a niche product, accounting for just 0.5% of total meat sales in the UK.
But a three-pronged approach to marketing has helped Gressingham improve brand awareness and lift sales from the supermarket chill cabinet.
“As the main supplier to retailers, it was obvious that, if we were going to grow the category, we would have to do it ourselves,” says marketing director Stephen Curzon.
Consumer research two years ago revealed that, while 51% of consumers had eaten duck in the previous 12 months, just 7% had bought duck for home consumption.
The research also revealed that of those who had bought it, very few did so on more than one occasion. And even those consumers who did a lot of home cooking were wary of using duck. “The challenge was to overcome that resistance, to extend the cooking styles beyond just roasts and reposition duck as a regular treat, rather than just for special occasions,” says Mr Curzon.
The company came up with a new approach based on branding, recipes and new product development.
Branding
“We did not want to lose the premium product people tend to associate with Gressingham duck, but we did want to appeal to a wider range of consumers,” says Mr Curzon. “The solution was to introduce the ‘one, two, three’ concept on front of pack, giving three very simple steps on how to cook the product. Consumers can then flip it over for the more detailed instructions.”
There is already 61% brand awareness among adults of Gressingham duck, so the familiar black-and-gold colouring was just tweaked and the branding carried into other products, including cooked meats, aromatic duck, guineafowl, poussin and quail.
Recipes
To appeal to a wider audience, the company has worked closely with the website Greatbritishchefs.com to develop a range of new recipes, and has also majored on ways to cook duck on Gressingham’s own website. The two platforms now have more than 60 duck recipes between them.
Web traffic has quadrupled in the past 12 months as a consequence of the new strategy.
Gressingham has also done more recipe booklets and leaflets, and is using Facebook and Twitter to raise awareness. In particular, it is keen to move consumers from whole ducks to portions.
New products
The third leg of the marketing strategy is new product development, and last September the company launched a new convenience range, based on two fresh duck pieces and a ready-made sauce.
Boozy Duck features two breasts with a blackberry, redcurrant and port sauce; Tangy Duck comes with an orange, red pepper and chilli sauce; and Sticky Duck includes two duck legs with a sweet chilli sauce. “We’ve tried to be informal with these products, to appeal to a younger, wider audience.”
The new marketing initiative seems to be working, with sales up 8.5% in the past 12 months, though this rate has slowed to 3.9% in the past three months.
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