A premium proposition is going mainstream, says Liz Hamson
This time last year, Paddy Klein and Ed Caporn were wondering if they were making a big mistake. After jacking in careers as management consultants to set up Klein Caporn, they had just launched a premium range of pasta sauces into specialist independents and food halls such as Harvey Nichols and Harrods priced at up to £8.50 for a 450g pot.
It was a big ask to expect consumers to fork out that kind of money, however authentic the flavours and appealing the proposition of "slow food fast", the company's slogan. Klein admits they were naïve: "We realised that the price was too high to have mass-market appeal."
Yet last month, the company launched three lines - Ragù Bolognese Rosso, Chilli Amatriciana and Sausage Pomodoro - into Waitrose's 17 London stores. Early customer feedback is positive. So what has changed?
Klein, who handles the marketing, while Caporn oversees sourcing, logistics and distribution, says they soon realised they had to hit a wider market. "Through a friend, we were taken on by creative agency The Partners, who agreed that we couldn't have a sustainable business with the independents. So we came out of them and took test batches of our five sauces and went door knocking at the multiples."
Eventually, they knocked on Waitrose's door. Being Londoners, Klein Caporn had no regional food group to seek advice from, so they had to approach the retailer directly. Sheer persistence won Klein an audience with chilled and prepared foods buyer Yseult Caroff-Richeux. "I had to speak to five or six people before I finally got through to her."
She recalls: "There was naïveté on Paddy's part about how we worked. The price was a talking point. But behind the product was a good story and it was great quality." She was also impressed by the labels. "The quality values were there right away with the packaging. It looked premium - something we don't often see. That jumped out at me."
One challenge was to streamline the operation to ensure that it could handle large volumes and maintain quality. But the biggest tussle was over the price. Caroff-Richeux says: "A lot of these sauces are selling for £2. Paddy wanted us to sell it for £5. That wasn't going to work."
Even so, with a reduction in the pot size from 450g to 400g, they were going to have to take a hit on their margin from about 20% to closer to 10%. Meanwhile, Waitrose knew it was taking a risk listing a £3.99 product alongside own label lines priced more than £1 cheaper, though this was mitigated by listing only three lines, says Caroff-Richeux. "I felt more comfortable starting with three and it's easier to manage the volume."
To give the range the best possible chance, it was launched with an introductory 50p-off offer to encourage repeat purchases.
So far, things are looking good. Klein says: "A solid baseline level of sales has been achieved and repeat purchases are coming through, suggesting high customer loyalty." He is aware that any honeymoon period won't last long. Caroff-Richeux says: "If it's not working after eight weeks, you know it's not going to work."
But if the sauces take off there's no reason why they couldn't go national, says Waitrose local and regional buyer Graham Cassie. "Local and regional is a good way to develop the market. The only question is whether you can take lines at this price."
Meanwhile, Klein is hopeful that Waitrose will list its Spinach and Gorgonzola recipe, if not its Ragù Bolognese Bianco, which contains veal.
He has also hit the publicity trail and expects to get relisted in specialist independents, although he has clearly learned his lesson on price. This time it will be closer to £4.69.
This time last year, Paddy Klein and Ed Caporn were wondering if they were making a big mistake. After jacking in careers as management consultants to set up Klein Caporn, they had just launched a premium range of pasta sauces into specialist independents and food halls such as Harvey Nichols and Harrods priced at up to £8.50 for a 450g pot.
It was a big ask to expect consumers to fork out that kind of money, however authentic the flavours and appealing the proposition of "slow food fast", the company's slogan. Klein admits they were naïve: "We realised that the price was too high to have mass-market appeal."
Yet last month, the company launched three lines - Ragù Bolognese Rosso, Chilli Amatriciana and Sausage Pomodoro - into Waitrose's 17 London stores. Early customer feedback is positive. So what has changed?
Klein, who handles the marketing, while Caporn oversees sourcing, logistics and distribution, says they soon realised they had to hit a wider market. "Through a friend, we were taken on by creative agency The Partners, who agreed that we couldn't have a sustainable business with the independents. So we came out of them and took test batches of our five sauces and went door knocking at the multiples."
Eventually, they knocked on Waitrose's door. Being Londoners, Klein Caporn had no regional food group to seek advice from, so they had to approach the retailer directly. Sheer persistence won Klein an audience with chilled and prepared foods buyer Yseult Caroff-Richeux. "I had to speak to five or six people before I finally got through to her."
She recalls: "There was naïveté on Paddy's part about how we worked. The price was a talking point. But behind the product was a good story and it was great quality." She was also impressed by the labels. "The quality values were there right away with the packaging. It looked premium - something we don't often see. That jumped out at me."
One challenge was to streamline the operation to ensure that it could handle large volumes and maintain quality. But the biggest tussle was over the price. Caroff-Richeux says: "A lot of these sauces are selling for £2. Paddy wanted us to sell it for £5. That wasn't going to work."
Even so, with a reduction in the pot size from 450g to 400g, they were going to have to take a hit on their margin from about 20% to closer to 10%. Meanwhile, Waitrose knew it was taking a risk listing a £3.99 product alongside own label lines priced more than £1 cheaper, though this was mitigated by listing only three lines, says Caroff-Richeux. "I felt more comfortable starting with three and it's easier to manage the volume."
To give the range the best possible chance, it was launched with an introductory 50p-off offer to encourage repeat purchases.
So far, things are looking good. Klein says: "A solid baseline level of sales has been achieved and repeat purchases are coming through, suggesting high customer loyalty." He is aware that any honeymoon period won't last long. Caroff-Richeux says: "If it's not working after eight weeks, you know it's not going to work."
But if the sauces take off there's no reason why they couldn't go national, says Waitrose local and regional buyer Graham Cassie. "Local and regional is a good way to develop the market. The only question is whether you can take lines at this price."
Meanwhile, Klein is hopeful that Waitrose will list its Spinach and Gorgonzola recipe, if not its Ragù Bolognese Bianco, which contains veal.
He has also hit the publicity trail and expects to get relisted in specialist independents, although he has clearly learned his lesson on price. This time it will be closer to £4.69.
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