Can Red Lion Foods really create a mainstream household staple brand and give £30m to the armed forces, as it’s promised, asks Amy Golding

In a five-month offensive since its launch this May, Red Lion Foods has generated £8.5m and donated £100,000 to armed forces charities selling ham, sausages, bacon and sliced chicken.

It's been an astonishing opening campaign for the cause-related startup. But it's just the start, MD Andrew Gidden promised this week, as he launched a far-reaching rollout of the brand to comprise 82 grocery staples including orange juice, ready meals, bread, puddings, tomato ketchup and confectionery with more on the way.

Gidden is targeting sales of £40m within the year, and £80m by May 2012. And he's expecting donations from post-tax profits to soar to £30m in that time.

While donations will be given to a number of charities, he explains - the Soldiers, Sailors, Airmen & Families Association and the Royal British Legion, as well as Support our Soldiers, Help for Heroes, the Gurkha Welfare Trust and the Sir Oswald Stoll Foundation - the appeal of Red Lion isn't hard to see.

"Red Lion is giving every person in the UK the chance to regularly say thank you to the Armed Forces," Gidden explains.

And helping him achieve his ambitious goals are both multiple grocery retailers and suppliers. The first listings of the original, limited range, back in May, went into Tesco, Sainsbury's and The Co-op. Further listings of a wider range of SKUs will begin this month in Waitrose and Morrisons. "We have received a lot of support from our suppliers. Retailers ripped up their rulebooks and introduced our products into stores outside normal range review cycles."

And supplying Red Lion will be more than 20 major suppliers including Arla, Cranswick, Hovis, Del Monte, Weetabix, Daniels Chilled Foods, Typhoo Tea, Westler and Tangerine Confectionery.

So what are Red Lion's chances? Will this work? Or is Gidden being a tad ambitious?

One thing in the start-up's favour is experience. Gidden has held senior sales roles at RHM, Unilever and Cadbury Schweppes, and formulated the concept last November while working as sales director for John West.

And all the senior team at the Reading-based start-up have strong track records in the food industry, including marketing director David Wilkinson, sales director John Hunter and commercial director David Coles.

"We have no ties to the armed services. We are food, not charity experts," Gidden adds.

The strategy it adopts is also going to be key. The brand was originally set to focus exclusively on meat lines, says Wilkinson, but the team decided a wide range of high-volume multi-category staples would better assist its rapid development. The lines cost from £1 to £4.99 in price.

"We wanted products people could spend money on every day. In under five years, we will be a fully established brand," Wilkinson claims. "I can see us still being in the market in 10 to 20 years and I don't see the cause changing."

Above-average prices
The focus on own-label-dominated staples could help Red Lion Foods establish a really positive brand preference, says Jossie Clayton, consultant at The Value Engineers.

While the original ownership of Duchy Originals may have been a divisive cause (see boxout), "compassion levels towards the armed forces are high. It is the right time to capitalise on this. And the company's cause is mirrored in its offering; everyday products, for everyday people."

But success is by no means guaranteed, she adds. "Red Lion Foods is asking for 100% penetration and a 52-week average spend. No new brand can expect this."

Another issue is quality, says Kate Waddell, MD of business brands at Dragon Rouge: "Even the most charitably minded consumer will balk at unconditional giving if the food on their plate doesn't deliver."

Gidden agrees: "So many charity brands out there are actually really poor quality food. We want to be recognised first as a high quality food brand and second as a charity brand." Red Lion has employed a technical manager to monitor and maintain product quality, he adds.

With no budget for marketing, shelf standout will also be key. And Gidden says feedback about the brand identity and packaging has been "really positive".

"We have been told Red Lion looks like a well-established brand. Our charity banner on the front highlights the fact we give money to armed forces charities."

But one expert said Red Lion didn't so much have an "established" feel as "resembling an own-label range from the 1970s".

Waddell agrees. "Red Lion feels familiar as a brand name, and resonates as a cause. However, it should take care not to become wallpaper, and the current identity does not necessarily shout its difference."

With no budget for large-scale marketing to support its rollout, the team is relying on in-store and PR activity. So far it is working a treat, says Gidden. As well as a big story in The Sun this week, the brand has already gained TV exposure through recent Sainsbury's ads, which promoted it among products with 50% price reductions. And Gidden says it will be a combination of factors that get people to buy into Red Lion.

"A key reason we have generated high sales figures already is because of the half-price deals that were run on our ham product. We are realistic about what motivates customers. We need to make sure our products are less expensive than the headline brands in their categories," he adds.

According to Red Lion, retailers including the Co-operative, Tesco and Sainsbury's also plan to run big product pushes around Armistice Day next month.

"The retailers and the charities will share the company's marketing voice," says Clayton. And she adds: "Red Lion may just have created a circle of virtue. Assuming the products are good enough, it is potentially a win-win-win situation: for the brand, the charities and the retailers."

Does charity pay? Sometimes...
Newman's Own
Co-founded by the late Paul Newman, the Hollywood actor, Newman's Own gives all its post-tax profits and royalties to charity. Since 1982, it has donated more than £190m ($300m) to causes in a number of countries.

Duchy Originals
Launched by the Prince of Wales in 1992 to help small farmers and to raise money for the Prince's Charities Foundation, Duchy's rapid expansion across multiple categories resulted in heavy losses. After failing to make donations for two years in a row, Waitrose licensed the brand from last September in return for financial support.

Innocent Drinks
Donates 10% of its profits each year to rural development. But it was unable to make donations in 2008 owing to losses. Cafédirect: Over the past five years, Fairtrade drinks brand Cafédirect donated £3.7m more than half its profits into the businesses of its grower partners as part of its Gold Standard Fairtrade policy. Cafédirect works with 39 producers in 13 countries.

Seriously Good Sauces
A cooking sauce brand launched by Comic Relief in September 2009. The brand has raised £200,000 for the charity in the last year and recorded sales of more than £2m [launch to w/e 8 August 2010, Kantar].