By Jill Rivkin
There are many factors influencing the sauce segment today, and some are creating a real push-and-pull situation for brand owners and manufacturers playing in this market. For one, according to Chicago’s Euromonitor, “historically high prices for oil, wheat, corn and other commodities continued to be a burden to sauces, dressings and condiments manufacturers in 2008.”
Another factor is decreased consumer spending, however that trend is buoyed by consumers focusing their food spend on cooking and entertaining at home. Unlike many other consumer-packaged-goods categories that saw significant declines, this segment reported mostly flat sales performance in 2008, Euromonitor reports. So while the down economy is forcing people to reign in the spending, the increased time spent cooking at home has offset the potential for lost sales in the sauce market.
Overall, Euromonitor reports that unit prices rose slightly as manufacturers often were forced to pass along some of their rising costs, and manufacturers and brand owners looking to grow the sauce segment were focused on flavor trends rather than “radical product innovations.”
For example, according to Corey Schiff, vice president of sales and marketing at Melrose Park, Ill.-based Tone Products Inc., “We are beginning to see an increase in our barbecue business with new flavors including pomegranate barbecue and acai berry barbecue.”
Similarly, Mark A. Natale, executive vice president of sales and marketing at Baltimore-based Tulkoff Food Products says, “We believe people are buying and using less, therefore they want more unique, high flavor profile products.”
The Assortment on the Shelf
Because consumers are being even more deliberate about their food purchases, some manufacturers say consumer purchasing patterns recently indicate distinct trends. An understanding of those trends is a message that must be relayed at the shelf by carrying the appropriate assortment.
“The sauce segment is shaking out toward two trends,” says Rob Wagner, vice president of U.S. sales at Mondiv Foods, Boisbriand, Quebec. “Economy brands for those value-conscious consumers searching for low-cost sauces during tough economic times; and high-end, upscale sauces that are restaurant quality, which consumers can use at home without spending the money at a restaurant.”
Also, Wagner adds, “Economic strain benefits private label, while constant branded promotions at $2 per unit or lower are flooding the grocery aisles.”
Private label has gained share every year since 2004, but both manufacturers and retailers have had to increase prices in response to supply pressures. Euromonitor maintains that, “The continued shift towards private label and cheaper brands will also counteract the increased sales of premium and gourmet sauces, dressings and condiments.”
The activity at both ends of the spectrum — with much less happening in the middle — reflects consumers’ interest in cooking restaurant-quality food, likely for more special meals and entertaining, while at the same time spending less on more everyday sauces.
“Casual, comfort flavors seem to be where the industry is heading for 2009,” Schiff says, also pointing to marinades that contain fruits that are high in antioxidants, as well as unique Asian and Hispanic flavor profiles.
And, of course, despite financial pressure, consumers still want healthy profiles. Often all-natural or organic products fill that need, and they have been particularly relevant in the past couple of years as organic foods moved into mainstream markets. “All-natural sauces are becoming a necessity rather than a nice addition,” says Andrew Oliver, president of Braswell Food Co., Statesboro, Ga.
“There’s a heavy emphasis on organics with all major players,” Wagner adds. “‘Good-for-you,’ healthy-style sauces are being discussed.”
