By Jill Rivkin

Ahough consumer behavior has indicated many people are eating out less and staying home more, according to Chicago’s Euromonitor International, many still aren’t cooking from scratch. Ready-meals and products that require little preparation have been in demand recently, while sales of ingredients for scratch cooking stagger a bit with “sluggish” sales, the market research firm reports. However, for categories such as sauces that do contribute to easier at-home meal preparation, there is an upside.

“The declining U.S. economy created a ripple effect which shifted food consumption from away-from-home to home-prepared meals,” Euromonitor reports. “Many consumers who were either not satisfied with the quality of ready meals, or simply could not afford to pay for their value-added features, started cooking more. The sauces, dressings and condiments category was a natural beneficiary of this trend because the products help consumers recreate the flavors with which they are familiar at a more affordable price point than restaurant meals.”

Euromonitor expects the cooking-from-scratch trend to “remain relevant” even as the economy recovers.

“People haven’t stopped going to restaurants, they’re just going less often,” asserts Doug Oaks, national accounts manager, retail, at Red Wing, Minn.-based Food Service Specialties. Given that his company services both foodservice and retail, as the pendulum swings toward one direction, you see the affect on the other very clearly, he says.

Philip Tulkoff, president of Tulkoff Food Products, Baltimore, says: “People are staying very conservative because of the economy,” he says, also pointing to what he sees moving into foodservice establishments. “We are not seeing the introduction of new packaging or flavors at the moment. People are sticking with what they know and what they’re comfortable with. Anything that would increase the cost of a product, whether it’s ingredients or packaging, is not being accepted at this point in time.”

Also, Tulkoff adds, people are eating out less often and thus “volumes are down across the board.” However, he says, “While there was a large decrease in volume over the last 18 months, we are now seeing what we hope is the bottom of the downturn. While sales are not increasing, they seem to have stabilized at current levels.”

Understanding Trends

“I think the old standby products and flavors are what people are sticking to,” Tulkoff says, primarily pointing to the foodservice market. “I’m not seeing many new products being introduced and when they are, they tend to languish. This is also being driven by the economy.”

On the other hand, Steve Fay, executive vice president at Berner Foods, Roscoe, Ill., says of the retail market, “People are still looking for new flavors and new experiences. While consumers may have modified shopping habits to some degree, the wants of the consumer have not radically changed.”

Retailers, Fay says, also want to “project substantial savings to the consumer” through larger packaging, citing a recent project where a retailer set out to provide 200 percent of the quantity for 150 percent of the cost.

“The market will prove out the theory’s accuracy or not, but the thought is that if consumers are going to consume more at home and less in restaurants that they will be willing to spend a bit more to get a lot more and then consume it more frequently,” he says.

And given today’s economy, the key word “value” has never been more telling. “People have rediscovered the value proposition in their purchases,” Fay adds. “When money is tight and doom and gloom fills the airways, people just simply start asking what is and isn’t a value. I believe smart marketers are trying to make value comparisons against emotional needs and gratification, and not nickels, dimes and quarters.”

Product Preferences

There are many influences when it comes to flavors and varieties in the sauce segment including changing demographics, ingredient availability, restaurant trends and, of course, overall consumer eating trends.

For one, as the Hispanic population continues to grow in the United States, more and more consumers have been exposed to ethnic foods and spices. For example, in the past decade Cuban restaurants and thus flavors of this cuisine have become much more popular, Oaks says, emphasizing the significance of salsa unseating ketchup as the No. 1 condiment in the United States.

When it comes to ingredients, Oaks emphasizes the importance of high-quality ingredients such as fresh vegetables, olives, capers and sundried tomatoes all contributing to growth in the segment. And comfort foods such as Alfredo sauces, he adds, have become increasingly popular and recently have outperformed the classic marinara and tomato basil sauces.

Some of the sales growth can be attributed to price increases, Euromonitor reports, as largely commodity-driven ingredients such as canned and processed tomatoes experienced booming demand abroad. The combination of less supply available for U.S. consumption and historically volatile tomato prices was responsible for recent unit price increases, Euromonitor reports.

From his perspective, Oaks says tomatoes have held steady recently because while tomatoes from the field are more expensive, decreasing fuel costs have allowed processing costs to come down. The market has “stabilized,” he says, however, pointing to the increased variability of the spice market. “Spices have increased as much as triple in the past couple of years,” Oaks says.

“In addition to the economy leading more consumers to discover their kitchens, spicier, ethnic and healthier items were the driving forces in the category,” Euromonitor reports. Spicier products, according to the firm, “migrated” from foodservice as consumers set out to recreate restaurant fare.

Another influencer on the sauce segment is the overall consumer trend to seek more education about food and product ingredients. Euromonitor cites a Boston Globe article pointing to increased enrollment in cooking classes, growth in cooking products and cookbook sales. There’s a growing interest in learning about food and garnering information about a product’s origin and health implications.

“People are reading labels, reading ingredient statements and not only reading them, but understanding them,” Oaks says. “People have become nutritionally aware.”