Sauces and dressings can indulge the inner foodie in us all. And if restaurant menu choices and grocery aisle assortments are any indication, with their vast selections of spicy, ethnic and rich-tasting sauces, there are quite a few “Barefoot Contessas” and “Emeril Lagasses” out there seeking sauces and dressings to try in their own kitchens. The $15.4-billion sauce and dressing segment provides a key glimpse at what industry and culinary trends are resonating with consumers. But the biggest opportunities for brand owners may still lie ahead as packaging improvements and private label gain momentum — and conventional products decline in popularity. 

In 2007, as most manufacturers raised prices to keep pace with increasing commodity costs, many consumers decided to swap their existing cheaper brands with higher-priced specialty, premium offerings. This switch most likely accounts for the category’s 1 percent increase in sales, but 3 percent decline in total retail volume sales, according to Chicago-based Euromonitor International. Culinary and ethnic sauces are gaining momentum as people want to try new flavors and have more opportunities to sample them at increasingly popular ethnic restaurants.

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“The sauce and dressing category tends to spur innovation, primarily among the products that are most readily available to be brought to market from restaurants and that represent changes in cuisine,” says Jim Wisner, president, Wisner Marketing Group Inc., based in Libertyville, Ill. “It’s a good category to watch as a predictor of new category changes.”Diners are comfortable with the many Asian, Mediterranean and Latin-flavored specialty sauces in supermarkets because they probably first tried them at national chain restaurants, or more premium, specialty bistros. National restaurant chains often have signature items. Chipotle, for example,  is known for its spicy, gourmet salsas, and Buffalo Wild Wings offers 14 sauces for its wings, including Asian Zing, Caribbean Jerk and Mango Habanero. At Panera Bread, sandwiches are accompanied by chipotle mayonnaise, sun-dried tomato ale mustard and spinach artichoke spread, in addition to many other variations. “People are looking for more intense flavor profiles; they want Asian-influenced sauces and heat-related sauces, such as horseradish and chipotle,” says Mark Natale, executive vice president of sales and marketing at Tulkoff Foods, based in Baltimore, Md. “In the past, the trend was to be more neutral in the restaurant industry.” He notes that a larger variety of European and restaurant-inspired sauces can now be found at upscale convenience stores, grocery and boutique stores.Manufacturers also are upgrading traditional barbecue sauces to offer more kick and sophistication, due to the increasing popularity of premium grilling spices such as McCormick’s Grill Mates spice line and Weber Grill Creations spices and marinades.

New vs. Comfortable

Consumers, influenced by celebrity cooking shows and spicier cuisines, want finishing sauces to drizzle over a protein entrée. For example, they may want to provide quick elegance and a more complex flavor, which is easily accomplished with a bottled product. But in families with children, it’s a different story. Children usually aren’t as impressed with the strong flavors that parents favor or sauces that offer lots of texture from mushrooms and tomatoes. They are happy to settle for simplicity in their dinner presentation.

“Younger families want a different product than empty nesters, seniors and health-conscious consumers,” says Edward Salzano, executive vice president and chief operating officer for LiDestri Foods Inc., Fairport, N.Y. “In a lot of categories, mainstream products are more appealing to larger families with many different age groups. The younger palate, for example, appreciates flavor but doesn’t want bells and whistles.”

This factor may help explain why canned gravy remains the market leader in the wet/cooking sauces category, with a 46 percent value share, reports Euromonitor. Although canned gravy appeals to convenience-minded shoppers, it still is losing ground to Mexican and other cooking sauces that offer more variety. Indeed, the sauce category is dominated by established brands, which offer very few new product launches. This issue is expected to drag down other established — and basic — products such as mayonnaise and ketchup through 2012, Euromonitor reports in its Sauces, Dressings and Condiments in the U.S. report.

Healthy Lifestyles, Healthy Sauces

According to David Wilhoit, vice president sales for Winston-Salem, N.C.-based Golding Farms Foods, there continues to be a shift to healthy, all-natural and organic foods and beverages, including sauces and dressings. “Developing the healthier organics message is becoming a key issue for manufacturers and marketers,” he says.

Organic sauces and dressing sales shot up 18 percent last year, reports the Organic Trade Association, based in Greenfield, Mass., and there’s no reason to think the trend won’t continue. Indeed, 73 percent of Americans occasionally used organic products last year.

Ron Rash, president of The Wizard's Cauldron, Yanceyville, N.C., notes that organic customers are more willing to try new flavors and products.

“Eating organic is a lifestyle change, not a trend,” he says. “As people educate themselves, eat more organic foods and try new brands, they bring a greater sense of adventure to trying new products.”

Manufacturers also are designing new sauces to be low in fat and sodium. At Holland, Mich.-based Request Foods, Jeff Gehres, senior account manager, notes that his company manufactures sauces in frozen entrees so employees have to keep in mind how the sauce will affect the nutritional statement.

“I think brand owners are now focusing on the ‘healthy,’ ‘good for you,’ natural-type products,” he says. “The media has really pushed the trans-fat issue.” 

Moving Forward

Licensed products such as Weber Grill’s spices, KC Masterpiece barbecue sauce and even Frito Lay cross-promotions are greatly impacting the sauce and dressings category — at least, for the short term. Celebrity chefs are putting their names on products, and many companies also are putting together licensing programs with local celebs.

“The opportunities with licensed products are huge,” Wisner says. “Primarily, brand owners are coming up with products that will change or extend their position in the marketplace. There will be pretty significant opportunities to garner market share or grow the category a bit.”

Many retailers have developed a three-tiered approach to corporate brands or private label products, says Wilhoit. “The upper tier is positioned as ‘premium,’ and are usually unique formulations and have packaging that differentiate it from the national brands,” he says.

Clearly, private label is making headway into sauces and dressings. As it moves into the next generation of products, says Wisner, it won’t emulate national brands but will supplement their products, building its own brand loyalty.

The center store, however, is not expanding, so the rise in licensed and private label products poses a risk to secondary and tertiary brands. Moreover, retailers are utilizing SKU rationalization to evaluate each item they carry: Does it provide a genuine choice to customers or is there another version of this product on the market?

“How many Italian dressings do you need?” Wisner asks. “Retailers may discontinue secondary brands and replace them with private label or specialty items.”

The key is to develop products that have some staying power in the market. “When developing items you have to make sure that there will be volume and you are not following the current fad,” Gehres emphasizes.

Sidebar: Plastic or Glass

Manufacturers are using packaging to distinguish themselves from their competitors, and to make up for a lack of new product launches with conventional sauces and dressings. Using polyethylene terephthalate (PET) instead of glass has allowed manufacturers to provide more convenience for shoppers. In 2006, Heinz Ketchup’s fridge-door bottle was designed to fit nicely into refrigerator doors. Also that year, Unilever launched Wishbone Salad Spritzers, which are spray-on salad dressings, appealing to dieters or those watching their portions. In addition, many manufacturers have launched upside-down bottles for anything from jam to ketchup.

Pouches and plastic jars may be on the horizon for manufacturers, although plastic is becoming more expensive for manufacturers to use due to rising oil costs. However, plastic does reduce shipping weight and offers a good foundation for new types of labels such as full-body shrink sleeves.“Packaging is always an issue and challenge,” notes Rob Wagner, vice president of U.S. sales for Mondiv Food Products, based in Boisbriand, Quebec. “… but the industry is going to plastic.”