Article: Cooking Sauces & Marinades -- January 2009
As of 2007, the cooking sauce and marinade market accounted for $3.3 billion in sales, and according to the recent “Cooking Sauces & Marinades--U.S., April 2008” report published by Mintel International, the market is poised to achieve some $4.3 billion in sales by 2012.
Contributing to the market’s growth is its generally inexpensive price. On its own, this fact might not be sufficient to drive sales, but coupled with the rising cost of dining out, consumers are looking to expand their options for at-home cooking.
Cooking sauces and marinades allow those with limited cooking skills to prepare more diverse meals without new equipment or a large time investment. Also boosting the popularity of these products is their availability through a wide array of channels, ranging from the inexpensive (club stores, mass merchandisers) to the more sophisticated (specialty stores, restaurants). These products are also increasingly available online, at sites such as cooksshophere.com.
Segmenting the Sauces
Mintel divides the cooking sauce and marinade market into three key segments: wet sauces, dry sauces and ethnic sauces. According to Mintel and Information Resources Inc. (IRI), the wet sauce segment accounts for more than half--$1.3 billion--of cooking sauce sales at food, drug and mass merchandisers (FDM), ex-cluding Wal-Mart.
Wet sauces, including the likes of barbecue sauces, Worcestershire/steak sauces, bottled marinades and liquid gravies, play directly to consumers’ need for convenience--requiring little to no preparation. However, from 2005-2007, sales of wet sauces at FDM grew just 1.8%, as private label products became more prevalent. The competitive prices of private label products are particularly attractive to consumers and (at least in the short term, in the face of current economic struggles) will continue to play a major role in the market.
Dry sauces (dry seasoning mixes) achieved FDM sales of $587 million in 2007 but have seen sales slow, losing to more convenient, ready-to-use items. Dry sauce mixes that require additional liquids are likely to continue losing favor to easier-to-use items.
Interest in ethnic and regional American cooking continues to rise, in part because of consumers’ increased exposure to different foods through travel and restaurants. Consumers are better educated about food and are more inquisitive; the popularity of the Food Network, adventure travel and cooking magazines illustrates consumers’ interest in both food and travel.
As such, Mintel’s report separates out sales of ethnic sauces (soy, teriyaki and other Asian sauces, as well as Mexican sauces). In 2007, ethnic sauces amounted to $330 million in FDM sales, up from $292 million in 2002. While the typical “ethnic” flavor profiles--Chinese, Mexican and Italian--are well-represented in the cooking sauce market, manufacturers can expand offerings by looking beyond the typical.
According to Mintel and the National Association for the Specialty Food Trade’s (NASFT) 2008 “State of the Specialty Food Industry” report, specialty manufacturers recently cited South Africa and South America as having growth potential for new ideas and flavors. Flavor notes such as tamarind are beginning to move into a number of food segments, suggesting possibilities for innovative cooking sauce flavors.
Cooking sauces and marinades compete against themselves within the category--a cooking sauce can double as a marinade and vice versa, dry rubs can be used to make marinades, and ethnic sauces can be used in multiple ways. In addition, they face external competition, from products such as soups and salad dressings, which can often be used as replacements.
Rising Costs a Blessing and a Curse
Competition from foodservice outlets, both in-restaurant and takeout, has taken a hit in 2008, as the economy worsens and consumers cut back on dining out. As more consumers turn to in-home eating to save costs, the opportunity emerges for cooking sauce manufacturers to partner with or co-brand restaurant sauces for in-home usage and consumption, allowing consumers to enjoy restaurant tastes from the comforts of their own home.
In fact, according to Mintel’s exclusive consumer research, conducted in February 2008, 46% of consumers were preparing more meals at that time than they did the previous year. At the same time, 28% were buying more prepared foods than they did last year. Cooking sauces, which combine the participation of consumers with the benefit of pre-made convenience, are positioned for success.
However, the introduction of many private label cooking sauces has slowed sales of major manufacturer brands, as consumers trade down in an effort to save money. In addition, competition for shelf space at supmarkets (which account for just over half of all sales) is high. Most supmarkets focus on national and store brand items as their major product mix, with specialty, regional or local SKUs resigned to a more limited number of product facings.
Specialty and natural stores, gourmet stores and online sales, along with small, regional or local manufacturers, accounted for just less than 48% of cooking sauce sales in 2007. Although specialty cooking sauces have been extremely successful--according to the “State of the Specialty Food Industry” report, between 2005-2007, sales of shelf-stable specialty sauces increased 19% (to $863 million), while sales of refrigerated sauces increased 28% (to $494 million)--as consumers strive to cut costs, these higher-priced items will likely be among the first eliminated in favor of more affordable options.
Mintel’s research also found that 61% of consumers like to experiment with new recipes. Many times, recipes from magazines, particularly higher-end/gourmet magazines, use exotic ingredients that are not available in traditional grocery stores and must be preordered. Pre-made sauces or sauce mixes that allow consumers to replicate these recipes without higher-end items may fare well.
Highly Fragmented Market
In FDM sales, market leader McCormick holds just a 13% share, while Kraft lags behind by only one percentage point. At the same time, private label products account for about 10% of total sales. The market’s variety of sub-segments, ranging from dry rubs to barbecue sauces to soy sauce, makes it hard for one manufacturer to stand out. The growing popularity of regional brands in some segments also makes it hard for a single national brand to retain control of any one segment.
Kraft leads other big names in the wet sauce segment with its popular A1 and barbecue sauces. However, from 2005-2007, Kraft, along with Heinz, Clorox and Campbell Soup Co., all saw shares decline, while smaller, niche players have made inroads.
Privately held, Chicago-based Sweet Baby Ray’s barbecue sauce is currently the top premium barbecue sauce in FDM and is the fastest growing in supmarkets. Sweet Baby Ray’s has moved beyond its regional origins to become a national brand, more than doubling FDM sales from 2005-2007.
McCormick controls nearly 50% of the dry mix segment, a position solidified when it acquired the Lawry’s brand from Unilever in 2007. McCormick’s success is based partly on its innovation in new cooking trends, such as “make-in-bag” cooking, as well as its continued launch of new products with emerging ethnic and regional flavors.
Trends Driving Innovation
One of the strongest attributes of cooking sauces is their convenience. Providing ready-to-use products that help consumers spend less time in the kitchen and more time enjoying the meal is key. According to Mintel’s Global New Products Database (GNPD), 35 of the 292 new cooking sauces launched in 2007 boasted a “convenient” claim.
With the average American spending just over a half an hour a day on meal preparation (including cleanup), products that make basting/marinating even easier will continue to appeal to consumers. Analogous to “salad spritzers” in the salad dressing category, cooking sauces that can be sprayed or pumped directly onto meat or vegetables have potential appeal as both convenient (no need for measuring cups or mixing bowls) and healthy (users can easily control amount used).
In addition to the convenience factor, the other four top new cooking sauce product claims related to health and quality--kosher, all-natural, no additives/preservatives and organic.
According to Mintel’s analysis of the “Simmons National Consumer Survey” (NCS), 81% of households use cooking sauces, and 40% use gravy and sauce mixes, down slightly from 2003 levels. In February 2008, Mintel conducted an online survey to better understand consumer usage, preferences and beliefs about cooking sauces. Despite the slight decline in usage seen in the Simmons NCS, nearly half of all respondents to Mintel’s exclusive consumer survey see marinades as a pantry staple.
Among those who prepare at least half of the meals eaten in their households, 80% marinate meat or vegetables, and 69% use packaged seasoning mixes to prepare meals and sauces. The youngest group (age 18-24) is the most likely to both marinate food and use dry mixes. These respondents likely rely on the convenience of prepared sauces and packaged seasoning mixes to save time in meal preparation and offset more basic cooking abilities.
Young cooks are the most likely to use store-bought, ready-to-use marinades--a trend that continues through age 44, a turning point when store-bought and homemade marinades are used evenly. Maintaining these younger customers will be key to future growth in the cooking sauce market.
Among those who use marinades and/or seasoning mixes, there is a stark difference in flavor preferences, depending on age. Mintel’s survey found that older respondents are more likely to be conservative or traditional in their flavor preferences, while the youngest users are the most likely to embrace spicy/hot flavors. Understanding the extent to which consumers are willing to experiment with flavors--and then pushing the envelope a little further--may gain new customers or allow for flavor line extensions.
Indeed, as shown in Mintel’s “Cooking Sauces and Marinades--U.S., April 2008” report, when choosing new marinades, younger consumers are more interested in ethnic flavored products, suggesting strong growth possibilities for the ethnic cooking sauce segment.
For the over-65 set, “better-for-you” products have particular appeal, as some 31% are interested in trying products with these claims. Additionally, nearly half of the 65+ group agree that cooking sauces/marinades have too many artificial ingredients. Between 2008-2013, the over-65 set is forecast to grow some 13.5%, increasing in size by more than 5 million, suggesting a strong growth opportunity for healthier cooking sauces.
Natural products offer appeal across all age groups, with more than 40% of respondents to Mintel’s survey concerned about cooking sauces having too many artificial ingredients. However, one in five also says they will only use a store-bought marinade, if they have no other choice. Convincing consumers to choose prepared marinades and/or seasoning mixes will depend on providing the health benefits, flavor profiles and convenience consumers are seeking.
Being both convenient and relatively inexpensive, cooking sauces and marinades are positioned for continued growth in the market. Price and variety have contributed to increased sales of these products over the past six years and will continue to support growth. While competition heats up, products that deliver the flavor profile consumers want, at a reasonable price, will find the most success.
Fully utilizing co-branding and co-marketing opportunities will also contribute to growth. While some co-branding efforts already exist--KC Masterpiece & Lay’s KC Masterpiece-flavored barbecue potato chips, for example—there is room for more co-branded products. Additional expansion with restaurant brands will provide another outlet for growth in the market and provide a competitive advantage over lower-priced private label offerings.
This article contains information from the Mintel report “Cooking Sauces and Marinades--U.S., April 2008.” Please visit http://reports.mintel.com for more information or call Mintel at 312-932-0400.