- At-home Eating Buoys Sauces Market
- Fresh/Frozen and BBQ Sauces Drive Growth
- Dressings Flood Market; See Some Setbacks
- Purity and Allergy-free Claims Share Equal Billing
The cooking sauces and dressings sector has performed well in recent years, thanks to the recession and subsequently slow economic recovery. Since 2005, Americans have been spending more time and money on home meal preparation than just six years ago. According to Bureau of Labor Statistics data, the average amount of time people spend preparing meals increased 10% between 2005-2010. Importantly, while the amount of money households spent on food at home rose 10% during this time period, too, spending at restaurants declined 5%.
It’s not just the economy kindling the home meal-prep movement. As noted in Mintel’s “Cooking Enthusiasts—U.S., October 2011,” Americans’ growing interest in home cooking is about saving money while also improving nutrition and health benefits. More than half of home cooks believe food prepared at home is a healthier alternative to restaurants or prepared foods sold in supermarkets.
Hitting Consumers’ Savory Spot
The $3.7 billion cooking sauces and marinades market gained 25% in total U.S. retail sales during 2005-2011, according to Mintel’s “Cooking Sauces and Marinades—U.S., April 2011” report. And, while home cooking/meal preparation certainly bolstered sales, price increases also played a role. On the downside, falling per-capita consumption of meat, poultry and fish hampered sales, particularly in segments heavily focused on meat, such as barbecue sauce and other wet sauces.
Although news generally has been good in the past five years, looking ahead, Mintel expects this sector will face several competitive challenges. Some of these challenges include increased consumption of food away from home and attractive convenience foods, like frozen entrees and pre-seasoned meat, fish and poultry. As the economy improves, substantially higher ingredient prices will be passed on to consumers, possibly slowing usage or encouraging trade-down. Mintel anticipates the market will grow 19% (or 3 to 4% annually) during 2011-2015, with sales reaching $4.4 billion in 2015.
Fresh, Frozen and BBQ Sauces Driving Growth
Mintel divides the cooking sauces and marinades market into five large segments. While the total U.S. market gained 7.3% during 2008-2010, refrigerated/frozen sauces increased by 11.2%, benefiting from fresh and premium positioning. The segment also attracts health- and wellness-driven shoppers seeking foods with fewer or no preservatives. Many of these offerings are made locally and sold regionally; retailers should certainly tout this positioning since it appeals to a range of consumers. Mintel expects the segment’s future looks promising and predicts growth of 6-7% annually through 2015. Sales are expected to top $500 million in 2015.
Barbecue sauces make up 18% of the market (estimated $684 million in 2011), but that’s an increase of 10.7% from 2008-2010. Kraft Foods Inc. is the category leader. However, it struggled to keep pace with the overall segment, losing 2.6 percentage points of share to Sweet Baby Ray’s Inc.’s premium-positioned sauces. Sweet Baby Ray’s wisely uses its website, social media and its restaurants to connect with consumers. While barbecue sauce is appearing with more regularity on restaurant menus, sales growth in retail is not expected to grow by more than 4% annually during 2011-2015—in part due to Americans’ declining per capita meat consumption. Mintel expects sales will reach nearly $800 million in 2015.
By comparison, both of the two largest segments—dry sauces (i.e., rubs) and other wet sauces—enjoyed sales of $970 million in 2010 in total U.S. sales, or 26% market share. From 2008-2010, the segments grew 6.1% and 4.5%, respectively. American favorites, Worcestershire sauce and steak sauce (which lead in household penetration at roughly 50%, according to Experian Simmons) also dominate the other wet sauces segment. In terms of recent and future sales performance, both dry sauces and other wet sauces segments declined slightly in 2010-2011, but Mintel expects dry sauces to top $1.2 billion by 2015, with other wet sauces reaching just over $1 billion.
Ethnic sauces represent 19.4% in total U.S. sales, accounting for $712 million in 2010. During 2008-2010, sales gained 7.7%. With more families eating meals at home, ethnic sauces help consumers replicate favorite meals and flavors from Mexican and Asian restaurants. Plus, “kitchen fatigue” means many household cooks are curious to try new and interesting ethnic ingredients. While the segment experienced varied growth since 2005, Mintel predicts ethnic sauces to perform solidly for the next five years, topping $880 million in sales in 2015.
Dressings Sales Slowed by Nutrition Perception, Price
As discussed in Mintel’s “Bagged Salad and Salad Dressings—U.S., July 2008” (the most recent update on the salad dressing market), salad dressing sales have declined since 2005, despite the fact that sales of packaged greens have increased. Health-oriented consumers who eat large amounts of lettuce and salad greens are curtailing consumption of dressings perceived as high in fat, calories and/or sodium. The price premium for salad dressing may also mean some consumers are making their own occasionally, or simply using seasonings, oil and vinegar.
As consumers have sought less-processed, “real” food with more enthusiasm in recent years, this may also have hurt the dressings sector, since less-processed dressing innovations, by their nature, typically cost more and are higher in fat/calories than comparable processed products. While consumers might be open to paying more and eating more indulgently with, say, ice cream, this likely doesn’t sit nearly as well when it’s a savory dressing meant for a healthier meal, side dish or salad. Ultimately, Mintel expects the salad dressing segment to grow just slightly in 2011-2012 (0.3%), reaching $3.1 billion in total U.S. sales.
Sauces & Dressings Flood U.S. Market
According to Mintel’s Global New Products Database (GNPD), cooking sauces and dressings/vinegar are two of the top three subcategories within the sauces and seasonings category (which includes dry and wet applications), in terms of number of innovations launched. Since 2007, more than 2,500 new products came to market in these two subcategories. As with most other subcategories, 2009 was a year when innovation was down sharply (thanks to the recession, which led manufacturers to scale back due to costs), but the past two years have seen a steady flow of new products.
As noted above, sales growth for salad dressing, in particular, is stagnant—and has been since 2002. New product innovation is a critical component of growth in the sector, and the good news is marketers appear to be answering the call with some consistency since 2009. The concern, however, is that all of these new products aren’t resulting in a bigger bump in sales. (See chart “Sauces and Seasonings Launches, 2007-2011.”)
Positioning claims that pertain to purity (e.g., kosher, no additives/preservatives), as well as allergen-free claims that include gluten and dairy, are increasingly common on all kinds of cooking sauces and dressings. According to Mintel’s GNPD:
n In the cooking sauces subcategory, “gluten-free” and “low/no/reduced allergen” claims each appeared on more than 120 products in 2011 (vs. fewer than 20 in 2007). The “no additives/preservatives” and “all natural” claims appeared on roughly 70 products in 2011 (nearly double that of 2007).
n In the dressings/vinegar subcategory, “gluten-free” and “low/no/reduced allergen” claims appeared on roughly 40 products in 2011, about 4 to 5 times that of 2007. Meanwhile, the “all natural” claim ranks third overall in the subcategory in terms of sheer number of products with this claim, and the claim was on 26% more products in 2011 than in 2007. In both the cooking sauces and dressings/vinegar subcategories, the kosher claim ranks fourth overall and appeared on more than 20% of products in 2011 vs. 2007.
It’s no wonder a host of new products are focusing on these types of positioning claims. Premium and natural/organic condiments, dressings and marinades typically are free of artificial additives and are targeting an audience that includes those who profess to be sensitive to allergens. Premium and natural/organics in this sector have performed well in recent years:
n Gourmet/specialty condiments, dressings and marinades racked up a sizable $1.4 billion in 2010 in FDMx (Food, Drug, Marketing except) and natural supermarkets.* As the fifth-largest segment in specialty food overall, this category grew 9.7% from 2008-2010, keeping up with the overall market’s growth of 10.4%. (See Mintel’s “Specialty Foods—The NASFT State of the Industry Report—The Market—U.S., September 2011.”)
n Meanwhile, sales of natural/organic condiments, dressings and marinades reached $327 million for the 52 weeks ending July 2011 in FDMx and natural supermarkets*, growing 7.9% from 2009-2011. (See “Mintel’s Natural and Organic Food and Beverages—The Market—U.S., October 2011.”)
* Does not include sales through Whole Foods Market, Trader Joe’s or Walmart. Does not include private label sales or PLU items.
It’s clear that, as consumers return to their kitchens, they also are seeking sauces and dressings and other “fix-ups” that include restaurant- and ethnic-style flavors to maintain a feeling for the professional touch familiar in foods prepared away from home. Manufacturers are stepping up to the plate with products that focus on the hot marketing trends of convenience and health, while adhering to the demands of an informed consumer palate.
David Browne is a senior analyst with Mintel International Group, a consumer, media and market research company with offices in Chicago and London. Mintel’s Global New Products Database (GNPD) is the company’s source of global product intelligence. This article draws from Mintel’s reports, “Cooking Sauces and Marinades—U.S., April 2011,” “Cooking Enthusiasts—U.S., October 2011,” “Natural and Organic Food and Beverages—The Market—U.S., October 2011,” “Specialty Foods—The NASFT State of the Industry Report—The Market—U.S., September 2011,” and “Bagged Salad and Salad Dressings—U.S., July 2008.” Please visit http://reports.mintel.com for more information or call Mintel at 312-932-0400.