A Convergence of Forces
Many factors are poised to shape the future of this market sector. For example, consumers are expected to eat more meals away from home in the coming years. According to Euromonitor International, the U.S. economic recession in 2009 pushed up the retail sales of sauces, dressings and condiments by 3%. Consumers on tight budgets cut their outside dining pleasures close to the bone and sharpened their home-cooking skills. The result was a dramatic increase in sales of sauces, dressings and condiments in that year. This picture is expected to change somewhat, as markets begin to recover.
Although the complete data from 2011 (the most recent year studied) are not in, numbers crunched for the first half look positive for restaurants, as consumers appear to be venturing out to dining establishments more often. In fact, Mintel projected a 2011 restaurant industry sales growth of 3.9%, topping off at $419 billion. This trend, too, is expected to continue.
While all this is good for the restaurant industry, it presents a challenge for the sauce and marinade sector, which benefits from people eating more meals at home. Price increases in sauce and marinade ingredients boosted sales during 2009, though volume growth lagged behind, according to data supplied by SymphonyIRI and as reported by Mintel. Once consumers adjusted to the price increases in 2010, sales began to grow again. This could be said to demonstrate that, as long as the economy stays depressed, sales of cooking sauces, marinades and condiments will likely continue to be strong.
Multiple tracks are injecting excitement into the sauce and marinade market. “Increasing interest in foreign cuisines has been particularly significant for the cooking sauces category,” notes Lu Ann Williams, research manager for Innova Market Insights. According to Williams, that interest alone accounted for about half of the tracked global sauces that came out last year. The figure was well ahead of bottled table sauces, taking about a quarter of the category, with mayonnaise and dressings comprising a fifth.
The convenience image of the sauces market aside, Williams stresses that “there has been ongoing interest in health in evidence: Nearly 45% of 2011 global launches recorded by Innova Market Insights feature health claims of some kind, rising to more than 50% for salad sauces and dressings, compared with 45% for cooking sauces and 38% for table sauces.”
Sauces by the Number
Within these general sales trends, sauces and marinades break down into five distinct segments from which the total market figures are derived.
The two largest segments are dry sauces and (other) wet sauces. Dry sauces are inexpensive and user-friendly, which accounts for their continued popularity. Other wet sauces include those American favorites, Worcestershire and steak sauce. Mintel expects dry sauces and other wet sauces to exceed $1.2 billion and
$1 billion in sales, respectively, by 2015. Ethnic sauces gained in popularity as Americans attempt to bring home the flavor of Mexican, Asian, Indian and other traditional cuisines. Mintel projects strong sales in this segment, topping $880 million in 2015. And, of course, barbecue sauce remains popular, although consumer brand loyalty can be swayed. Sales in this niche are expected to reach nearly $800 million in 2015.
Refrigerated/frozen sauces increased by 11.2% in sales during 2008-2010, outpacing the market as a whole. The category attracts shoppers seeking sauces that can closely replicate homemade flavor, as well as health-minded shoppers who read labels and try to avoid preservatives. Mintel expects this segment to grow by 6-7% during 2011-2015, with sales exceeding $500 million in 2015.
If home-cooking is the driving force behind overall sales of sauces and marinades, the combination of flavor preferences and health concerns determines direction. Both are influenced by age, gender and economic status. According to Mintel’s research, consumers surveyed prefer sauces and marinades with spicy/hot flavors (53% of respondents), sweet flavors (46%), ethnic-flavored (44%), authentic regional U.S. products (49%) or local/restaurant brands (30%). A greater percentage of those respondents younger than 45 years of age preferred internationally inspired dishes, while consumers with household incomes greater than $100,000 were the most receptive to local flavors with eco-friendly marketing. Finally, men tend to be more influenced by celebrity chefs than are women.
Shaping Flavor Trends
The first wave of Baby Boomers is past age 65. Boomers bring specific preferences and health concerns to their tables. For example, they are more likely to choose products with less sugar and salt. They are concerned about weight and want to maintain a high activity level consistent with their perceptions of themselves as trendsetters. According to Mintel’s “Outdoor Living—U.S., April 2010” report, “As Boomers get closer to age 65, they tend to become more conservative, which triggers a range of behaviors, including saving more money (28%); eating healthier (35%); and exercising more (32%).” Boomers want their “low-in…” claims, but spiked with spicy flavors and linked to “authentic regional U.S. products.”
Boomers aren’t the only ones with health concerns: The world is in the midst of what is termed by the medical journal, Lancet, as a “global pandemic of obesity and type 2
diabetes.” And, consumers looking for clean labels, purity and authenticity; reduction in allergens; and premium claims are driving innovation in many products.
According to Mintel’s research, one in four shoppers who cook at least half their meals at home look for “purity” claims, such as “natural,” “no additives and preservatives” and kosher certification. This applies when shopping for cooking sauces and marinades. And, it is driving marketers to create new products and reformulate older ones with premium ingredients, such as all-natural, gourmet herb and spice rubs; aromatic, all-natural blends of Meyer lemon, roasted garlic, Dijon mustard and herbs; and white wine—all aimed toward recreating restaurant-quality meals at home.
Another driver of formulations targeting flavor is that of special needs. To satisfy the concerns of the nearly 11.4 million Americans reporting food allergies and sensitivities, marketers are showcasing products that are free from common allergens. Mintel’s global new product database (GNPD) 2008-2010 saw 31 gluten-free products launched, along with 31 new allergen-free products.
The top health positionings for newly launched sauces with herbs and spices in the first half of 2011 are: no additives/preservatives; natural, allergy- and gluten-free; low-fat; and organic, in that order. The natural category in cooking sauces has grown steadily since 2007, from 7.9% of the market to 20.7%. Organic as a positioning rose from 6.9% in 2007 to 14.1% in 2009 and settled in at 12.0% in 2010. The spicy seasonings, health claims and innovations for convenience set the stage for future prospects.
Consumers Like it Hot
Ethnic and spicy foods appeal to both the younger and more adventurous tastes, as well as Boomers, whose taste buds have lost some sensitivity. Hot and spicy flavors are leading the charge of new products. According to Innova Market Insights, the top flavors found spicing up cooking sauces launched January-June 2011, were: non-specified herbs and spices, curry, basil, tomato, garlic, green curry, chili, salt, soy and ginger.
These are reflected in the top blends: non-specified herbs and spices, tomato/basil, tomato/non-specified herb, tomato/non-specified spice, tomato/garlic, tomato/onion, tomato/chili and curry/non-specified. Most of the specified flavors are prominent in a number of newly launched sauces and meal kits aimed at recreating ethnic and traditional meals at home. Barbeque sauces, pasta sauces, cooking sauces, dips and marinades showcase flavor combinations that range from sweet-and-spicy to intense to “a fiery curry made using one of the hottest chili peppers in the world, the Bhut Jolokia.” (See “Sizzle and Smoke,” Prepared Foods, June 2012, page 80.)
All the options emphasize the natural purity of the ingredients; many are directed toward creating one-serving meals, also emphasizing convenience and authenticity. As a side note, Mintel research showed that men like it hot, generally leaning toward spicy sauces and marinades more than do women.
Innova Market Insights sees future opportunities for this category. More adventurous spice kits will emerge, along with flavored stocks and concentrated sauces for specific dishes, many of which will be targeted to one- or two-person households. Intense flavor, spicier than ever before and led by new chili pepper varieties, is a trend that will continue, along with an expanding list of ethnic dishes.
Consumer health concerns likely will drive the creation of more products featuring vegetables, along with herb/spice mixes, pestos and dips. Dips and spreads made specifically for use with vegetables are ripe for expansion. Natural and, to a lesser extent, organic products that combine with ethical considerations in their front-of-pack claims also will continue to attract discerning consumers.
According to Euromonitor International, sales of sauces, dressings and condiments are expected to have a compound annual growth rate (CAGR) of 1% and reach $19 billion in the U.S. by 2016. Though retail volume sales are expected to decline at an annual rate of 1%, as the economy slowly recovers and consumers eat more meals out, the slack in demand will be picked up by foodservice establishments.
This will drive an increase in total volume sales (both retail and foodservice) by 2% over the forecast period as a whole. Ethnic sauces are expected to remain popular, due to growing ethnic populations and increasing consumer tastes for adventurous and tasty foods. Spicy chili/pepper sauces and soy-based sauces are expected to grow by 4% and 1%, respectively.
The influence of the obesity epidemic will drive consumers toward sauces, dressings, marinades and condiments that offer health and wellness benefits. Herbs and spices containing beneficial phytochemicals—i.e., curry, garlic and ginger—will continue to be popular. Also, products that tout “low/no” claims, such as low in sugar, fat or calories, or are free from allergens and preservatives, will give consumers the possibility of achieving restaurant-quality meals. It also will satisfy their desire to prepare the healthiest food possible for their families.
This will have a price, however. Economic growth in the developing world is expected to drive up commodity costs. At the same time, anticipated consumer preferences for unique products with quality ingredients should drive growth in premium products, pushing up the average price of sauces, marinades, dressings and condiments to the predicted CAGR of 2% above the forecast period.