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MP15127

MAPS CONDIMENTS AND SAUCES NOVEMBER 1997

Overview

Table of Contents

Executive Summary

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EXECUTIVE SUMMARY

The condiments and sauces market includes a range of products added to a meal after it has been bought to the table. These vary from table sauces such as tomato ketchup, brown sauces and up and coming products such as barbecue and ingredient sauces to salad accompaniments, pickles, gravy makers to dish specific sauces, salt & pepper, vinegar, mustard and marinades. The market is mature, with a number of well established product sectors with household brands, and are very much part of the traditional British diet. Nevertheless, even this sector is being affected by modern eating and cooking trends, such as the increased interest in ethnic cuisine, more informal eating and declining consumption of red meats. In response, suppliers have sought to introduce products which focus more on contemporary meals, recipes and tastes, as well as promoting product versatility.

Taken together, retail sales of these products amounted to £678.4 million in 1996 equivalent to 350,800 tonnes, representing an overall growth of 11.5 percent on 1992 at current prices compared with a marginal decline of 0.1 percent in real (1992 constant) prices. Tonnage growth amounted to 5.3 percent during the same period. The higher rate of volume relative to real value growth during this period is in large part due to the fall in tomato ketchup prices during 1994, as well as intense price competition and growth of supermarket budget brands which however, slowed down in 1996. The compound annual growth rate between 1992 and 1997 is 3.1 percent in value and 1.5 percent per annum in volume.

Table sauces constitute the largest single sector, accounting for 24 percent of total sales value in 1996 followed by pickles, chutneys and relishes on 20 percent. Between 1992 and 1996, salad accompaniments the third largest sector, experienced the greatest growth of 29 percent in sales value at current prices. This sector benefited from growth of the low fatlow calorie segment, which accounted for 37.8 percent of sales value and 34.3 percent of volume in 1996, as well as increased availability of fresh salads, health consciousness and new product launches - most notably in the other dressings segment. After a period of relatively flat sales, growth has picked up in the gravy makers sector, as suppliers have focused on closing the gap between the number of occasions a range of host foods are used and those times when they are accompanied with a gravy. Broadening usage opportunities and developing ready-to-serve versions are therefore central to growing sales of these products.

Extending usage occasions has also been an important issue in sectors such as dish specific sauces, in an effort to reduce reliance for sales on the period surrounding Christmas, especially in the cases of cranberry sauce for example. There has therefore been greater focus on the regular weekday and weekend meal rather than the special occasion in promoting these products. New and more contemporary flavours such as Sage & Onion are being launched and recipes becoming more commonplace on packs.

Within other sectors, the most significant growth is coming from segments responding to modern eating trends. Examples include the barbecue, soy and other ingredient sauce segments of the table sauce sector, speciality mustards and vinegar as well as marinades. It is being recognised that many of these products make an ideal cooking ingredient as well as an accompaniment.

Most of the products under review have a high proportion of housewives buying them in the course of a year. Salt and tomato ketchup have the highest incidence of purchase of 89 percent and 84 percent respectively. Salad cream and mayonnaise follow with penetration levels exceeding 70 percent. Brown sauce follows narrowly behind. Smaller higher growth products such as marinades and barbecue sauces have penetration levels exceeding 30 percent, quite significant in view of the comparatively recent emergence of these products. This probably reflects the wider usage of these products as part of ethnic dishes and as cooking ingredient throughout the year.

Those aged 35-54 usually have the highest incidence of purchase as they are the most likely to have families and be engaged in family entertaining. Children aged ten and below have become an increasingly important market for tomato ketchup. Certain products such as vinegar and pickles have a bias towards older age groups, although new pack and product formats are seeking to change this, but any shift is unlikely to be dramatic. Salad accompaniments have a younger and more upmarket usership profile compared with most other product sectors.

A number of Europe’s major food companies are active in the condiments and sauces market, such as Unilever, Nestlé and Danone, as are American majors like Heinz, Kraft, CPC and McCormick. Many dominate individual sectors with well established brands - the most obvious examples being Heinz accounting for 60 percent of tomato ketchup sales value in 1996, HP Sauce (part of Danone) with 38 percent of sales value for brown sauce and Colmans’ from Unilever subsidiary Van Den Bergh Foods accounting for 64 percent of mustard sales value in 1996. Nestlé dominates sales of sweet pickles where it has a 68 percent value share with its Crosse & Blackwell Branston brand. International manufacturer Tomkins has a presence in several sectors, such as gravy makers where in 1996, it had a 60 percent value share with Bisto; and its JA Sharwood subsidiary retained leadership of soy sauces. The Hillsdown owned Chivers Hartley Haywoods brand has the largest single branded share in the sour pickles sector.

As in a number of food markets, retailers’ own labels have had an important part to play, especially in the more commodity type sectors such as salt and sour pickles. The retailers have injected increased price competition into a number of sectors, especially with their budget brands in the table sauce and salad accompaniment sectors. By the end of 1996 however, more emphasis was being put on differentiation based on product quality and taste rather than just price.

Above-the-line advertising on the products under review amounted to £22.7 million in 1996, equivalent to 3.3 percent of total sales. This is slightly higher than in number of food markets, although not as high as breakfast cereals or confectionery for example. A number of brands such as Lea & Perrins, Bisto and Heinz salad cream regularly conduct high profile TV advertising. This is supplemented by product sampling as well as in-store promotions. Cross promotions with host foods as well as recipes on packs, are becoming increasingly important as part of the effort to emphasise product versatilitydifferent usage occasions.

The grocery multiples continue to increase their share of trade, accounting for 75 percent of sales value in 1996 compared to 73 percent in 1992. Tesco has the largest single share at 22 percent, marginally ahead of Sainsburys with 19.6 percent, followed by Asda on 12 percent and Safeway with 10.2 percent. There are variations between individual retail multiples in terms of the importance of own labels to their total sales by of some of the products under review. Discounters led by Kwik Save accounted for 11 percent of sales, with some gains being made by up and coming retailers in the UK such as Aldi and Lidl. Co-ops accounted for a further 6 percent of sales value in 1996, with their share remaining fairly constant since 1992.

A large number of supermarket retail outlets site condiments and sauces above freezers. According to independent research commissioned by Heinz in 1997 however, consumers prefer gondola type shelving and expect to find all sauces merchandised together. The research pointed to consumers regarding the category of three product groupings a) ketchup/brown sauce and barbecue sauce, b) salad accompaniments, and c) pickles/relishes/chutneys. Based on these findings, Heinz recommended that each of these groupings should be displayed into sub-category vertical blocks, vertically blocked by brand within sub-category.

The condiments and sauces market is expected to grow by an overall 11.2 percent at current prices between 1997-2001. Growth is likely to be on this modest scale given the market’s mature state of development. The compound annual growth rate expected between 1997 and 2001 in value terms at current prices is 2.7 percent per annum.

Within the market, there is expected to be some shift towards products reflecting modern eating trends, such as the growing interest in ethnic cuisine or barbecuing. At the same time however, as the pace of life increases and the high proportion of working women continues, the best chance of success for products are those which are easy and quick to serve up and use, whilst at the same time providing authenticity and closely resembling home made quality.

Versatility in terms of providing a cooking ingredient and accompaniment, will probably increasingly feature in the marketing strategies of sectors such as speciality mustards, vinegar, gravy makers, barbecue sauces and marinades. Another key element will also be the relationship between sauces and the choice of host food.

Demographic trends to the year 2001 are if anything, expected to help sales of most types of condiments and sauces. The main consumers are 35-54 year olds, whose numbers are forecast to increase by 6.2 percent between 1997-2001. They are the most likely to entertain at home, have families and have more usage occasions for condiments and sauces. However, in the longer term, the lower take-up of condiments and sauces amongst the under 35s will result in declining sales, unless these trends can be reversed with innovative new concepts and products.

Marinades are expected to experience greatest growth, albeit from a small base. Gravy makers and salad accompaniments are likely to grow more than most, as a result of new products to cater for different usage occasions. A steady but modest increase in levels of disposable income and consumer confidence remaining fairly constant (compared with 1997) will contribute to sales growth, especially when it comes to trading up and willingness to experiment.

Text © 1997 MAPS

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