When is a sauce brand no longer just a sauce brand?
When it also sells flavoured mayonnaises, dipping sauces, relishes, salad dressings and a host of other foods, from baked beans to pizza. Over the past couple of years traditional sauce brands have diversified, leveraging their brand equity in new areas.
The past 12 months alone have seen ketchup king Heinz ramp up its mayonnaise range, Hellmann's launch its own ketchup, Branston bolster its presence in ketchup, mayonnaise and relishes and Blue Dragon move into salad dressings. And that's just the tip of the iceberg. Retailers have also been busy launching more premium own-label products into all of the above sub-categories and enjoying strong sales growth on the back of it.
But has greater consumer choice led to greater sales growth for the category as a whole, or have manufacturers merely been stealing market share from one another?
The table sauces and condiments category is worth just over £670m, up £32m (5%) on the previous year [Kantar Worldpanel 52w/e 13 June]. However, a significant part of the value rise is due to commodity-driven price rises. Volume sales are only up 1% with some sub-categories, such as table sauces and pickles, chutneys and relishes experiencing a dip in fortunes [Kantar].
Only salad accompaniments, vinegar and mustard have seen value and volume growth and part of the challenge for the rest of the category in trying to grow volumes is that 98% of all UK households already buy into it [Kantar].
The high levels of penetration are forcing brands particularly in the table sauces sub-category to diversify in an attempt to increase their sales. This was clearly the thinking behind Hellmann's tomato ketchup launch last year. The product was soft launched through a trial at Tesco and given a national roll out in March this year. Unilever's category leader for dressings, Cat Armitage, says it was high time Hellmann's strong brand credentials were brought to bear in another part of the category.
"Hellmann's is all about authentic ingredients and nutrition," she says. "With Hellmann's Ketchup we've been able to deliver a product that, on testing, 56% of people preferred to Heinz Ketchup. But we've done it at improved GDAs with 22% fewer calories, 27% less sugar and 40% less salt versus the current Heinz Ketchup." Armitage says it's still early days for the new ketchup, which has achieved value sales of £1.5m in the first four months after its full launch [SymphonyIRI 52w/e 10 July].
"We're trying to offer a ketchup for consumers who aren't buying Heinz but who buy Hellmann's Mayonnaise," she says. "What we're seeing is 64% of Hellmann's Ketchup users also buy Hellmann's Mayonnaise and 43% of Hellmann's Ketchup users are buying it in addition to another ketchup or are new to the category."
Certainly, Heinz Ketchup sales don't seem to have suffered up 5.7% in value to £120.8m and 1.6% in volume [SymphonyIRI]. And Heinz's other big sauce brand, HP, has had a smoking year in the barbecue category. Sales of HP BBQ shot up 8.7% in value to £8.6m and 10.4% in volume [SymphonyIRI]. Own-label barbecue sauces also fared well, with value up 33.4% and volume up 39.3% [SymphonyIRI].
Much of this growth is being attributed to the 'barbecue summer'. While English Provender marketing director Grahame Wright concedes there have been a few wet patches, this summer has far outshone the previous two. Wright says the company was forced to run full shifts to keep pace with demand, with sales of its Newman's Own Sticky BBQ Marinade proving particularly popular, up 60% year-on-year.
Another company that's enjoyed the fruits of the sunny conditions is All About Food, which has the licence to sell grocery products for brands such as Nando's and PizzaExpress. Charlotte Dewhurst, marketing manager at All About Food, says in the first half of the year the fine weather definitely had a positive impact on trading figures.
"Nando's unit sales were 18.2% higher in May than April and, when we look at the leap from May to June where Nando's chilli sauce unit sales were up a whopping 23.5%, we can see the good weather clearly had a positive effect," says Dewhurst. "Similarly, salad dressing sales go through the roof when the sun shines with Pizza Express salad dressing volume sales 30.4% higher in May than in April."
But while the spring and early summer months were an improvement on previous years, August's washout could have put paid to hopes of a bumper year overall.
So far, the year-on-year data for salad accompaniments still looks good up 5.8% in value and 5.6% in volume [Kantar]. Somewhat surprisingly, given salad's healthy credentials, health isn't top of the agenda when it comes to salad dressings, according to Dewhurst, who says consumers are giving lighter options a wide berth.
The low-calorie dressings market has declined 4.9% and the standard dressing market has grown 2.2% [IRI 52w/e 10 July]. This could be the result of the turbulent financial climate; consumers treating themselves to indulgent dressings rather than eating out, suggests Dewhurst, citing the strong showing of premium salad dressing brand Mary Berry, which has seen sales of its salad dressings leap 37.9% to £1.4m over the past year [SymphonyIRI].
Consumers are entertaining at home more often and buying full-fat dressings for guests, where they would make do with lighter options for themselves.
Own-label products continue to dominate salad dressings, but leading brands such as Hellmann's are performing well with value sales up 14.6% to £6.4m and volume up 11.4% [SymphonyIRI]. And there have been many new entrants to the category. One of the latest additions is oriental food company Blue Dragon. Earlier in the summer it launched a three-strong range of Thai Sweet Chilli salad dressings in Thai Sweet Chilli & Garlic, Thai Sweet Chilli & Lime and Thai Sweet Chilli & Lemongrass flavours.
"We know salad dressing consumers are always seeking new flavours while maintaining healthy eating habits," says Tracy Hughes, AB World Foods consumer and trade marketing controller. The company is looking to emulate its success in oriental condiments and dipping sauces, where it holds a majority share, she adds.
Another sub-category of salad accompaniments enjoying tremendous growth is flavoured mayonnaises. According to Unilever's Armitage, this has been the value driver of the mayonnaise category.
"Flavoured mayonnaises are at a much higher average volume price to core mayonnaise as a result of their price point and the pack size," explains Armitage. She says Branston has enjoyed huge success in adding category value through its 'With a Twist' flavoured products, with value sales up 94.9% to £2.7m and volume sales up 71.2% [SymphonyIRI], but she adds that the company's range, which includes the likes of Peri Peri and Sweet Chilli Mayo, is finding favour with a younger customer base, whereas Hellmann's core target mayonnaise user is a 35 to 45-year-old housewife with children.
To meet the needs of this audience Hellmann's is about to launch two flavoured additions lemon and chilli alongside its garlic mayo and Dijon mustard mayo. "People are trying to recreate the restaurant experience at home," says Armitage. "We've been advising consumers how to 'pimp their mayo' take a core mayonnaise and add some lemon juice or chilli flakes for some time. Now we're taking this to a new level of convenience for consumers."
Introducing new flavoured variants seems to be a popular tactic. Heinz is hoping to spice up the salad cream market with a limited-edition lemon and black pepper variant. It's a significant break with tradition but one the company is confident will pay off. "Heinz Salad Cream Lemon & Black Pepper performed extremely well in research, which indicates it will bring new consumers into the category, with 67% of consumers saying they would buy it in addition to their current sauce," says Lynsey Hurst, senior brand manager of Heinz Salad Cream. "This is the first time Heinz Salad Cream has undertaken a major flavour innovation. We hope to make Heinz Salad Cream Limited Edition a recurring platform."
Spicy flavours are also still on the agenda, with chilli sauce value sales up 12.4% year on year [SymphonyIRI]. To capitalise on this, All About Food launched Nando's Taste of Africa Peri-Peri Sauces featuring Bushveld Braai and Chakalaka flavours to coincide with the World Cup and Dewhurst expects sales of spicy sauces to keep growing. "We are continuing to become spicier as a nation with consumers demanding more spice at mealtimes," she says. Sales of Nando's Peri-Peri Sauces are up 23.7% year-on-year [SymphonyIRI].
Encona clearly agrees. It added four sauces to its 11-strong range Thai Chilli & Ginger Sauce, Thai Chilli & Garlic, Jamaican Jerk BBQ Sauce and American Chilli Ketchup. "Consumers told us they were bored with bland sauces," says commercial director George Phillips. "They're looking for flavours with a bit of a kick. We've responded with an extended range of spicy sauces with the versatility to be used as table sauces, cooking ingredients, dips and marinades."
Not everyone's a heat-seeker of course, and in recognition of this Blue Dragon has extended its dipping sauces to include a mild variant. However, this looks like a departure from the norm, as we are likely to see a plethora of spice-laden product launches in the coming months.
"Every launch we make that's hot and spicy is successful," claims Premier Foods' San Juan. "One of the key trends we identified in our research in 2006 was that people wanted spicier and hotter flavours and that desire hasn't abated."The company recently launched a chakalakah relish and San Juan says the targets the company set itself were "blown out of the water in a few weeks".
Continuing interest in spicy flavours isn't harming more traditional flavours, though rather the reverse in some cases.
Tracklements has been tapping into the renewed interest in eating seasonally and believes demand for condiments that revive traditional recipes will grow. "We constantly monitor our buyers' needs," says managing director Guy Tullberg. "We meet the desire for seasonal produce with a range that changes depending on what local crops are best at the time, such as our most recent introduction, elderflower & gooseberry jelly."
Meanwhile, fine food company Turnham Green has launched a spiced apple & pear chutney, using seasonal pears.
With brands pushing into new territories, the continued growth of spicy flavours and traditional recipes making a comeback, the category is buzzing at the moment. But there is a cloud on the horizon: commodity and ingredient price rises. Tomato-based sauces could certainly be hit as major growing countries such as Italy and Spain massively scaled back this year's tomato plantings, leading to fears of price hikes. Another concern is the rapidly growing price of rapeseed oil, used in the production of mayonnaise, following poor harvests across the EU.
"Since the start of the year we've seen rapeseed oil go from something like 650 per tonne to about 800 per tonne," says Unilever's Armitage. The company is doing its best to offset the hikes, he says. "We're constantly striving to have economies of scale and we try to protect consumers as much as possible from the inflationary effect of commodity prices."
And for brands, there is another concern: the rise of own-label products. While economy own-label value sales are down 3.9%, sales of standard and premium own-label goods are showing impressive growth of 5.8% and 17.2% respectively [Kantar]. This suggests consumers are trading down from premium branded goods to cheaper own-label products.
Much of this growth has been achieved by the likes of Tesco and Asda launching products into categories such as flavoured mayonnaises, points out Armitage.
"Retailers are really investing in these premium own-label brands and they're credible offerings. But if you look at the headline own-label share it's not actually up by as much," she says. "One of the fears going into the recession was that people would trade down into lower-tier own-label products, but that's not been the case."
The rise of better-quality own-label products in conjunction with brands branching out into new areas means that the ultimate winner is the consumer. They now have huge amount of choice in the sauces and condiments aisle and it only looks set to increase.
Focus On Sauces & Condiments