Get Inspired

Retailers will find plenty of opportunities to ramp up development in premium minded, better-for-you and flavored-up store brand condiments.

To many of us, a BLT just isn't a sandwich without a smear of mayo. And a burger devoid of a ketchup and mustard topper really seems quite dull.

Yes, Americans long have relied on a variety of condiments to infuse a little flavor excitement into even the most basic of sandwiches. What's more, they refuse to let a little thing like a down economy interfere with their right to squeeze, pour or spoon them on.

Indeed, data from The Nielsen Co., New York, show decent dollar and unit sales gains for several subcategories within the condiments segment for the 52 weeks ending May 15 (see table, p. 26) — and, with the exception of the ketchup subcategory, even more impressive gains for store brands. But the data might be deceiving in terms of where the store brand segment stands now. Mike Hackbarth, vice president of private label for the Fremont Co., Fremont, Ohio, calls the current state of affairs price-focused and reactive.

"National brands have fought back the significant 2009 private label gains with deep promotional allowances and pricing," he says. "Retailers accepted the promotional monies and deep deals by promoting branded SKUs at or near the private label SKU levels. To offset the private label losses now occurring, retailers have forced private label manufacturers to reduce dead net prices so they can maintain margins and price private label goods significantly under the leading and value brands."

Alfons van Heerwaarden, president of Jersey City, N.J.-based Parnassia Food, says the problem economy also has pushed many retailers toward a value store brand strategy. Still, he sees plenty of room for premium, destination-type store brand condiments, especially as the economy begins to recover.

"A two- or even three-tier complete private label program should grab consumers' attention and can take share away from the national brands," he says. "Focusing only on value store brands is not enough. You also want your consumers back in the store for [your] premium brands."

Hackbarth agrees, noting that unique premium condiments positioned as natural could be particularly important to retailers with "healthier for you" sub-brands.

Do consider natural, lower-sodium and other 'better-for-you' formulations that mesh with consumers' desire to eat healthier.

'Catsup' on trends

Speaking of natural, it's one of a number of trends impacting the condiments segment (see the sidebar, p. 24, for flavor-related trends). Although organic claims appear to be losing some steam here, product launches with a natural claim increased by more than 25 percent in 2009 over 2008, according to Niraj Lalka, an analyst for the global Datamonitor Group, and gluten-free claims also are surging.

And Hackbarth does note a shift from specialty branded organic items to private label organic items.

"National brands have launched lower-sodium, natural and/or 'better-for-you' changes in their lines to accommodate consumers' desire to eat healthier," he adds. "Private label programs should … lead such initiatives or at least be quick to react."

Another closely related trend is the elimination of high-fructose corn syrup (HFCS), notes Tom Vierhile, Datamonitor's director of product launch analytics. It increasingly is being replaced with honey and other sweeteners consumers view as less-questionable ingredients.

"HFCS has come to be regarded as a marker for a highly processed food product," he says, "and the fact [is] that the general public sees HFCS as a being a 'bad for you' ingredient, regardless as to whether or not this is really true."

Don't focus solely on value store brands — unique, premium-type products will bring shoppers back to your stores.

Sitting pretty

The right packaging, too, can help draw consumers to store brand condiments, van Heerwaarden emphasizes. And he believes a product's label contributes the most to overall shelf appeal. Although the products fall outside the condiment arena, A&P's Via Roma Italian items feature a great-looking label treatment that could provide inspiration for premium-type condiment items, he adds, and also could boost the curb appeal of functional/sustainable-type packaging such as PET jars.

Dan Kelly, vice president of sales for Musco Family Olive Co. of Tracy, Calif., agrees that graphics updates are needed on store brand condiment packaging, especially on that for premium-tier products.

"I know that accounts like Kroger and Ahold are definitely working on that," he says, "where they're taking it to another level beyond national brand equivalent and trying to upscale the graphics or the packaging."

Vierhile contends that very little innovation actually is underway in condiment packaging formats.

"Flexible packaging is one of the only developments worth mentioning, as companies experiment with standup pouches," he says. "Single-serve packaging is another area that has some potential, but even that has not been capitalized on to the extent it might be."

Kelly also sees unique packaging opportunities on the olive side of condiments — particularly in the dry grocery arena. He believes retortable pouches and even brineless packs could add portable convenience to the category.

"It's very challenging for manufacturers to do that, but it's certainly an opportunity," he adds.

But looks aren't everything — retailers also need to examine their options in terms of packaging size. Hackbarth points to one major retailer that recently missed the boat here.

"The national brand upsized all SKUs and discontinued the price/value-driven size that the consumers preferred two-to-one within this category," he explains. "The retailer's private label and overall category volume suffered significantly because they adopted the branded strategy for their private label program — instead of listening to the vendor's expertise or analyzing consumer demand."

Don't try to be everything to everybody — use shopper behavior to understand what your most loyal shoppers truly want from a condiments standpoint.

Do consider investing in packaging innovations and graphics upgrades, especially for your premium store brand condiments.

Market the mayo

Yes, a deep analysis of shopper behavior data is critical, Kelly believes, if retailers are to enhance sales and profitability of store brand condiments, as well as sales within the entire condiment segment.

"You can't be everything to everybody," he emphasizes. "You can't have 500 items and have 10 items do 90 percent of the sales. I think the solution to that is understanding what your shoppers truly want and focusing on being who you are, as a retailer."

Kelly points out that the average consumer shops in more stores today, on a weekly basis, than he or she did 10 years ago. He reminds retailers, therefore, to forget about the shoppers who are cherry-picking their stores — and to focus instead on the folks who are spending $100 a week or so at those stores consistently.

Beyond optimizing product assortment to suit loyal shoppers, retailers should be engaging in merchandising and promotional strategies that showcase own-brand products.

Display-ready cases are great for building incremental sales, Hackbarth says.

Because consumers use condiments primarily to enhance center-of-the-plate items — and often don't even include them on shopping lists, Kelly says cross-merchandising is an important sales-building strategy. Don't pass up opportunities to cross-merchandise condiments with products ranging from sandwich makings to salads, he advises, in multiple departments across the store.

And employ your own website, as well as social media, to show your shoppers creative ways to use condiments in sandwiches, salads, pasta and more, van Heerwaarden recommends.

"Let consumers post their own recipes and comments on your Facebook page," he suggests. "Reward consumers with coupons or products if they post a great idea or win a contest. Use social media to bond with your consumers [and get] free feedback; interact and be active, get the consumers involved, and you will be rewarded."

Fun with Flavors

U.S. Consumers are clamoring for more than better-for-you ingredients when it comes to condiments. They also want to experiment with new flavors and fragrances to recreate the restaurant experience — a less-affordable option for many in this economy — at home, according to Niraj Lalka, an analyst for the global Datamonitor Group.

"Blended flavors continue to see the most number of launches, while launches of spicy and garlic flavors are on the rise due to the increasing popularity of global ethnic cuisines such as Thai, Indian [and] Chinese amongst American consumers," Lalka says.

Tom Vierhile, Datamonitor's director of product launch analytics, elaborates further on a number of flavor trends specific to individual subcategories, including:

"Hotter and spicier" ketchup products with ingredients such as chipotle and other hot peppers.

Mustards with value-added ingredients such as capers, raisins and blue cheese.

Mustards with a sweet and hot "flavor experimentation treatment" based on wine, port or other alcohol flavors; chipotle; lime; cranberry; and more.

Better-for-you mayonnaise featuring ingredients such as flaxseed and olive oil.

Mayonnaise with a spicy and/or savory emphasis, boasting flavors such as bacon, horseradish/wasabi and garlic.

Pickled products with chimichurri (a green sauce) and other interesting flavors.

A continuing upscaling of stuffed olives, with specialty cheeses such as gorgonzola and provolone.

Salsas flavored with crab, pork, beef or chicken — or sporting ingredients or flavors such as lime, tequila, black beans, pineapple, pomegranate and peppadew peppers.