Out with the old

Zest is in short supply in the condiment and salad dressing sector. A tepid retailer response to changing shopper attitudes and lifestyles is resulting in a primary focus on traditional products — and lackluster sales increases.

Condiment revenues grew just 1 percent to $6.9 billion between 2010 and 2015, while dressing sales rose 6 percent during the period to $2.6 billion, reports global market research firm Mintel in its December 2015 “Condiments and Dressings — US” report.

To bolster activity, retailers need to offer more unique flavors and healthier selections, Mintel states. Such items could be natural or organic, contain additional proteins or vitamins, and/or have less or no salt, fat or sugar.

“The most influential condiment features are those that align with broader food trends overall,” Mintel states. “Interest in fresh or refrigerated products is important to consumers and may provide an additional area of opportunity, especially as sales of these products in natural channels already trend upward.”

The most active segments in recent years — including ketchup, pickles, olives and relish — are benefiting from innovations or positive health and freshness perceptions, Mintel notes.

Also expanding in popularity are premium and artisanal condiments and dressings, as well as hot and spicy flavors, notes Euromonitor International, a London-based market research firm. Demand is especially increasing for herbs and spices with intense tastes, the firm states.

“Consumers are increasingly preparing dishes at home with more spices and seasonings,” Euromonitor states in its December 2015 “Sauces, Dressings and Condiments in the US” report. “Spices also offer time-pressed consumers a simple, quick and easy way to add global flavors to home-cooked meals.”

While salad dressings, mayonnaise and ketchup remain the most popular table sauces, product revenues are stagnant. Growing interest in ethnic cuisines, however, is triggering stronger sales of soy sauces and chili sauces, Euromonitor notes.

Target taste

Indeed, offering enticing flavor profiles is key for solid growth, notes Kyle Fabing, national accounts sales manager – retail for T. Marzetti Co., Columbus, Ohio.

Many shoppers, particularly millennials, are seeking selections with more robust flavors — for example, dressings and dips with sriracha, a hot sauce made from a paste of chili peppers, distilled vinegar, garlic, sugar and salt, he notes.

“Consumers want products that are new and exciting, but also clean with fewer preservatives,” Fabing adds. “Many shelf-stable dressings that have high-fructose corn syrup are experiencing a steady sales decline.”

Retailers that offer store brands with easy-to-identify ingredients and without artificial flavors and colors will attract more of the growing sector of health-conscious shoppers, agrees Ron Ratz, director of development for Wixon Inc., St. Francis, Wis.

“Gluten-free, vegan, and non-GMO products also continue to be important to customers,” he states. “Cleaner, simplified labels are a major trend in salad dressings as in other consumer packaged goods.”

Stand apart

Offering such wellness-oriented products, as well as unique selections, should be a key strategy of private label product developers, notes Mike Hackbarth, vice president of private label and customer demand for The Fremont Co., Fremont, Ohio.

“Successful retailers in the condiment category lead with noticeably different products versus strictly the same private brand offering from the same supplier that all their competitors offer,” he says.

Yet value should also be a prominent store brand differentiator, says Jamie Smith, Wixon flavor scientist.

“Set a price point that is below the national brands as consumers still shop with their pocketbooks,” she states.

Lower-cost store brands are already helping to spur sales of organic condiments — a typically higher-price category — by giving shoppers a more affordable alternative to the national offerings, Hackbarth states.

“Shoppers like the concept of organic or gluten-free, but they often don’t want to pay a higher price,” Fabing adds.

Retailers, however, should not rely strictly on low pricing to attract customers to store brands. Most mainstream stores, Hackbarth notes, cannot compete long-term with the volume-based pricing of discount chains.

“The challenge is to not take a myopic view of the category or commoditize it,” says Dan Kelly, vice president of sales for Tracy, Calif.-based Musco Family Olive Co. “Consumers have the opportunity to buy condiments in different retail channels, so it is important to have the right price and to engage shoppers through proper shelf management and promotions.”

Such promotions could include posting meal ideas that include condiments and dressings on websites, distributing product coupons and cross-merchandising selections in stores, he says.

Retailers also could generate greater interest in private brand condiments and dressings by merchandising them in the perimeter of stores, including in the deli and meat departments. Foods in the perimeter have the perception of being fresher and of higher quality, Fabing states.

Create a partnership

The most effective product development strategies, however, often result from collaboration between retailers and their suppliers. By sharing data and perspectives, the partners can pinpoint the competition’s weaknesses and create stronger alternative products, Smith says.

Retailers could garner insights by reading trade publications, researching online comments from consumers about specific products and brands, and speaking with shoppers in store, she notes.

Retailers can monitor what the industry is doing and work with suppliers to create innovative flavor systems, packaging and labeling,” Smith states, adding that it is important for retailers to distinguish their store brands so they stand out.

Indeed, the development of new product options will add vibrancy to a placid sector.

“The condiments and dressings categories continue to struggle,” Mintel states. “To help these categories grow, manufacturers will need to consider developing more better-for-you products featuring fresh and simple ingredients, as well as promote customizable options and product versatility.”

Do consider adding premium and artisanal condiments to the own-brand lineup.

Don’t go it alone; collaborate with suppliers to create unique, on-trend condiments and dressings.

Do merchandise store brand condiments in the deli and meat departments.