Report: Dips, Seasonings and Sauces
Many food trends in the United States can be traced back to a hot regional cuisine of the latest health kick. That would explain the recent popularity of such items as dried Sriracha seasoning rubs or elderberry vinaigrettes. But when a retailer or product manufacturer can innovate around a consumer’s sentimental favorite — that can be lightning in a bottle.
Trader Joe’s, for example, has throngs of fans raving about its Everything But the Bagel Seasoning, named the “Favorite Overall” product at the retailer during its annual Customer Choice Awards. Trader Joe’s followed up with Everything But the Elote Seasoning, a blend inspired by the Mexican grilled corn Elote, a popular street food, and builds off the bagel seasoning mix. Aldi recently came out with an Everything But the Bagel seasoning, too, a nod to the product’s popularity.
In the branded world, McCormick, based in Baltimore, unveiled an Old Bay branded hot sauce on its website in January and sold out of the product within 24 hours. The company brought a new flavor to a fan favorite and capitalized on sizzling growth in the hot sauce category.
Both are examples of companies bringing some innovative heat to the spices, dips and seasonings category, one that is doing especially well. Rising demand for international cuisine is expected to propel the global hot sauce market to $3.7 billion by the end of 2026, a 6.5% compound annual growth rate from 2019, according to a report by Fortune Business Insights. Hot sauces with extra kick from ingredients like harissa and gochujang now consistently appear on consumer rankings of top-rated products in the category.
Meanwhile, the global spices and seasonings market is expected to grow from about $16 billion in 2018 to $23 billion in 2026, according to the National Seasoning Manufacturers Association. Rising demand for organic seasonings using chilies, garlic and ginger is driving the global market, according to Robert Post, executive director of NSMA. In the U.S., he notes, the most commonly sought spices are pepper, chili, ginger, cinnamon, cumin, turmeric, nutmeg, cardamom and cloves.
While introducing new multicultural ingredients to an increasingly diverse U.S. population makes sense, experts caution that the tactic works best when the flavor profile rings true. “Within the cooking sauces category, consumer surveys repeatedly show that authenticity of a product is one of the most important attributes. Flavors that resonate as authentic are showing growth rates above category norms,” said Chris Blanford, senior director of marketing at Sandpoint, Idaho-based Litehouse Foods, a private label manufacturer of salad dressings, sauces, dips and other products under brand names including Litehouse, Organicville, Sky Valley, Green Garden and Brite Harbor.
Litehouse Foods’ Sky Valley Thai Peanut and Sweet Chili sauces are among the company’s fastest-selling items in the hot sauce category, according to Blanford. Both are seeing velocities increase compared to previous 12 weeks by at least 25%. “We’ve also seen this growth in salad dressings within the natural channel. Flavors like sesame, tahini and tamari are providing authentic new flavors and incremental sales dollars to the category.”
Looking Past the ‘Pandemic Pantry’
Perhaps not surprisingly, the recent period of adjustment to coronavirus-related restrictions has resulted in a spike in sales of pantry staples, comfort foods, condiments and traditional dips such as ranch dressing. “Growth rates on typically slower selling items [have increased] more the further into the COVID-19 crisis we go, while high-velocity sellers peaked earlier,” Blanford said. “The focus by consumers has been a mix of what is available, as well as multi-use and family favorite flavors.” As an example, he notes that ranch sales have been higher in recent weeks than coleslaw in the refrigerated salad dressing category.
Stockpiling, which began to accelerate during the second week of March, also is boosting sales of products such as dried herbs, cooking sauces and salad dressings. According to data from IRI and Spins, the four weeks ended March 23 saw refrigerated salad dressing growth rates above 20%, or 15 points above the preceding six-month growth rate. Dried herbs and sauces saw similar trajectories, both with growth rates above 25%.
While some of these forces may linger, marketers can get ahead of the curve by focusing on broader, more evergreen consumer trends. For example, the growing demand for ready-to-eat foods and convenience foods has been driving higher sales in the seasoning category, said NSMA’s Post, noting the benefit of using dried herbs as a quick flavor enhancer with little monetary or caloric expense. Using seasonings allows manufacturers to lower salt and sugar content of their products, while providing unique flavors to make a range of foods more appealing and satisfying for consumers, he said.
Blanford agrees. “This year you can expect to see us drive the development of products that meet the consumer’s growing demand for better-for-you offerings,” he said. New launches will include a zero grams of added sugar ketchup under Litehouse Foods’ Organicville brand, a line of non-GMO freeze dried herbs under the Green Garden brand and a relaunch of Greek yogurt-based dressings offering lower calories and extra protein under the core Litehouse brand.
New Formulations and Formats
While flavor experimentation may work well in dips and sauces, it is more challenging in tried-and-true pantry staples like condiments. The ketchup category, for example, has seen very little in the way of organic growth or innovation lately and continues to be dominated by Heinz, which has roughly 50% market share. “Retailers, every cycle, will come back and ask us what flavored ketchup we are working on,” says Renee Hicks, director of private brands at The Fremont Company in Fremont, Ohio. “For most people, ketchup is just ketchup. They don’t want us to mess with it."
When Walmart tried to inject some fun into the category with its promotional Nickelodeon Slime ketchup two summers ago, apparently even kids were not amused by the strange green product. “It did not sell well at all,” Hicks recalled. “Retailers will occasionally do well with smaller sizes or unique flavors on a limited basis, but it’s not enough to move the needle for the category.” Flavored ketchups inspired by international cuisines have increasingly appeared on restaurant menus, but thus far the trend has not spilled over into food service or retail, she added.
Meanwhile, private label ketchup manufacturers continue to move away from using corn syrup in formulations and are mainly switching to cane sugar, which is often denoted on packaging as “natural.” The movement began with the introduction of the Heinz Simply brand years ago and has been gradually followed by store brands.
“Some major retailers have converted whole portfolios, while others are in the process right now,” said Hicks. Store brands don’t generally widely advertise the shift, though some have introduced a redesigned label with a “made with sugar” ribbon or banner. “The new look tends to bring more attention than the formulation itself. Usually it comes with a sales increase,” said Hicks. Within the next two or three years, Heinz is expected to transition most or all of its products to the Simply Heinz brand, she added.
Other private label manufacturers are looking to strike gold with new packaging formats. In April, Fine Italian Foods introduced Fratelli Mantova Italian Spray Dressing, a single SKU in Extra Virgin Olive Oil & Balsamic Vinegar, at various grocery chains. The first product of its kind, according to the company, it relies on a technology used by most cooking oil sprays. The proprietary bag-on-valve system allows the oil to be atomized without the use of chemicals, additives or emulsifying agents. The spray dressing will be added to Fratelli’s portfolio of 100% natural spray oils used for various cooking techniques and non-stick cooking applications.
Fratelli Mantova’s new spray dressing offers a quicker and more efficient way to dress salads, and it also serves as an ideal finishing oil for pizzas and pastas, said Agron Kosova, manager at Fine Italian Foods in Naperville, Ill. “Typically the spray will use 90% less product than a traditional olive oil or oil-based dressing. Being a high-quality oil, consumers will enjoy the quality and flavor just as much."
The demand for new plant-based products and the push toward clean-label packaging will also provide marketers with new opportunities in categories like dips and sauces. Dollar sales of plant-based spreads, dips, sour cream and sauces grew 54% in the past year and 135% over the past two years, according to Spins data analyzed by the Good Foods Institute. Those numbers far exceeded the increases in dairy alternative categories like creamers and yogurt, per GFI.
Even seasonings are getting in on the plant-based act. Earlier this year, Trader Joe’s introduced its Vegan Chicken-less Seasoning Salt, a mix of common flavorings used in roast chicken (minus the animal products) inspired by a cooking craze in Australia. Apparently, folks Down Under discovered the seasoning works particularly well when sprinkled over French Fries or fish and chips as an alternative to traditional shaker salts.