Spread on the Flavor

From anytime snacking to party time, few foods offer the versatility and convenience of dips and spreads, and more people are reaching for them. “Spreads in the US,” a report published in November 2014 by London-based Euromonitor, forecasts that the market for dips and spreads will reach $4.5 billion in 2019.

And sales data from Chicago-based market research firm Information Resources Inc. (IRI) indicate that many shoppers are already choosing store brand offerings here. Private label refrigerated flavored spreads, for example, show a 31 percent increase in dollar sales during the 52 weeks ending Dec. 28, 2014, while private label cheese spreads/balls experienced a 17 percent increase.

Retailers still will find room for growth, however. Keeping up with the latest trends for spreads and dips can mean even more success in this category.

Go nuts

One way to grow more sales is by “going nuts.” The mighty peanut butter is facing a lot of competition in the spread aisle, much of it from butters based on such nuts as cashews and almonds, as well as butters based on seeds such as sunflower and pumpkin.

According to “The State of the Specialty Food Industry 2014” report, published by the New York-based Specialty Food Association Inc., sales of nut and seed butters grew a whopping 51.6 percent from 2011 to 2013. The growing interest in nut-based spreads is also a trend noted by Euromonitor.

“Traditionally, peanut butter spreads comprised the vast majority of nut- and seed-based spread sales in the U.S. However, niche brands like Justin’s and SunButter, which sell almond and sunflower-based spreads, have recently expanded their distribution channel presence to include big name supermarket and hypermarkets,” Euromonitor states, noting that the Orrville, Ohio- based J.M. Smucker Co. is also getting in on the action with its Jif brand almond and cashew butters.

Focus on flavor

For retailers wanting to increase sales of store brand spreads and dips, having flavors that jump out at shoppers is key.

“Consumers are looking for spreads to make a dull piece of bread or fruit taste better with a unique flavor profile,” says Kim Holman, director of marketing at St. Francis, Wis.-based Wixon Inc., a flavors and seasonings company.

According to data from Euromonitor, chocolate spreads, in particular, are in high demand, partly because of their versatility.

“Whereas traditional spreads with the likes of jam, jelly and peanut butter are typically used in conjunction with bread and more meal-oriented applications, chocolate spreads can be consumed in and outside of the context of meals,” the Euromonitor report notes.

Many consumers, particularly younger ones, are using Nutella spread not just as a spread, but also as a cooking and baking ingredient, meaning a competitively priced store brand alternative — perhaps with recipes on the label — could be very appealing to shoppers.

“I think that Nutella has really proven that sweet spreads have the power to grow sales and be a major player in the aisle,” Holman notes.

When it comes to fruit spreads, according to Euromonitor, grape remains the favorite of Americans, but premium flavors are seeing sales growth, too.

“Incorporating more exotic fruits like mango and superfruits like acai berries is on-trend,” says Michelle Joller, category marketing manager at Platteville, Wis.-based Bay Valley Foods LLC, a manufacturer of a variety of private label spreads and other foods.

Savory flavors are hot, too, though.

“Beer cheese is exploding on the spread front,” notes Mary Lindemann, marketing director for Newton, Wis.-based Pine River, which produces a variety of cheese spreads, including ones for private label customers. She adds that hot or spicy ingredients such as sriracha are getting noticed.

And with ethnic flavors continuing to grow in popularity, particularly among millennials, the 2015 McCormick Flavor Forecast suggests Garlic Pepper Labneh and Tomato & Roasted Red Pepper as two Middle Eastern-influenced spreads that could gain traction this year.

But whatever the flavor, spreads also need to convey quality.

“Premium products are outpacing the rest of the category, and sales of products with ‘natural’ claims are increasing,” Joller says. “Adding a premium product tier is an excellent way for retailers to expand store brand sales by potentially reaching new shoppers.”

Offer healthful options

Besides flavor, consumers also want spreads and dips that are considered better-for-you. Non-GMO, organic and gluten-free claims can motivate shoppers to purchase the store brand. In line with those claims, Holman predicts that eventually manufacturers could start adding functional benefits, too, such as vitamins and minerals to spreads and dips to generate even further consumer interest, as has been the case in other grocery categories.

Some of the most healthful — and most popular — dips and spreads already on store shelves are Mediterranean-inspired ones.

“Greek yogurt and hummus continue to resonate with consumers,” says Karyn Andrew, director of marketing for Glendale Heights, Ill -based Kronos Foods, which offers a number of products and culinary solutions for Mediterranean cuisine. “The numbers are incredible from an awareness standpoint.”

Both Greek yogurt and hummus are high in protein, with hummus also being high in fiber, but retailers shouldn’t go overboard in stressing their health benefits, Andrew warns.

“Messaging that reminds consumers about the protein content and versatility should be used, but don’t make specific health claims.” Instead, she advises retailers to try to grab shoppers with exciting beyond-the-ordinary flavors such as red pepper, chipotle and roasted garlic, and also by emphasizing the variety of uses for each.

“There is a huge opportunity for retailers to educate how both Greek yogurt dips and hummus can be used beyond just a dip,” Andrew says, noting that “signage, recipes, videos on the grocer’s social media channel or even something as simple as pointing the consumer to Pinterest for recipes will extend their sales.”

And with these and other refrigerated dips, retailers also should consider product shelf life.

“They will want it to have a long shelf life for both their sales cycle and the consumer’s use,” Andrew says.

Claims that promise convenience can also mean more store brand sales.

“Dips that can be refrigerated and heated in the microwave help consumers in their time-tight days,” Holman says, adding that Mintel data show that “microwaveable” claims for new product launches of dips and spreads almost doubled from 2013 to 2014.

Last but not least, one of the strongest means of drumming up excitement for store brand dips and spreads is simply giving customers the opportunity to sample them.

“It’s the best way for people to try a new item or reinforce the goodness of a store brand,” Lindemann says.

Do consider adding nut and seed butters to the store brand spread lineup.

Don’t limit offerings to NBE; premium spreads are outpacing the rest of the category.

Do consider adding healthful own-brand offerings such as hummus and Greek yogurt dip.

Don’t miss the chance to educate consumers on uses beyond the traditional for dips and spreads.