Sector Trend Analysis - Sauces, Dressings and Condiments in the United States

Contents

• Introduction
• Consumer trends
• Trade overview
• Retail sales
• Company
• Product launch analysis
  • Ingredients
  • Flavours
• Distribution channels
• Claims
• Packaging
• New product examples
• For more information
• Resources

Introduction

The United States is the largest consumer and importer of sauces, dressings and condiments in the world, representing 20% of the world’s retail consumption and 13% of the world’s import share. This sector indicates a dynamic opportunity for Canadian producers of sauces, dressings and condiments related products that are healthier due to the markets shift towards product offerings that are nutritious, healthy, and flavourful in nature. As more consumers move away from traditional sauces, dressings and condiments that were predominantly produced by American companies, there is now a growing chance for international producers to offer American consumers a diverse-range of ethnic products in this sector.

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United States	37%
Germany	18%
United Kingdom	17%
Canada	14%
France	14%
Source: Global Trade Tracker, 2017

Consumer trends

Consumer preferences and diet habits are changing the consumption patterns for traditional staple products such as ketchup, mayonnaise, and mustard, while increasing the consumption for flavourful ethnic sauces, dressings and condiments in the United States.

According to Euromonitor, American consumers’ preferences for sauces, dressings and condiments are shifting towards healthier and more flavourful products. They have a growing desire to incorporate dishes and ingredients from a wider variety of cultures into their diets. This is especially relevant to younger consumers, who are demanding more snack foods and ethnic flavours. Another rising trend is the increasing interest for premium products with an organic, all-natural, small-batch or craft positioning. Additionally, consumers are seeking greater opportunities to incorporate new ingredients into home cooked meals across cultures and provide gourmet flair to their meals (Euromonitor, 2017).

Trade overview

The United States is a net importer of sauces, dressings and condiments-related products, with imports worth US$2.6 billion in 2016 and exports worth US$1.9 billion. Canada is the fourth-largest supplier of sauces, dressings and condiments-related products worth US$258.6 million to the United States, after Vietnam with imports worth US$357.7 million, India worth US$298.1 million, and Mexico worth US$259.9 million.

In 2016, preparations for sauces, prepared sauces, mixed condiments, and seasonings made up 37% of the United States sauces, dressings and condiments-related product imports from the world, worth US$945.2 million and a compound annual growth rate of 6% from 2012 to 2016. Imports from Canada saw a growth rate decline of -0.14% from 2012 to 2016; however, there was an 8% increase from 2015 to 2016.

Preparations for sauces, prepared sauces, mixed condiments, and seasonings made up 83% of Canada’s sauces, dressings and condiments-related product supplied to the United States. Soy sauce saw the highest growth rate of 13.2% of Canada’s sauces, dressings and condiments-related products supplied to the United States.

Retail sales

From 2012 to 2016, sauces, dressings and condiments grew at a compound annual growth rate of 2.1%, with retail sales reaching US$24.4 billion in 2016. Table sauces represented over 36% of the sector’s retail sales with salad dressings, mayonnaise, and ketchup leading the category sales. However, due to shifting consumer trends, traditional table sauces such as mayonnaise, ketchup, and mustard experienced flat or declining growth in 2016. Alternatively, products that exhibit ethnic and spicy qualities, such as herbs and spices, soy and chili sauces experienced strong growth in the review period, with retail compound annual growth rates of 5.2%, 4.0%, and 6.5%. The growth experienced in the herbs and spices subcategory under cooking ingredients, is due to rising prices and increasing sales of premium gourmet and ethnic products (Euromonitor, 2017).

The cooking ingredients category represented the second-largest sauces, dressings and condiments category, with a compound annual growth rate of 2.9% from 2012 to 2016, and reaching retail value of US$8 billion in 2016. According to Euromonitor, American consumers’ desire for adding gourmet qualities to home-cooked meals is a trend that also resulted in strong growth of liquid stocks and fonds (i.e. chicken and beef-based stock and bone), which experienced a growth rate of 3.6% from 2012 to 2016.

The third-largest category was the dips which represented about 15% of the sector’s retail sales. The category saw a compound annual growth rate of 3.8% from 2012 to 2016, with retail sales reaching US$3.6 billion. Although the category is primarily made up of salsa products, the recent growth in dips has been driven by the growing sales of hummus and guacamole products, which is in line with the shifting demand for more ethnic products.

The sale of sauces, dressings and condiments is forecasted to reach US$28.4 billion by 2021 at a compound annual growth rate of 3.4% from 2017 to 2021. The shift towards more bold flavours and gourmet cooking is expected to continue. However, the sector is likely to face strong competition from foodservice establishments and the snack sector due to the rise in “snackification” trends among young American consumers who prefer to snack regularly than eating traditional meals. As the earning and spending power of millennials increase in the future, this trend towards snacking is likely to continue, limiting some of the potential for future growth of more traditional sauces, dressings and condiments, but providing strong opportunity for products that can adapt well to these snacking trends (Euromonitor, 2017).

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Table sauces	36%
Cooking ingredients	33%
Dips	15%
Pickled products	10%
Other sauces, dressings and condiments	4%
Tomato pastes and purées	2%
Source: Euromonitor, 2017 *E: Estimate

Health and wellness

Health and wellness (HW) sauces, dressings and condiments made up 9% of the sector’s total retail sales in 2016, worth US$2.1 billion. During the five year review period, the sector grew at a compound annual growth rate of 3.0% (2012 to 2016) and is expected to grow at a compound annual growth rate of almost 5.5% from 2017 to 2021.

The organic portion of the health and wellness sauces, dressings and condiments saw the most significant growth, with a compound annual growth rate of 11.5% from 2012 to 2016. This is partly due to the rise in demand for natural and organic products in the United States. The category is expected to continue to grow at a dynamic compound annual growth rate of 10.6% from 2017 to 2021. Alternatively, the “reduced fat” health and wellness category saw a decline in growth with a compound annual growth rate of -1.8% from 2012 to 2016. However, this category is expected to recover at a compound annual growth rate of 1% from 2017 to 2021.

Company

The top three companies with the most market share in the sauces, dressings and condiments sector were Kraft Heinz Co, McCormick & Co Inc, and Campbell Soup Co. With the merge of HJ Heinz and Kraft Foods Group Inc in the review period, the new Kraft Heinz Co continued to be the leading company in the sector despite slow and flat growth in 2016. In 2016, the company’s retail sales amounted to US$2.7 billion, with 11.2% market share of the total sauces, dressings and condiments sector. Despite the company’s dominant share over its competitors, Kraft Heinz Co is less popular with millennial consumers.

McCormick & Co is the second-largest company with 7.8% of the sector’s market share and total retail value of US$1.9 billion. According to Euromonitor, McCormick & Co made significant gains by the increasing popularity of it brands, such as Lawry’s which offers a variety of seasoning mixes, spice blends and marinades, positioned as authentic craft products from Texas. Another contributing factor to this brand’s popularity is its ethnic qualities and more intense flavour. Additionally, the company took several steps to transform its product offerings by appealing to the growing consumer demands for healthy options and concerns over ethical and natural food production (Euromonitor, 2017). As a result, the company saw a 5% current value growth in 2016 and compound annual growth rate of 2.6% from 2012 to 2016.

Campbell Soup Co. is the third-largest company with a 5.4% market share in the sauces, dressings and condiments sector, and retail sales reaching US$1.3 billion in 2016. Like McCormick & Co, Campbell Soup Co.’s success in 2016 was mainly driven by the popularity of product offerings with ethnic qualities and more intense flavours.

Although the sauces, dressings and condiments sector is dominated by American companies there are a number of international companies maintaining a strong presence in the sector. According to Euromonitor, companies such as Hellmann’s Bestfoods, and Kikkoman Foods are all experiencing strong positive growth, much of which was fueled by sales of ethnic products.

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Kraft Heinz Co	2,735.3
McCormick & Co Inc	1,900.5
Campbell Soup Co	1,328.1
Unilever Group	1,044.5
PepsiCo Inc	904.6
Mizkan Group Corp	717.5
Clorox Co, The	685.7
Pinnacle Foods Inc	591.4
ConAgra Brands Inc	586.6
Strauss Group Ltd	571.1
Source: Mintel, 2017

Product launch analysis

In response to consumers’ shifting demands, companies are aggressively pursuing new product launches or alterations to existing products that incorporate spicy and ethnic qualities into their product lines and are making strong efforts to alter their production processes accordingly (Euromonitor, 2017). For example, in 2015 ConAgra launched Gulden’s Sriracha Mustard and Stone Ground Dijon Mustard, while tomato processor, Red Gold, introduced ketchup and salsa products containing sriracha in early 2016 (Euromonitor, 2017).

According to Mintel’s Global New Products Database, there were 9,617 sauce, dressing and condiment products launched in the United States from 2012 to 2016. Most of which were new product launches, variety and range extensions, while 26% of the launches were relaunches, new formulations, and changes in packaging. The top three origins for ingredients used in the product launches were Chile, Italy, and the United States. Around, 13.1% of the products launched in the United States were identified as imported products, while 16.1% were identified as non-imports. Of the products launched, 62% were branded while 38% were private labels.

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2012	1,846
2013	2,251
2014	1,674
2015	1,686
2016	2,160
Source: Mintel, 2017

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New variety/range extension	41%
New product	33%
New packaging	20%
Relaunch	5%
New formulation	1%
Source: Mintel, 2017

The top categories to see the most product launches from 2012 to 2016 were seasonings with a total of 2,218 products, table sauces with a total of 1,439 products, and cooking sauces with a total of 1,153 products. The top companies to launch new products were Kroger with 473 products, Williams-Sonoma with 407 products, Aldi with 295 products, Target with 283, and McCormick with 247 products.

Ingredients

The top five ingredients used in sauce, dressing and condiment launches were salt, water, garlic, spices and onions. However, ingredients that have grown in use since 2012 were thyme, filtered water, cumin seed, corn starch, and flavouring substances. According to Mintel, the new ingredients appearing in this sector are shrimp shell, red currant juice, crab apple, curing agents, date juice, raisin juice, sparkling wine, pomegranate vinegar, silver onion, and kimchi.

Flavours

The top flavours that were identified in sauces, dressings and condiments were garlic, tomato, salsa, roasted/toasted, and barbecue/BBQ/barbacoa. The flavours that have grown in use since 2012 were sriracha (hot chili sauce), salt/salted, Greek yogurt, cinnamon, and chili/chili pepper (green). According to Mintel, the fastest growing flavours are onion, pepper/peppercorn, cranberry, salsa verde (green sauce), mushroom, and bay leaf/laurel.

Distribution channel

Supermarkets remained the dominant retail channel for sauces, dressings and condiments in 2016 with a value share of 62%. Most consumers tend to purchase sauces, dressings and condiments in supermarkets as part of larger shopping trips with more time-consuming home dining experiences in mind (Euromonitor, 2017). Private labels struggled in 2016 for the sales of cooking sauces. Convenience based channels, such as convenience stores, drug stores and discounters held a portion of the sector sales. Internet retail sales made up 1.5% of the sectors retail sales, however, this represents a significant increase from 2010 at compound annual growth rate of 7.8% (2010 to 2016) and a consistent year on year growth of about 8%.

Claims

Due to the shift in consumer preferences, manufactures are advertising their products as being natural or as having ethical qualities, such as being organic, non-GMO or free of artificial ingredients (Euromonitor, 2017). For example, during the review period (2012 to 2016) the top claims associated with sauce, dressing and condiment launches were kosher, low/no/reduced allergen, gluten free, no additives/preservatives, and all natural ingredients.

Packaging

According to Euromonitor, a number of new packaging innovations were announced in 2016 that sought to cut down on food waste, increase convenience and eliminate the use of chemicals viewed by many consumers as potentially harmful to their health (Euromonitor, 2017). Companies are now launching new packaging for sauces, dressings and condiments that provide smaller, health-conscious portions and reduce the waste often associated with traditional packaging used for products in the sector, such as large bottles of salad dressings. In addition, companies are now looking into alternative packaging materials, such as acrylic and polyester packaging, to discontinue the use of chemical in their packaging. This is a direct response to consumers’ growing concerns for health risks caused by the use of chemical, such as Bisphenol A (BPA) (Euromonitor, 2017).

During the review period of sauce, dressing and condiment launches from 2012 to 2016, the common package materials used for over 43% product launches were plain glass. The top three packaging manufactures used in the product launches were Owens-Illinois Glass Containers (USA), Ardagh Glass (UK), and Berry Plastics Corporation (USA).

New product examples

Smoked Honey Sauce

Record ID	Company	Brand	Category	Sub-Category	Country	Store Name
4503235	Bee Local	Bee Local	Sauces & Seasonings	Table Sauces	USA	Whole Foods Market

Store Type	Store Address	Date Published	Product source	Launch Type	Price in local currency	Bar Code
Natural/Health Food Store	New York 10011	Dec 2016	Shopper	New Product	US$12.99	814417021134

Bee Local Smoked Honey Sauce is made with American honey and smoked with Cherrywood using a Traeger wood fire grill. It is described as sweet and smoky, and can be used with cheese, barbecue, roasted vegetables, fried chicken and dressings. This product retails in an 8-fl-oz. pack.

Ghost Pepper Mustard

Record ID	Company	Brand	Category	Sub-Category	Country	Store Name
4430193	Beaverton Foods	Inglehoffer	Sauces & Seasonings	Table Sauces	USA	Brooklyn Fare

Store Type	Store Address	Date Published	Product source	Launch Type	Price in local currency
Supermarket	New York 10014	Dec 2016	Shopper	New Variety/Range Extension	US$4.49

Inglehoffer Ghost Pepper Mustard is said to be America's hottest mustard, and is free from gluten. It retails in a 10.25-oz. pack, bearing the Facebook logo.

Artichoke, Jalapeno & Parmesan Premium Dip

Record ID	Company	Brand	Category	Sub-Category	Country	Country of Manufacture	Import Status
4484703	Reser's Fine Foods	Stonemill Kitchens	Savoury Spreads	Dips	USA	USA	Not imported

Store Name	Store Type	Store Address	Date Published	Product source	Launch Type	Price in local currency	Bar Code
Schnucks	Supermarket	Cape Girardeau 63702	Dec 2016	Shopper	New Packaging	US$2.99	071117180312

Stonemill Kitchens Artichoke, Jalapeno & Parmesan Premium Dip has been repackaged. The product contains no artificial colors or flavors, is said to be made with real parmesan cheese, and retails in a 10oz. pack.

Dad's Original Sauce

Record ID	Company	Brand	Category	Sub-Category	Country	Store Name
5188155	Jambco	Bongiovi Brand Pasta Sauces	Sauces & Seasonings	Pasta Sauces	USA	Safeway

Store Type	Store Address	Date Published	Product source	Launch Type	Price in local currency	Bar Code
Supermarket	Seattle 98121	Oct 2017	Shopper	New Product	US$2.99	858981004148

Bongiovi Brand Pasta Sauces Dad's Original Sauce is a premium, all natural sauce. It is free from gluten and is kosher certified. It retails in a 9-oz. pack. The manufacturer claims that the profits help combat hunger and homelessness through the Jon Bon Jovi Soul Foundation.

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

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For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International Market Intelligence page, arranged by region.

Resources

• Euromonitor, 2017.
• Euromonitor, Sauces, Dressing, and Condiments in the US, 2017.
• Mintel, Global New Products Database, 2017.
• Global Trade Tracker, 2017.

Sector Trend Analysis - Sauces, Dressings and Condiments in the United States
Global Analysis Report

Prepared by: Ranna Bernard, Market Analyst

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