FLAVOR FAVES

LIZA CASABONA

With the recent explosion of new products in the condiments category, consumers and retailers alike must choose the products best suited to their needs. For retailers, this translates into an editing process, removing weak-performing items from shelves and leaving room for those with expected staying power.

Geographic location and demographics affect new product trends, but retailers across the country are trying to make room for increasingly higher-quality condiments, sources told SN. Yet for a majority of retailers, expanding the space devoted to condiments is not an attractive option.

Food Lion, Salisbury, N.C., has not made any major adjustments to the space devoted to condiments despite an increase in sales, said spokesman Jeff Lowrance. Sales growth does not justify major changes, he asserted.

Food Lion's category managers review new offerings in each segment and try to select items with the most sales potential, he said.

"The challenge is to determine which items will add incremental dollars to the category and stock those items," said Lowrance.

Ross Nixon, vice president of merchandising, Dahl's Food Markets, Des Moines, Iowa, agreed. He said the 12-store chain hasn't increased the large amount of space already dedicated to condiments, but has shifted the kinds of items offered and the quantity of space dedicated to each.

Flavored rubs for meat -- which are applied prior to cooking or grilling, similar to a marinade -- is the largest group of new products to emerge in in terms of stockkeeping units, he said. However, he is skeptical of their sustained popularity.

"Who knows how many are going to be around in a year? They are good products, but I don't think that you necessarily need three or four different companies in the category with each company manufacturing one to five or six different SKUs."

The rubs are popular enough to be placed at premium prices, possibly at the expense of traditional barbecue sauces. Nixon said an Open Pit or traditional barbecue sauce could carry a price of 79 cents, but his customers prefer the more expensive rub products, which he said often hover around a $2.99 price point. Barbecue sauce is by far the weakest link in the condiment category for the Iowa market, he said.

"In our market, the barbecue sauce category as a whole has really been flat to down for two or three years."

Not all retailers are able to accommodate new products in the same way due to space restrictions, even with some jockeying and editing of old products to make way for new ones.

According to statistics from the Chicago-based Information Resources Inc., the top five categories to experience dollar-share growth for the year ended March 24 were hollandaise/bearnaise/dill sauces; ketchup/mustard combinations; specialty nut butter; meat sauce/marinade/glaze; and Oriental cooking oils, in that order.

In a year that saw most condiment categories lose dollar share or experience only minimal growth, the meat sauce/marinade/glaze category increased 9.7% to hold a 41.4 dollar share, an increase retailers can see in the aisles.

"You've got this whole explosion of marinades," said Mary McLaughlin, vice president of procurement and category management at Fresh Brands, Sheboygan, Wis. "We've literally had to go into our stores and create between four- and six-foot sections to handle all the new items that have been introduced in that segment over the last two years." Marinades are increasing across the board she said; everything from ethnic flavors to branded items connected to television chefs are bombarding the category.

"Anybody and everybody is getting into this category on a very large basis, and the products are selling."

McLaughlin said new introductions are creating incremental sales and making the overall category very profitable in her stores.

However, not all new introductions carry the same growth potential. While the ketchup/mustard category experienced a 48.3% increase in dollar sales over the last year, many retailers believe the products that fueled the growth in that category are pure novelty.

McLaughlin said colored ketchup and other such products are not items she thinks can sustain growth over the long term.

"There's not a large repurchase rate on those products. People will buy them once, they'll try them, but they're not as apt to come back and repurchase them."

She said the introduction in the last year of additional ketchup colors is responsible for the hearty sales increase. Nixon of Dahl's also said he is unsure how long the ketchups will continue to sell.

Retailer skittishness about the sustainability of the new condiments is reflected in the reluctance to pilot private-label counterparts to national brand products that are perceived to be trendy.

"Regarding new and innovative items, we are taking a wait-and-see approach as many new items have not lived up to their billing. We want to be relatively sure that the new items will be successful before we invest in store brands," said John Gianakas, director of category management support for Bi-Lo, an Ahold subsidiary based in Mauldin, S.C.

IRI statistics show that private-label ketchups did not fare well over the last year, posting a decline of 4.4% in dollar share.

Retailer reluctance to enter some private-label categories does not extend across the whole condiment aisle, however. The hollandaise/

bearnaise/dill sauce segment experienced its largest growth over the last year, mirroring overall category statistics. Private-label products in this category increased by a whopping 3,438.6% in dollar share over the last year.

Large growth in dollar share was also seen in the meat sauce/marinade/glaze category, which grew 30.6%, while taco sauce grew 33.9% and Mexican sauce/marinade increased 25.8%.

McLaughlin sees a sustainable growth potential in the marinade and sauce category. She said Fresh Brands introduced a private-label line of marinades about a year and a half ago that is doing very well. The retailer introduced a line of marinade flavors that mirrored the most successful flavors found in the national brands: Caribbean, teriyaki, Thai, sweet and sour, and honey mustard.

"Traditionally, condiments have been a tough category for private label, and we have not found that to be the case with the marinades," she said.

McLaughlin sees the increase in marinades' popularity as indicative of changing meal-preparation habits. Sauces and marinades have always been a part of cooking practices, but now they are no longer being made from scratch.

"People just don't have that kind of time to devote to meal preparation any more; marinades allow people to put variety into a meal. You can take a boneless chicken breast, marinate it, and create a variety of different meals."

The premium product prices on the marinades make them attractive for retailers, she added, but still don't exceed what a consumer would spend to eat a similarly flavored meal at a restaurant. The biggest brands, according to McLaughlin, are Emeril Lagasse's line and Lawry's, one of the first marinade introductions from Unilever.

Gianakas agrees: "Consumer products companies have recognized several consumer needs that need to be fulfilled: quick meals, ease of preparation, and the need to duplicate tastes from restaurant experiences at home." The success of the new products, he added, depends on their ability to meet the needs of consumers while remaining valuable.

The condiment arena may be very attractive for retailers looking to increase their Center Store share of the market, said Brian Sharoff, president of the Private Label Manufacturers Association, New York.

"For private label, the condiment category is one of those growth categories. It's due to the fact that condiments are a solid, profitable item in the retailer's repertoire; it's not just a commodity item but a value-added item. In general, it can fall into either gourmet or premium private label very easily."