THE HIP DIP

MIKE STERNMAN

Salsa just keeps getting hotter. Three years after it passed ketchup as America's No. 1 condiment, the Mexican-born product continues to be a big winner

for retailers.

Not wanting to be caught napping, grocers have been quick to capitalize on the category's success, adding varieties and cross-merchandising all over the store.

"Salsa is rising better than the overall category it's in," said Doug Keller, director of grocery at Save Mart Supermarkets, Modesto,

Calif. "It's the amount of items available, very aggressive promotions, the healthy image."

Figures provided by A.C. Nielsen, Schaumburg, Ill., illustrate the segment's meteoric rise. For the 52-week period ended last September, salsa sales in supermarkets totaled $488 million, accounting for 65% of the Mexican sauce category's $747 million volume. For the same period in 1991, salsa accounted for 53% of the Mexican sauce category's $480 million sales in supermarkets. By contrast, taco sauce, the other major element in the Mexican sauce mix, grew an average 3% yearly.

To food aficionados, the reason couldn't be plainer: Where taco sauce can be sugar-laden and heavily processed, zesty salsa has a kick that comes from no-fat hot peppers plus vinegar. Another reason for the rise in sales is consumers are discovering new uses for salsa.

"Using salsa as a dip, that's still king," said Carl Murphy, vice president of grocery at Busch's Valu Land, Ann Arbor, Mich. But he added that "people are slowly turning it into a multipurpose condiment, sauce and cooking ingredient. You can pour salsa on your fried eggs or use it as a meat sauce if you like. Myself, I'll put a couple of spoons of salsa in my bean soup, or perk up homemade chili with it."

Retailers cite the rising popularity of Mexican restaurants as another aid for the category. "Mexican restaurants have exposed people to the Southwestern lifestyle," said Duane Proulx, grocery buyer at Bashas' Markets, Chandler, Ariz. "They'll start with an appetizer of chips and salsa even before someone orders. Those who like the product will look for it in the grocery store."

Citing another get-acquainted opportunity, Andy Knoblauch, buyer-supervisor at Coborn's, St. Cloud, Minn., said, "Baked tortilla chips have opened up that category to people who wouldn't eat chips before."

David DiGeronimo, a buyer at Victory Markets, Leominster, Mass., said in-store demos have helped boost his salsa sales.

"Demos have increased probably threefold," DiGeronimo said, noting the chain keeps a close watch on its demo program. "Instead of having many companies out in our stores, we funnel our samplings through an Andover [Mass.] company. It helps us keep our finger on it."

The pressure to promote, he said, is at its most intense during December and January. "You get every darn salsa vendor and broker out there ready to kill for the Super Bowl and Christmas and New Year's ads." The other particularly strong selling time, especially in Hispanic markets, is Cinco de Mayo, other buyers said.

Given the number of usage occasions, Ross Nixon, vice president of merchandising at Dahl's Food Markets, Des Moines, Iowa, finds 12- and 16-ounce jar sizes wanting.

"The 24-ounce size seems to be where it is happening today. In fact, I would look for the smaller ones to go by the wayside," Nixon said.

In addition to being cross-merchandised in the snack aisle, salsa has become an anchor in the ethnic food section.

"We sell quite a bit of it right off the shelf with ethnic foods," said Gary Stevens, director of grocery at Big V Supermarkets, Florida, N.Y., a member of the Wakefern Food Corp. ShopRite cooperative. "Mexican has grown to an average of 16 feet, not counting direct-delivery vendor sections like Goya and Vitarroz, resulting in more space for salsa. In some of our ethnic stores, we can go to as much as a 90-foot run with a combination of DSD and warehouse Mexican."

One Midwestern retailer said he devotes half of his Mexican section in locations serving migrant workers to "authentic stuff, including salsa, with labels in Spanish." He buys them from gourmet food distributors, he noted.

Retailers are discovering salsa is not a one-size-fits-all product.

"Our mix of people has changed drastically in the last 10 years," Bob Kopplin, a buyer at Dan's Supreme Supermarkets, a Hempstead, N.Y.-based Key Food franchise. "We now cater to 10 different breakdowns of Hispanic people, and every one has their own taste for salsa."

Retailers also report that new products and heavy display activity, have provided a great lift to the category. Products that do make it to the shelves have to contend with private label, which Nielsen reports posted a dollar volume gain of 71.1% to $24.4 million last year. The latest Nielsen figures further show sales of store-brand tortilla chips and salsa moving in unison like a winning dance team, with both enjoying market share gains in dollars of close to 5% and unit-share gains in the neighborhood of 7.5%.

"They often are promoted together," said Tom Yarrows, category manager of Mexican foods at Big Y Foods, Springfield, Mass. His chain features both kinds of products under the World Classics upscale controlled label from Topco, a leading cooperative marketer.

VARIETY IS THE SPICE

One nice thing about salsa is the sheer number of products on which consumers -- and grocers -- can feast.

"The latest thing is different types of flavored salsas," said Debra Romero, a buyer at Hughes Family Markets, Irwindale, Calif. Some head-turners for Romero are salsas spiked with ingredients such as roasted garlic and fire-roasted peppers, salsas resembling corn-type relish, and salsas containing sun-dried tomatoes or an organic ingredient -- generally features "that bring up the price or perception of value a bit." Romero said fruit salsas are also coming on strong.

There's been a recent spicy shift in the category as well. Mild salsa, once the choice of most Americans, has dipped to 42.6% of purchases, according to the Snack Food Association, Alexandria, Va. Medium now accounts for 39% of the salsa share, with hot, at 11.7%, looming ever larger. Other heat shadings make up the rest of the pie.

According to a study conducted by Packaged Facts, a New York-based research company, spiciness levels are not the only thing heating up. The report predicts popularity will rise for thicker, chunkier salsas known as garden, home or restaurant styles.

Single-portion salsas in cups -- often accompanying entrees -- are impacting the lunch market. In what could carry over to supermarkets, vending machines soon will hawk microwavable baked potato and taco lunches with a 2-ounce salsa topping. Fresh food departments of Winn-Dixie Stores, Jacksonville, Fla., now offer a Hispanic-oriented entree with a 3.5-ounce splash of salsa in a cup. Meanwhile, Tampa, Fla.-based Kash 'n Karry Food Stores is reportedly considering a four-pack sleeve of the single-serve salsa for the dairy case, without partnering it in an entree.