Cooking Sauces December 2010

Issues in the Market Key themes What forces are shaping the competitive landscape? How much innovation has there been in the cooking sauces sector? With penetration at over 75%, how can brands encourage greater usage? Who buys cooking sauces and how does this differ by product? How do consumer attitudes towards cooking sauces vary by demographic group? Value sales growth for the sector Retail sales for the cooking sauces sector reached £806 million in 2009, enjoying sales growth of 27% since 2005. Cook-in sauces dominate, with four fifths of consumers having used these in the past 12 months. Trends in the market A return to family eating occasions has helped to drive growth in the oven-bake sector. Brands such as Premier Foods’ Loyd Grossman and Sharwood’s have been quick to react, launching oven-bake ranges in Italian (made with pasta) and Indian (made with rice) varieties. Mintel’s research for this report found that two fifths (41%) of consumers agree that there is too much salt in cooking sauces, with some brands such as Jamie Oliver reducing salt content in response to concerns. While consumers have been showing a genuine interest in home cooking and cooking from scratch, time constraints, cost and a lack of skill, particularly for more complex dishes including ethnic sauces is stemming the shift away from cooking sauces. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Internal Market Environment Positioned as an affordable meal solution, pasta cooking sauces have fared well as consumers tightened their belts during the recession. The market is benefitting from a renewed interest in cooking, which has been met by premium products and celebrity chef ranges. Health remains an issue with cooking sauces looking to reduce salt content in order to appeal to scratch cooks. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Broader Market Environment Rising commodity prices have driven an increase in the average cost per pack, while promotional activity has resulted in growth in volume sales. Consumer sentiment remains fragile as the UK emerges from the recession, with the predicted rise in the cost of living causing shoppers to remain cautious. The increasing proportion of ABC1s, should create opportunities for value growth in the sector through premiumisation, while the dominance in the number of families by 2015 bodes well for the long-term growth of the sector. Figure 1: Forecast adult population trends, by lifestage, 2005-15 Source: Office for National Statistics/TGI/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Strengths & Weaknesses Over three quarters (77%) of consumers buy into the cooking sauces market, with four fifths of consumers opting for cook-in sauces. The increasing proportion of AB consumers is promising for pasta sauces, where usage is biased towards this demographic. Major brands continue to take inspiration from food service trends, with Sharwood’s launching a Biryani range and Blue Dragon seeking to emulate the success of Japanese cuisine by unveiling a Yaki sauces range. New entrants such as the English Provender Company’s Very Lazy range target have-a-go chefs who are looking for a quality sauce that they do not need to make from scratch. Weaknesses With penetration so high, it is hard to attract new users to the category and the challenge is to grow frequency of usage. The growing AB and 55+ demographics are lighter users of cooking sauces, with usage peaking among C2’s, posing a challenge for future value growth, innovation and premiumisation in the sector. Consumers’ increasing interest and willingness to cook from scratch poses a threat to the sector, although the time and cost saved by using a cooking sauce should help to maintain usage. Two fifths (41%) of consumers agree that there is too much salt in cooking sauces, which is of great concern to older consumers. Reductions in salt content by brands such as Jamie Oliver should help to alleviate such fears. Promotions have become widespread in the sector, affecting volume sales, while rising commodity prices have pushed up costs. Brands are therefore attempting to move to temporary price promotions and x for y offers, rather than multi-buys. The growth in one-person households will prove problematic, as singles are less inclined to buy cooking sauces, although innovation such as Loyd Grossman’s ‘For One ‘range should mitigate this. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Who’s Innovating? Innovation has sought to cater to consumer lifestyles, with Loyd Grossman’s “For One” range appealing to single-person households. The success of oven bakes during the recession has prompted innovation from Patak’s with its Biryani sauce range. An emphasis on origins continues for Asian sauces, with regionality specified on-pack. Restaurant brands are entering the pasta sauces market, with a Pizza Express pasta sauce range now available. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Market Size Valued at £806 million (2009), the cooking sauces market has seen robust growth of 27% since 2005. The cooking sauces market is benefiting from flavour and format innovation that has brought new customers to the category. Rising commodity costs have led to a rise in the average cost per pack, although the situation is thought to be stabilising. Mintel forecasts that the total market is set to reach £1,041 million in the next five years, rising by 25% by 2015. Figure 2: UK retail sales of cooking sauces, by value, 2005-10 Source: Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Market Forecast Future Market Growth The future uncertainty within this market is illustrated by the coloured bands around the five-year forecast. The widening bands successively show the developments that occur within 95%, 90%, 70% and 50% probability intervals. Statistical processes predict the central forecast to fall within the darker shaded area which illustrates 50% probability, ie a five in ten chance. At a 95% confidence interval, we are saying that 95 out of 100 times, the forecast will fall within these outer limits, which we call the best and worst case forecast as these, based on the statistically driven forecast, are the highest (best case) and lowest (worst case) market sizes the market is expected to achieve. The best and worst case forecasts take the value of cooking sauces from an expected £833 million in 2010 to £1,186 million(best case) and £897 million (worst case) in 2015. With key core user groups such as the 25-34s seeing a surge over the next five years and innovation continuing to keep consumers buying into the cooking sauces sector, Mintel expects the market to grow to a total of £1,041 million in 2015. © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Market Share Thanks to heavy investment, Mars’ Dolmio brand has grown sales and share, now representing almost one fifth of the total market. The focus has been on family occasions and dishes that are suitable for all, such as Bolognese, pasta bakes and in 2010, its attention has been on its Lasagne range. Own-label continues to appeal to more money-conscious consumers, although retailers have failed to heavily promote their own ranges as they concentrate on the major branded players. Figure 3: Manufacturers’ shares in UK cooking sauces, 2006-09   Source: Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Brand Communication and Promotion Above-the-line support for cooking sauces has been in decline since 2006, although 2010 saw a return to pre-recession levels. Mars continues to dominate advertising spend, accounting for almost half the total budget since 2006. Dolmio’s focus in 2010 has been on its Lasagne range following a return to family meal occasions. Figure 4: Highest spending brands on cooking sauces, 2008-10 *until 31 October 2010 Source: Nielsen Media Research © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Consumer Usage Almost a third of consumers (31%) use all three types of cooking sauces: cook-in, oven-bake and pour-over. This is rather low considering the similarities between the sauces but it is greater than the solus users of each of the separate segments. AB consumers and those living in larger households are higher than average users of all three, which is promising for increasing their repertoire of sauces. Figure 5: Crossover in usage of cook-in, oven-bake and pour-over cooking sauces, September 2010   Base: 766 internet users aged 16+ who have used cooking sauces in the last 12 months Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Consumer Attitudes Salt content is a concern for consumers, with two fifths (41%) agreeing that cooking sauces contain too much salt. This increases by age. Figure 6: Agreement with statements on cooking sauces, September 2010 Base: 766 internet users aged 16+ who have used cooking sauces in the last 12 months With Jamie Oliver’s Spicy Olive and Garlic sauce being found to have the highest salt content in CASH’s study (3.0g if salt per 100g), the brand has been forced to react and in 2010, rebranded, repackaged and had its salt content reduced in some flavours, a move which producer Fresh Retail Ventures claims does not compromise the taste. While the bottled sauces category has embraced consumer concern and introduced lower salt varieties, the cooking sauces market has yet to do so, or has at least failed to shout about such changes.   Source: Toluna/Mintel © 2010 Mintel International Group. All rights reserved. Confidential to Mintel.

Amy Lloyd Your contact Food & Drink Analyst mintel.com fax: 020 7606 5932 email: alloyd@mintel.com mintel.com