Category Review - Pickles

Category In a Pickle?

October 12, 2012
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You might say the pickle category finds itself over a barrel.

The combined sales of pickles, olives and relish grew 8 percent from 2007-12, reaching $2.5 billion. But most of that growth took place at the depths of the recession, 3.7 percent in 2008 and 4.5 percent in 2009, probably because consumers turned more to home cooking. The category segment actually slumped 0.3 percent in 2011, according to Mintel International Group, Ltd., Chicago, which predicts a further drop of 0.7 percent by the end of 2012.

SymphonyIRI Group, Chicago, measures similar performance for the year ending July 8, with their more finely segmented measure that only includes pickles off

Eye on The National Brands

Pinnacle Foods extended its Vlasic pickle brand with the addition of Farmer’s Garden by Vlasic. The line touts real ingredients – no artificial coloring or flavoring , as well as no corn syrup and varieties include deli style halves, bread and butter chips, zesty garlic chips, kosher dill halves and kosher dill spears.

0.27 percent, to $528.5 million in sales. Private label pickles fared even worse, SymphonyIRI says, down 4.34 percent to $155.5 million in sales.

“It’s a category that overall is probably shrinking some,” says Pat Hunn, president of First Place Foods, Garland, Texas. “It’s certainly not a vibrant, growing, energy drink type of category. It’s just kind of there.”

Overall, pickles, olives and relish represent 26.1 percent of condiment sales, according to Mintel, which speculates that those items benefit from appearing as a healthier and possibly fresher option than ketchup or mustard.

“The utilization of vegetables, such as cucumbers, cabbage, and peppers, and the fact that some of these offerings are available in the refrigerator section (rather than being solely shelf stable) aid in this,” according to an August 2012 report on condiments from Mintel. “Increasing premium, natural, and refrigerated condiment options across segments may be a means of growing interest among consumers looking for healthy food options.”

Pinnacle Foods and Mt. Olive brands comprised more than 20 percent of sales at food, drug and mass merchandisers, Mintel says, adding that Mt. Olive’s product range — with pickles, peppers and relish — is helping the company to grow sales, gaining share on Pinnacle’s Vlasic products.

Overall, the condiment category grew 15 percent from 2007-12, although only 4 percent when adjusted for inflation, and similar to the pickles, olives and relish subcategory, condiments grew most in 2008 (5.6 percent) and 2009 (6.2 percent). The condiment category dipped 0.6 percent in 2010 before resuming slower growth, Mintel reports, “coinciding with boosts in consumer confidence that the economy would improve. As consumers return to eating away from the home, they decrease their usage of condiments at home.”

Mintel recommends that condiment manufacturers keep consumers’ healthy eating desires in mind, noting that 42 percent of consumers say they maintain a mostly healthy diet and 52 percent say they’re watching what they eat. The company’s data shows 52 percent of those who buy condiments pay attention to sodium content and the same percentage are concerned about artificial preservatives. This particularly impacts older consumers’ use of condiments; those 65-plus only used them 1.56 times per day, on average, while those ages 18-24 used them 2.11 times.
 

“Growing category participation through the development of health-conscious products and the promotion of healthful qualities will be an important means of growing business." 

“Growing category participation through the development of health-conscious products and the promotion of healthful qualities will be an important means of growing business,” Mintel says. “This does not need to come solely from presenting low/no fat, low/no sugar and low/no sodium varieties of products, which can be viewed as bland or boring by some consumers. Rather, the natural health benefits of products should be promoted where applicable.”

Hunn sees receptiveness to such product upgrades on the restaurant side, where his company does most of its business. “If you change from shelf-stable hamburger chips to refrigerated, it gives a better perception of the quality,” he says.

Supermarkets continue to be responsible for the largest percentage of condiment sales, at 67.9 percent in 2012, up 2.3 percent from 2010, probably because of their vast product selection, Mintel says. “Other” channels have posted strong gains as well, up 15.7 percent over the past two years (on a much smaller sales base), because of the expansion of food offerings at drugstores, convenience stores and supercenters, as well as the growing interest in natural and gourmet stores.

After a slowdown in innovation during the recession, Mintel measured 913 new products in the category in 2010. Gluten-free claims rose 289.2 percent from 2007-12 and low/no/reduced allergen claims rose 271 percent over the same period among condiment launches, Mintel says. Organic and premium claims declined probably due to manufacturer awareness of consumer price-consciousness during poor to stagnant economic times.

But consumers tend to like the tried and true when it comes to condiments, Mintel reports, with only 37 percent saying they’re open to new and different flavors.

“Encouraging new product trial may come from keeping new formulations close to traditional offerings and from being specific about how products can be used,” Mintel’s report says.

Hunn doesn’t see much innovation in the category, which he blames partly on a lack of category leadership from top companies. “It’s been pretty stagnant for

Enlarged Image

Pickles chart

awhile,” he says. “I’m not seeing a lot of new forms or shapes or flavors. In my experience, if a particular category has a clear market or category leader, those leading companies generally innovate and then everybody else copies.”

Vlasic once filled that role when it was owned by Campbell’s — Hunn worked there at the time — but with Vlasic and Bay Valley “both owned by financial institutions now, they don’t put much emphasis on innovation,” he adds.

That hurts private label companies because “it’s the same old stuff,” he says. “There’s not a single item that makes you say, ‘Oh, I didn’t know they were doing that.’”

But given consumers’ conservatism, Hunn acknowledges, “It would be hard to convince a buying entity to do anything that’s a little bit out of the box. They would say, ‘This is what we’ve been doing for years; this is what our consumers expect.’”

First Place focuses heavily on hot and spicy, at least partly because of regional preferences in Texas, Hunn says.

“There’s still a lot of room to grow in some of your hotter flavor profiles, things that have a little bit of a kick to them,” he says. “That’s our niche. They’re certainly the most talked about; they’re the one people want to sample when you’re doing trade shows.”

Spicy pickles come nowhere near the standard hamburger chip when it comes to volume, Hunn says, but they’re more likely to be top of mind for certain consumers.

“Why go to this barbecue place or that barbecue place? It might be a side item,” he adds. “You know the meat’s going to be good, or they wouldn’t be in business.
I’m not naïve enough to think that’s predominant in decision-making, but I do think it comes into play.”

A certain percentage of people are surprisingly passionate about pickles, Hunn says, relating the story of an individual who asked to buy a gallon of pickles directly from First Place.

“He started off buying a gallon, then he bought a 5-gallon, and then a couple of 5-gallons. I said, ‘I thought this was for your personal consumption,’ and he said, ‘It is.’ Those people are the ones who will try the new flavors, the unique stuff.”

But overall, Hunn says, “It’s a category with little or no growth, little or no leadership, our products are heavy, and they’re cheap. It’s something that weighs 50 pounds and sells for $15. If I believed in reincarnation, I would come back as a marshmallow salesman.”

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