COOKS TODAY ARE SAYING "BAM!"

November 5, 2010
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While the economy still may be cold, the spice/seasonings category is hot. Consumers who have cut back on frills like eating out are instead turning to cooking at home and, in the process, using more spices and seasonings to flavor their creations.
It’s not just the basics of salt and pepper they’re shaking into their pots either. Natural and organic spices are catching on, particularly with younger consumers interested in healthy eating. More seasoned cooks are delving deeper into spice categories they already know, looking for special types of ginger, for example, rather than just the basic variety. Packaging is going more upscale to appeal to these new spice hounds as well. And that spells good news for private label offerings.
Indeed, while overall spices and seasonings sales rose roughly 3.8 percent in the 52 weeks ended July 11, 2010, according to Chicago-based SymphonyIRI, sales of private label spices and seasonings climbed 6.3 percent. Sales of spices and seasonings, with salt and pepper taken out, rose even more dramatically for private label in the same period, 9 percent to $182.9 million, SymphonyIRI reports (see table, below). SymphonyIRI data is for sales at supermarkets, drug stores, and mass merchandisers, excluding Walmart.
“People are still cooking more at home even as the economy improves and I’m reading that people are going to continue cooking at home,” says Brett Karminski, private label brand manager with Norway, Iowa-based Frontier National Products. In terms of what they’re buying in the spice aisle, “this year the story really is that consumers are just digging deeper into what they really know,” he says.
That can mean seeking out Vietnamese cinnamon rather than just plain cinnamon because of the higher oil content and stronger flavor of the Vietnamese variety, he explains. It also can mean buying whole nutmeg rather than the ground kind or trying Spanish saffron rather than just saffron.
Private label is well-positioned to attract today’s more savvy spice shopper, contends David Browne, a senior analyst with Mintel International. Looking at new product introductions in the spices category during the time period of 2005 through 2009, Mintel found that 19 percent of all new offerings were private label. But that spiked in 2008 to 28 percent of all new spice products being private label offerings. “Retailers ramped up private label offerings and were well prepared for the recession when consumers could trade down, in the spice aisle,” Browne says.
A Mintel report in October 2009 noted that sales of what it classifies as individual spices and seasoning, excluding salt and pepper, grew by 30 percent and a compound annual rate of 5.4 percent from 2004 to 2009.
“This segment is by far the largest in the seasonings market with a 53 percent market share and sales totaling over $1.9 billion in 2009,” the Mintel report states. “While nearly all segments benefitted from a rise in cooking at home driven by the economic recession, this segment in particular thrived due to growing interest in gourmet cooking and ethnic cuisines.”
Mintel forecasts 18 percent growth in overall seasonings sales from 2010 through 2014, a compound rate of 3.3 percent annually. Total sales in 2014 will reach $4.3 billion, it estimates.
“While Mintel expects that the eating-in trend has probably peaked, many consumers will continue to cook at home, at least to some degree, rather than revert to their old free-spending ways. Modest growth in gourmet, organic and natural seasonings will counterbalance sales declines from a shift to private label offerings,” the report states.
One part of the spice aisle where that shift to private label may be most noticeable is in organics, says Karminski. “Organic private label spices as a category are doing very well,” he says. “As retailers expand their offering of private label they’re looking to organics. Most mainstream retailers have a tier of conventional private label spices. Now retailers are trying to get that organic piece of the puzzle with private label. Some are even going to multiple tiers of organic options.”
Organic spices can routinely cost 15 to 20 percent more than their non-organic cousins so that makes them an ideal candidate for private labeling, Karminski reasons. Mintel’s report found that 43 percent of consumers surveyed said they buy “the cheapest herbs, spices and seasoning blends available,” up from 38 percent saying that in a 2007 survey.
Organic demand is up in such spice rack items as garlic flavoring, cinnamon, cumin and dill, Karminski says. Private label mulling spices don’t seem to be moving well but part of that may be seasonal as those are normally part of winter concoctions.

As spices go organic, packaging is going more upscale to reflect a refined image for such products. Bottles are becoming more elegantly shaped and sporting clear labels, for example, Karminski says.

Spice offerings such as whole peppercorns are increasingly appearing on shelves with grinders. Indeed, Frontier has “seen a lot of customers asking for grinder packaging. Whole spices preserve the freshness of the spice. Packages are being designed with grinders to be refillable but they can be disposable as well,” Karminski says.
Outlets such as dollar stores are offering spices in cardboard rounds that resemble small cans, but Karminski frets that those may not be keeping product fresh and could turn consumers off to spices bought in that manner.
He may not have too much to worry about. Most consumers go to supermarkets for their spices, the Mintel report notes. It found conventional supermarkets account for 64 percent of seasoning sales in the supermarket, drug store, mass merchandisers, excluding Walmart in the world (FDMx). Supermarket sales of seasonings rose 13.4 percent from 2004 to 2009 with a compound annual growth rate of 2.5 percent, Mintel estimates.
“Seasoning sales in drug, mass merchandisers (excluding Walmart) and other channels grew 41.9 percent from 2004 to 2009, far exceeding supermarkets,” the Mintel report states. “Strong growth in the mass channel was actuated by a recession-driven shift among consumers to value formats to save money.”

Mintel also found that a sizable minority, 27 percent, of respondents to a consumer survey it conducted go to specialty stores such as Asian markets, gourmet and natural food stores, looking for their spices.

Seasoning sales at natural food stores reached $47.5 million in 2009, about 1.5 percent of total seasoning sales, Mintel reports.
An average of 553 new spice/seasonings offerings debuted annually between 2005 and 2008, Mintel finds. “Driven by the healthy eating trend, natural and organic is a major trend in the seasonings market, even with the economic slowdown and consumers trading down in many categories” the Mintel report notes. “Nearly 700 new seasoning products launched from January 2005-January 2009 featured organic or natural claims, as monitored by Mintel’s GNPD (Global New Product Database),” the report notes.

SEGMENT ANALYSIS

The Mintel report also examined spices by category segment and found that “nearly all segments of the spices/seasonings market have benefitted from the recession-driven trends towards cooking at home.” Sales of dry meat and seafood seasoning mixes rose 23 percent from 2004 through 2009 thanks to consumers searching for easy-to-make home offerings,” Mintel finds.
One segment that lagged the spice sales trend was salt, Mintel reports. “Sales of salt (including regular, seasoned and salt substitutes) increased 15 percent from 2004-2009, half the rate of individual spices and seasonings. Although a flood of gourmet sea salt has helped boost retail prices, overall salt consumption is likely declining due to growing consumer awareness of the potential health risks associated with high-sodium diets,” Mintel reports. “Reduced/low/no sodium seasonings are also becoming more popular,” Mintel observes.

Looking at the other side of the traditional two-shaker kitchen seasonings dish, Mintel found that “pepper sales grew 16 percent from 2004-2009. The pace of growth sped up in 2008-2009, driven in part by a new crop of flavored peppers.”

 

THE SPICE CONSUMER

The typical U.S. spice user is more likely to be a woman, to be between the ages of 25 and 34, and to be part of a household making $100,000 to $149,000, Mintel reports. Of consumers surveyed by Mintel, roughly 64 percent reported being spice brand loyal, with younger consumers, those 18 to 24, more likely to agree that they are “willing to pay more for premium quality brands.”

Roughly 53 percent of 18- to 24-year-old respondents to the Mintel survey say they would pay more, while only 40 percent of all respondents say that.

Younger consumers also say they are more likely to buy fresh, whole herbs and to go to specialty stores.

“Usage of spices/seasonings is high across all respondents of all races. Hispanics, who tend to cook from scratch more often than non-Hispanics, have the highest usage rate at 80 percent. Hispanics and Asians generally use fresher, whole herbs, and tend to replace their seasonings to ensure freshness more frequently than white respondents,” Mintel reports. “Hispanics and Asians are also more likely to shop for herbs at specialty stores, such as ethnic markets and gourmet stores,” Mintel says.

 

Editor’s Note: PL Buyer will be taking a look at the Hispanic market and its private label buying habits

in its December issue.

 

Eye on the Competition

 

McCormick is far and away the category leader in the spice aisle with an estimated marketshare of 44 percent, according to Mintel International estimates. But it lost 1.4 percent in market share from August 2008 through August 2009, Mintel states, “largely due to a recession-driven shift to private label. Private label picked up 0.8 share percentage points, while smaller ‘other’ brands picked up half a point,” Mintel’s October 2009 report on the category says.
Interestingly, while in other aisles, private label seems to be taking share from third and fourth-tier national brands, in spices both private label and smaller brands are thriving, Mintel notes.

McCormick’s share loss came despite its purchase of Lawry’s in 2008. Morton Salt, No. 3 in the category with 3.4 percent share, saw its sales rise 11 percent in the 2008-2009 time frame thanks to its acquisition of Season-All. McCormick was forced to divest Season-All so it could obtain regulatory approval of its Lawry’s deal, Mintel reports.

 

Spices & Seasonings At-A-Glance

 

Average number of new product intros, 2005-2008       553

Natural and organic product launches, 2005-1009          700

Private label portion of overall intros, 2005-2009           19%

Forecast for growth, 2010-2014    18%

Forecasted Category Sales, 2014    $4.3 billion

 

Source: Mintel seasonings report, October 2009

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