• by Nina Lentini , January 12, 2007

Heinz credits its consumer-centric marketing and creations such as the "fridge-door-fit bottle" for making it the only major marketer in the stagnant $3 billion U.S. sandwich spread category to show any sales increase, albeit less than 1%.

Lack of innovation and consumer demand for healthier products means less use of ketchup, mustard and mayonnaise, according to a report by Packaged Facts, a division of Information Resources, Inc. The top players also include Kraft and Unilever.

A Heinz spokesperson agreed that lack of innovation has hurt the category, but said Heinz's increase (small as it was) was due to innovations made by the company in the last year. Sales of the new easier-to-hold-and-squeeze bottle style are up 40% year-over-year, he said. He credited the Heinz niche lifestyle portfolio, as well, which includes no-salt, organic, one-carb, and reduced-sugar ketchups.

Only 36 new product introductions occurred in the category between June 2005 and June 2006--most of which were launched by smaller players in the market--and this resulted in "little hope" of driving substantial market growth, according to the report.

Further market declines have been held off by promoting health-conscious products such as lycopene-rich ketchup and low-fat mayonnaise, the report says. Meanwhile, upscale, gourmet, and organic variations have also helped to revive interest in the category.

"The emergence of 'healthier-for-you' spreads as well as ethnic-inspired and alcohol-infused spreads should keep the market from declining too badly," said Don Montuori, Packaged Facts publisher. But more innovation is necessary to keep up with America's more sophisticated palates and desire for exciting and novel flavors."