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Driven by consumer demand for more diverse flavours, less artificial ingredients and more convenience, the sauce, condiments and dressing food market is projected to reach US$287.7 billion by 2035, according to a new report from Future Market Insights (FMI).
Currently, the market stands at US$170 billion per year in sales according to FMI, a provider of market intelligence and consulting services. Younger consumers, however, particularly in the Millennials and Gen Z cohorts are driving sales growth by craving “fusion flavours and ethnic variants,” the firm said in a press release.
As well, there is an ongoing appetite for so-called clean labels that promote healthier products.
“Growing awareness around health and nutrition is accelerating demand for organic, low-sodium, low-sugar and preservative-free products. Functional ingredients offering digestive or antioxidant benefits are further shaping innovation pipelines,” the release says.
Bright future for online sales
While the market is largely driven by in-store options, such as grocery stores and hypermarkets (defined by Investopedia as a "retail store that combines a department store and a grocery supermarket"), which combine to hold a 67.5 per cent share of the market, online sources are growing in popularity.
Besides adjusting for consumer taste, the manufacturers are also investing in new technologies, according to the report, such as:
- hydraulic and electric hydraulic systems for enhanced consistency and efficiency;
- electric processing systems (EPS) for automation and energy efficiency;
- high-pressure processing and vacuum packaging to extend shelf life; and
- flavour encapsulation and emulsification for improved texture and taste.
As well, market pricing pressures are driven by a number of factors such as raw material volatility (edible oils, spices, tomatoes), premiumization strategies including organic and specialty products, packaging innovations including sustainable materials, and private label competition, exerting downward pricing pressure.
“While mass-market products maintain competitive pricing, premium segments are witnessing higher margins driven by brand differentiation and quality perception,” the release states.
In breaking down the business trends regionally, the report points to North America and Europe as a mature market for sauces, condiments and dressings, having strong demand for premium, organic and clean-label products.
But the fastest-growing segment in the world is Asia-Pacific, with China forecasting to produce a compound annual growth rate (CAGR) of 7.3 per cent. India is close behind in growth at 6.8 per cent CAGR, according to the report.
The global report also pointed to the key companies in the industry which include Nestlé, Unilever, The Kraft Heinz Company, ConAgra Brands, McCormick & Company, Ajinomoto and General Mills.
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