Premium rules

Whether it’s a chocolate-hazelnut spread on bread at breakfast time or a zesty garden veggie dip at a dinner party, dips and spreads allow consumers to indulge in a treat any time of the day, anywhere. And according to two recent reports from Euromonitor, Chicago, “premium” has been the name of the game lately when it comes to new product development.

Published in December 2013, “Sauces, Dressings and Condiments in the US” states that 2013 saw a continued rise in premium products — including dips — due to consumer demand for high-quality meals at home. “Spreads in the US,” published the same month, also pointed out the rise in premium-product introductions from large companies.

Dip developments

On the refrigerated side, many retailers are introducing all-natural dips made with Greek yogurt, says Will Nagle, vice president of retail sales with Elk Grove Village, Ill.-based Grecian Delight. By replacing sour cream and/or mayonnaise with Greek yogurt, retailers draw health-conscious consumers who want a little indulgence without expanding their waistline. Popular varieties his company offers for private labeling include Kickin’ Ranch, Sun-Dried Tomato, Spinach & Garden Veggie and Zesty Greek Yogurt (with feta cheese).

“[And] there are definitely new flavors that are emerging,” Nagle states. “People are looking for different vegetables, different zests, different ethnic flavors, those kinds of things.”

In addition to Greek yogurt-based dips, hummus continues to see “explosive growth” on the private label side, says Aimee Tsakirellis, director of marketing for Ward Hill, Mass.-based Cedar’s Mediterranean Foods Inc.

“Retailers have found great success tapping into this ever-growing category, and have really created their own space in doing so without heavily effecting branded business,” she says. “Private labels are also creating differentiation points against branded items by offering flavor profiles and/or products that are not offered [as] branded yet. One great example is alternative bean-based hummus flavor profiles: lentil, edamame, black bean, etc.”

But not all hummus has to be savory. Jeanne Meeder, industrial ingredients and consumer products director for Wixon Inc., a St. Francis, Wis.-based provider of seasonings and flavor systems, notes that her company now offers retailers and their manufacturing partners ingredients to develop sweet dessert-occasion hummus in a variety of flavors. Made from chickpea powder, ingredients can be used for varieties such as chocolate, cookie dough, sweet potato and cinnamon.

As for the shelf-stable end of the dips category, milder flavors rule. Steve Fay, executive vice president of sales with Roscoe, Ill.-based Berner Food & Beverage, points to strong growth in his company’s Stadium Style Cheddar Sauce.

“It has no hot, spicy jalapeno and no pepper condiments; it is simply a smooth, creamy cheese sauce,” he states. “I believe many of the dramatic, strong flavors have saturated the category, and we are just now really addressing the desire of consumers who want something much milder.”

Of course, some consumers might customize milder dips with spices, fresh jalapenos and other zesty ingredients, Fay acknowledges.

Spread the goodness

Looking at the spreads category, mass-market-oriented manufacturers started to focus much more on premium products in 2013, “Spreads in the US” reports.

“For the last few years, premium products such as chocolate spreads, high-priced jams and preserves and almond butter were very strong growth areas for spreads. This did not go unnoticed by major mass-market companies, many of which attempted to enter these areas with their most popular brands,” the report states, citing as an example J. M. Smucker Co.’s entrance into the higher-end spreads market with Jif Almond and Jif Cashew last year.

And some retailers have followed suit. For example, in an entry on the Fresh Stories blog of Rochester, N.Y.-based Wegmans Food Markets, Jennifer Felice, RD, a Wegmans corporate nutritionist, announced the introduction of several blended nut and seed butter varieties under the Wegmans Organic brand: Smooth Almond Butter, Crunchy Almond Butter, Creamy Cashew Butter, and Tahini Butter (made from sesame seeds).

Chocolate spreads, meanwhile, performed “incredibly well” in 2013, as U.S. consumers were increasingly drawn to Nutella and other chocolate spreads with hazelnut, “Spreads in the US” says. Growth of this spread variety — which a number of retailers are offering under their own brands — occurred without causing “significant damage” to other varieties of spreads.

“One exception may be jams and preserves, typically used at breakfast, which may have experienced some loss of sales to chocolate spreads,” the report explains.

Consumers’ flavor preferences within the jams and preserves subcategory are “normally fairly stable,” the report adds, with grape jelly being the top-selling flavor in 2013, and strawberry jelly following as a somewhat-distant second. However, some consumers’ tastes are changing, with premium flavors such as apricot-raspberry and fig preserves and jams becoming more popular among consumers who are looking for something a little less monotonous.

Meeder adds that consumers’ demand for more exotic products is prompting more brands to introduce cheese-based refrigerated spreads with regional and ethnic flavor profiles.

The right pack

No matter how good a dip or spread tastes, an attractive package is critical. For refrigerated dips, retailers should consider bold colors on clear containers that allow shoppers to see the dip, Nagle offers.

Tsakirellis also sees the value of clear containers for refrigerated dips, though she adds that retailers should make sure packaging sports the same logo as that on complementary store brand products.

“Create a family of products across the different product lines to become a destination on the shelf,” she explains. “Callouts of differentiation points always help drive sales as well.”

On the shelf-stable side of dips, many retailers would like to see “some packaging evolution” in this category, but Americans continue their love affair with glass jars, Fay notes.

“Gusseted pouches have done miserably; plastic does not do well under high-temperature and high-pressure processing,” he says. “As a result, glass continues to prevail.”

As for the spreads category, “Category Insight: Sweet & Savoury Spreads,” a May 2013 report from global market research firm Mintel, notes that 40 percent of U.S. consumers said they are interested in single-serve nut and fruit spreads. Therefore, retailers have a prime opportunity to drive new product development in both sweet and savory spreads by introducing products that can be enjoyed easily on the go.

Placement is key

When it comes to merchandising, retailers would do well to place their dips and spreads in secondary locations throughout the store, says Rick Schmidt, vice president of national sales with Springfield, Ohio-based Woeber Mustard Co.

“Customers are moving through grocery aisles quickly and don’t take the time to slow down and shop the sections,” he states. “You need to present them with every opportunity to see your product.”

For example, refrigerated dips — which typically merchandise primarily in the deli — could be placed secondarily in the produce department, Nagle says.

“The deli area is definitely number one, and produce is number two — we’re seeing produce growing rapidly,” he states.

Retailers also should offer point-of-sale or on-package ideas for use and customization, Meeder explains.

And Schmidt warns against replacing all national brand products with own-brand items.

“You always need the marketing support of the branded companies,” he explains.