Spice, Sauce and Condiment Industry

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Part
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Spice, Sauce and Condiment Industry - Trends

Three current consumer trends in the sauce, spice, and condiment industry are (1) clean label, (2) ethnic/exotic flavors, and (3) hot/spicy flavors.

Current Consumer Trends — Sauce, Spice, & Condiment Industry

1. Clean Label

A. Overview

  • Clean label describes products that don't contain artificial ingredients. The clean-label frenzy that has swept through the food and beverage industry is also very popular in the sauce, spice, and condiment industry.
  • Clean label is a trend because it was expressly described as such by two or more reputable sources (Whole Foods Magazine and Food Business News).
  • Clean label is really important for the sauce, spice, and condiment industry to get right considering that "75% of consumers will pay extra for clean label ingredients."
  • Non-GMO products are a popular example of clean label products and are immensely popular in the sauce, spice, and condiment industry right now, as an industry executive said that non-GMO is what's being talked about by consumers and producers alike.
  • The following two descriptions demonstrate the popularity of clean label in the sauce, spice, and condiment industry right now: (1) "Clean label is huge right now and (2) "[c]lean label remains a dominant trend in the market."

B. How It's Affecting the Industry & Consumers

  • This trend is affecting the industry because "there is an ongoing drive [for manufacturers] to reformulate sauce and condiment products with lower levels of salt, sugar and additives to ensure they are healthier without sacrificing flavor." However, manufacturers are facing the challenge of eliminating the unwanted/unhealthful ingredients, yet making the products still taste exceptional.
  • Product developers also want manufacturers to make these products. Manufacturers are also working to expand their product portfolios to include product varieties featuring no sugar or no salt.
  • This trend is affecting consumers because they are equally interested in products that not only exclude the undesired artificial/unhealthful ingredients, but they simultaneously want the products to contain healthful ingredients. The trend is also impacting consumers through the closer attention they are paying to reading product labels when shopping, thus making it all-the-more important for manufacturers to create these products.
  • Rao's is a company that has embraced the clean label trend. The company states that its "sauces have no tomato blends, no paste, no water, no starch, no filler, no colors, no added sugar."

2. Exotic & Hybrid Flavors

A. Overview

  • According to a 2019 article published by Whole Foods Magazine, "U.S. consumers are seeking sauces, spices, and condiments that are exotic, bold, and even surprising." There's a strong interest among consumers for fun, new flavors.
  • This bold/unique/surprising trend generally takes the form of either ethnic flavors or hybrid flavors (or in some cases, both).
  • This is a trend because it was expressly described as such by two or more reputable sources (Food Business News and Whole Foods Magazine).
  • Nielsen describes the changing preferences of consumers from traditional condiments to bold/hybrid combinations as "the staple-swap out."
  • Food Business News stated that "consumers are attracted to the boldness of flavor."

B. How It's Affecting the Industry & Consumers

  • This trend is affecting the industry by increasing sales, as these unique products are popular among consumers. Additionally, the industry has had to respond to this trend by creating new products.
  • This trend is affecting consumers through their strong interest in trying out flavors that are new to them. A survey found that "59% of consumers say they try new menu items to discover new flavors." Additionally, consumers have shown a strong interest in recreating exotic recipes that they tried when traveling or at a globally inspired restaurant.
  • Heinz is an excellent example of a brand that has fully embraced the trend. Heinz created an entire condiment portfolio called Heinz Flavor Mashups, which includes the hybrid flavors Mayochup, Mayomust, Kranch, and Mayocue.
  • Brands that have embraced both the exotic and hybrid trends all-in-one are Zeisner (curry-flavored ketchup), Miso Mayo (a variety of miso-flavored mayonnaise products), and Gulden's (sriracha mustard).

3. Spicy

  • Spicy sauces and condiments is a trend that's both literally and figuratively hot right now.
  • A 2019 article published by the Wall Street Journal was titled: "Hot Trend: Spicy Sauces Are on Fire."
  • Spicy is a trend because it was expressly described as such by two or more reputable sources (Wall Street Journal and Restaurant Business Online).
  • American consumers are seeking products that are both spicy and packed with flavor. Factors that are driving the spicy sauce and condiment trend are "growing immigrant populations, thrill-seeking food shows, pop culture references and diners’ increasing familiarity with global cuisines."
  • This trend is affecting consumers in that their preferences are skewing to the spicy side of the heat spectrum. The Flavor Consumer Trend Report published by Technomic found that among those surveyed, half said they "prefer very spicy sauces." Furthermore, really spicy sauces are preferred by an even higher percentage of men (58%) and millennials (59%).
  • Rajin Cajun is a company that has embraced this trend, with its Spicy Sweet Jalapeno Relish as an example.
  • Red Gold is a company that has embraced this trend, with its Jalepeno Tomato Ketchup.

Research Strategy

We identified the above trends by conducting wide-ranging searches for articles about this topic. Examples of sources we reviewed included Restaurant Business Online, Food Insider Journal, and the Wall Street Journal, among many others. We ensured a U.S. focus to our research by only referencing information specific to the U.S. market and/or information published by U.S.-based sources. We ensured that each trend we included is indeed a trend by finding it expressly described as such by at least two reputable sources.
Part
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Part
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Spice, Sauce and Condiment Industry - Growth Drivers

Three growth drivers in the U.S. sauce, spice, and condiment industry are (1) more people cooking/eating at home, (2) millennials' quest for exotic flavors, and (3) healthier product choices.

Growth Drivers in the U.S. Sauce, Spice, & Condiment Industry

1. More Americans Eating at Home

A. Overview

  • With more Americans now choosing to cook and eat at home, their use of sauces and condiments has also increased.
  • The growing popularity of eating/cooking at home among American consumers is considered a growth driver because it was described as such by at least two reputable sources (Smart Brief and ZeroCater).
  • Recent NPD Group research found that of all meals that Americans eat, 80-82% are cooked/eaten at home.
  • Eating at home is a growth driver for the sauce, spice, and condiment industry because "consumers are twice as likely to use condiments, sauces, and dressings at home than when eating out."
  • In 2018, the average person in the U.S. ate 185 meals at a restaurant, which was the lowest number since 28 years ago. For reference, that number was around 216 back in the year 2000.
  • A factor driving more Americans to eat at home is that the price of a meal at a restaurant rises 2.2% per year, which outpaces the price increases for at-home meals.

B. Affects on the Industry & Consumers

  • One way this growth driver is affecting the industry is through companies (in this industry) looking to spark further interest in at-home cooking. For example, a company that has embraced this growth driver is Kraft Heinz, which recently partnered with Food Network to create a product line called Food Network Kitchen Inspirations. The goal of that product line (most of which consists of sauces and dressings) "is to inspire consumers to experiment with global flavors in their home kitchens."
  • A second way this growth driver is affecting the industry is through the resulting growth in ecommerce sales of these products, which "is expected to be the fastest growing distribution channel category" for these items between 2019 and 2024.
  • This growth driver is affecting consumers in that they are eating out less, as a result. The percentage of Americans 65+ who say they eat out less frequently than they used to has increased by 21%. Millennials are also eating out less often than they used to, as about 10 years ago they ate 257 meals at restaurants per year, whereas that number is currently around 241 (per a 2018 NBC News article).

2. Millennials' Quest for Exotic Flavors

  • This growth driver is affecting the industry by leading manufacturers to create new condiment innovations that appeal to millennials. Those innovations are reflected in condiments featuring unique flavor profiles, textures, and combinations.
  • This growth driver is affecting consumers by making it all-the-more appealing for them to cook (including exotic foods) at home, as unique sauce, condiment, and spice products debut. For example, among U.S. millennial women, 93% "cook at home more than half of the week," 80% cook regional/new ethnic foods, and 40% cook an increased number of ethnic/regional meals compared to how many they did just two years prior.
  • TRUFF is a company that has embraced this growth driver, through its innovative hot sauce that combines hot sauce, black truffles, agave nectar, and chili peppers.

3. Healthier Product Choices

  • The launch of new, healthier condiment choices "has been driving much of the sales growth" in the condiments space.
  • New, healthier product choices is considered a growth driver because it was described as such by two or more reputable sources (including the National Association of Convenience Stores and IBISWorld).
  • This growth driver is affecting the industry by further incentivizing manufacturers to continue producing and innovating these types of healthier condiments, as they have been directly attributed to increased sales.
  • Heinz is a company that has embraced this growth driver, which is demonstrated through its new ketchup products that are either sugar-free, honey-sweetened, non-GMO, contain no high fructose corn syrup, or organic. The company attributed those healthier products as a key part of the 8% growth it achieved in 2018. Heinz also stated that those healthy ketchups currently account for 15% of its total sales of ketchup and that percentage is further increasing.
  • This growth driver is affecting consumers in that they are looking for healthy, yet flavorful condiments and sauces.

Research Strategy

To identify growth drivers in the U.S. sauce, spice, and condiment industry, we reviewed numerous articles, survey results, and market research reports published by a wide variety of sources. Some of the sources we consulted throughout our research included Food Network, Food Business News, Grocery Dive, and Specialty Food. We ensured that each growth driver we identified is indeed a growth driver by finding each described as such by two or more reputable sources. Lastly, we ensured that our research findings are specific to the U.S. sauce, condiment, and spice industry by either using information specifically pertaining to the U.S. or U.S.-based sources.
Part
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Part
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Spice, Sauce and Condiment Industry - Demographics

Spice consumers are generally females aged 25+, with college degrees making more than $35,000 per year. Condiment consumers are most likely White males aged 45+, making between $40,000-$125,000 per year.

Age

  • A consumer purchasing spices is most likely to be above age fifty-five, although there is strong usage among 25-54 year olds as well.
  • People buying Heinz products, the leading condiment brand, are most likely to be 45+.

Gender

  • Females are more likely to use spices.
  • Sriracha is more likely to be consumed by men than women.

Ethnicity

  • No specific data on the ethnicity of spice consumers in the US could be found, mostly due to the vast number of different spices that are consumed regularly by different ethnicities within the country. However, over and over again market reports and government data highlighted the growing demand for ethnic spices such as those utilized in Hispanic and Asian foods.
  • People purchasing Heinz products, the leading condiment brand, are most likely to be Caucasian, closely followed by African American.

Income

  • People with higher incomes, over $75,000 per year, are most likely to use spices. Those with incomes $35,000-$74,999 are also likely to use spices.
  • People purchasing Heinz products, the leading condiment brand, are most likely to earn between $40,000-$125,000 pear year. However, the brand saw strong performance across all income categories.

Education

  • Those with a Bachelors Degree or Graduate Degree are most likely to utilize spices.
  • People purchasing Heinz products, the leading condiment brand, are most likely to have no college education, although the brand performed extremely well across all education levels (no college, college, and advanced degrees).

Research Strategy

The research team first attempted to find pre-compiled consumer demographic reports for the entire spice, sauce and condiment industry. However, this was unsuccessful, due to how vast the range of products in this market is. Therefore, we made the decision to split the market into two separate profiles — one for a spice consumer and one for a condiment consumer.

For each, we began by looking for pre-compiled demographic research, both from market reports and other research. This was successful for most aspects of the spices market, sparing ethnicity. It was not successful for the condiment market.

Therefore, we moved on to the second research strategy, which was to look for each demographic data point separately, again relying on market research, government data, as well as industry news. This was successful for insight into the ethnicity of spice consumers, as well as the gender of hot sauce consumers.

Finally, we utilized shopping data on one of the leading condiment brands, Heinz, to find additional information on the consumer demographics of those purchasing condiments. Through this strategy, we were able to find the rest of the requested information.

Due to the vast nature of this market, we had to, at times, focus in on specific products (like hot sauce) or specific brands (like Heinz) in order to provide consumer insights. Sriracha was chosen due to its recent rise in popularity and its strong positioning in the US market.
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Part
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Spice, Sauce and Condiment Industry - Psychographics

The typical consumer in the spice, sauce, and condiment industry in the US has a habit of experimenting with varied tastes and enjoy new flavors, spicy foods, and sauces. These consumers are also increasingly focused on ensuring healthy food intake and value corporate transparency as a big factor when making purchasing decisions.

Habits

  • The consumers of the spice, sauce, and condiment industry have a habit of healthy eating and mostly carry the perception that sauces and condiments are an unnecessary and unhealthy addition to many foods, which even leads to cut back on consumption.
  • The consumers in this segment are used to low-sodium or low-sugar intake and have a habit to focus on food label information and packaging, ensuring dietary restrictions.
  • The consumers in this segment tend to experiment with varied tastes and enjoy new flavors, spicy foods, and sauces and "desire to incorporate dishes and ingredients from a wider variety of cultures into their diets".
  • "Snackification" is a common habit of these consumers who prefer to snack regularly than eating traditional meals.

Values

  • The consumers in this segment value fitness and are health conscious with preference towards restrictive diets and organic food.
  • These consumers are mostly skeptical and believe in regulated information rather than marketing commitments.
  • They also show more interest in environmental sustainability and ethical business practices and value corporate transparency as a big factor when making purchasing decisions.
  • These consumers value convenience and are likely to purchase products which are premium and convenient to consume.

Spending Habits

  • The consumers in this industry prefer to spend their money on snack items more than traditional meals and do not mind spending extra on premium gourmet and ethnic products.
  • These consumers typically are bulk buyers and usually spend their money on a variety of items of a single product line.
  • Along with the cost of the product, the other most important attributes towards making a purchase decision by the consumers of this industry are taste, flavor, and ingredients.

Media Consumption Habits

Additional Information

  • "The top three companies with the most market share in the sauces, dressings, and condiments sector were Kraft Heinz Co, McCormick & Co Inc, and Campbell Soup Co." After Kraft Heinz, with an 11.2% market share of the total sauces, dressings, and condiments sector, McCormick & Co is the second-largest company, with 7.8% of the sector’s market share and Campbell with a 5.4% market share.

Research Strategy:

To obtain comprehensive insights regarding the psychographic profile of the typical consumer in the spice, sauce, and condiment industry in the US, we primarily focused on examining various credible market research reports from IBIS, Pewresearch, PRnewswire, Packagedfacts, and others, along with consumer survey reports from the industry as these reports and survey findings from sources such as Comex, Foodingredientfirst, etc. share key insights related to the typical consumers in the industry along with their preferences, expectations, demands, and spending facts driving the market trends.

Additionally, the consumer of the companies in the segment such as Kraft Heinz (11.2% market share), McCormick & Co (7.8%), and Campbell (5.4%) were also explored through various news articles and company analytical reports through sources such as Bizjournals, CNBC, Seekingalpha, Fooddive, and others as these companies usually get their market segments analyzed to remain focused on their target consumer and to decide their marketing strategies.

Part
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Part
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Spice, Sauce and Condiment Industry - Consumer Journey

The primary reason for consumers to purchase spice, sauce, and condiments is the intent and desire of trying new flavors and dishes adding into the diet. Most of the customers (70%) prefer to purchase in supermarkets/hypermarkets compared to online purchases.

Consumer Journey of the Typical Consumer in the Spice, Sauce, and Condiment Industry

Reason For Purchase

  • The desire of incorporating new flavors to home-cooked meals drives consumers to purchase spice, sauce, and condiments.
  • The habit of "snackification" of those who prefer to snack regularly than eating traditional meals is also another reason for purchase.
  • Their interest in consuming natural, organic and craft positioning food is also a reason to purchase the spice, sauce, and condiments.

Evaluation of the Different Choices

  • These consumers value convenience i.e. ready-to-eat products and are likely to purchase products that are premium and convenient to consume.
  • As per the Comax Flavors report, apart from convenience, innovation in flavors and pricing are considered as key evaluation parameters while choosing different choices.
  • Consumers also evaluate based on other parameters such as being gluten free, having healthy ingredients with less salt, sugar, and preservatives.

Choosing a Specific Provider

  • These consumers show more interest in ethical business practices and environmental sustainability of specific provider and tend to choose products from the companies which are increasingly selling a story along with their products.
  • Spice, sauce, and condiment consumers also look at websites or product labels' display information regarding the company's history and how products are manufactured to see corporate transparency which is again a big factor when making purchasing decisions.
  • Consumers are very skeptical about artificial additives and genetically modified organisms while purchasing, so most of the manufacturers present their certification of being "organic", "natural", and "non-GMO" on their label.

The Purchase Process

  • The typical spice, sauce, and condiment consumers tend to primarily rely on digital content, particularly on social media, to gather and share information.
  • They mostly consume video content and social media sites on mobile to decide on their choice.
  • The consumers buy these spice, sauce, and condiments in bulk and usually spend on purchasing a variety of items in a single product line.

Purchase Channels

  • Popular purchase channels of spice, sauce, and condiments are convenience stores, online, supermarkets/hypermarkets, and specialist stores.
  • Most of the customers (70%) prefer to purchase in supermarkets/hypermarkets compared to online purchases.
  • But it is to be noted that many customers also prefer to purchase them online.

Research Strategy:

To obtain comprehensive insights to derive the consumer journey of the typical consumer in the spice, sauce, and condiment industry, we primarily focused on examining various credible market research reports from IBISWorld, Pew Research, PRNewswire, Packaged Facts, and others along with consumer survey reports from the industry as these reports and survey findings from sources such as Comex, Food Ingredient First and others share key insights related to the typical consumers in the industry. Further, we also explored through various news articles and company analytical reports from sources such as Biz Journals, CNBC, Seeking Alpha, Food Dive, and others, to garner insights on various stages of the customer journey.
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Part
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Spice, Sauce and Condiment Industry - SWOT Analysis

The spice, sauce and condiment industry in the U.S. is growing steadily due to rising disposable incomes and preference for home-cooked meals. There are opportunities to use more organic and natural ingredients and to come up with more flavorful and ethnic products. However, increasing health consciousness has curbed demand in this industry and the volatile nature of the trade-weighted index is poses potential threats to the industry.

Strengths

Weaknesses

Opportunities

Threats

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Part
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McCormick & Company - SWOT Analysis

Over the years, McCormick & Company has invested in building a strong brand portfolio that can be extremely useful if they decide to expand into new product categories.

Strengths

  • Over the years, McCormick & Company has invested in building a strong brand portfolio that can be extremely useful if they decide to expand into new product categories.
  • Their customer relationship management department was able to achieve a high level of customer satisfaction and good brand equity among potential clients.
  • Automation of activities has brought them consistency of quality, allowing them to scale up or down, depending on the demand.
  • The company has good returns on capital expenditure, enabling them to successfully execute new projects by building new revenue streams.

Weaknesses

  • Fluctuations in cost and availability of raw and packaging material, as well as seasonal factors of their business.
  • Their investment in Research and Development is below the fastest growing competitors in the industry, since they're spending above the average and hasn't been able to compete with more innovative players.
  • Their profitability ratio and net contribution are below the industry average.
  • McCormick's organizational structure is only compatible with present business model, limiting their expansion in adjacent product segments. Also, their daily inventory is high compared to competitors, mostly due to them not being very good at product demand forecasting, increasing their rate of missed opportunities.
  • Their financial planning is not efficient. In fact, their current and liquid asset ratios suggest that they can use cash more efficiently than what they're currently doing.
  • McCormick & Company is not highly successful at integrating firms with different work culture, being only able to integrate small companies.

Opportunities

  • Geographic expansion in China and Southeast Asia, which will allow them to penetrate new markets.
  • Their new technology provides them an opportunity to practice a different pricing strategy, enabling them to maintain loyal customers and lure new clients.
  • The increase in customer spending will allow them to capture new customers and increase its market share. This will also be possible due to their online platform, since their investment on the former has opened a new sales channel for them, allowing them to better serve their needs by using big data analytic.
  • The dilution of competitor's advantage due to market development will allow them to increase their competitiveness. Also, lower shipping prices will bring down their cost of transportation, providing an opportunity to either boost their profitability or pass on the benefits to the customers.
  • The adoption of new technology standards and government free trade will allow McCormick & Company to enter a new emerging market. The new environmental policies will also enable them to take advantage of their new technology and gain market share in the new product category.
  • Low inflation rates will bring more stability in the market, enabling credit at lower interest rate to the customers of McCormick.

Threats

  • Damage to reputation, loss of brand relevance and increase in private label use, as well as product quality and safety concerns.
  • Fluctuations in market price of raw material due to weather and harvesting conditions.
  • Risks associated with global business, such as local economic and market conditions, restrictions on investments, royalties, dividends and exchange rate fluctuations.
  • New technologies developed by competitors or market disruptions, as well as liability laws in different countries, which may expose them to various claims, given the change in policies.
  • Shortage of skilled workforce, imitation of counterfeit and low quality products in emerging and low income markets and changing buying behavior from online channels, which could be a threat to the infrastructure driven supply chain model.
  • Foreign governments can react badly to the increasing trend towards isolationism in the American economy, greatly impacting international sales. New environment regulations under Paris Agreement can also threaten existing product categories.
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Part
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McCormick & Company - Company Background

The global spices and seasoning industry is worth $11 billion and McCormick & Company is the leading brand in that market.

Company History/Origin

  • McCormick & Company was founded in 1889 by Willoughby M. McCormick. The 25-year old from Baltimore started out by making his own syrups, flavor extracts and juices from the comfort of his own home. He would go door-to-door to sell his products and even recruited 3 assistants to help him with his manufacturing and selling.
  • McCormick adopted the saying "Make the best someone will buy it," and within just one year they had become successful enough to move from his cellar, to a bigger facility.

How McCormick & Company Got To Where They Are Now

  • What started out as one person and his three assistants selling door-to-door, turned into the largest leader of the spice and condiment industry, though it took lots of steps over the years to get there.
  • Focused on growing their base business — A lot of focus went into marketing with an investment near $200 million in 2012 and took advantage of multiple avenues including in-store and mobile marketing
  • Driving innovative products — A driving factor of sales is the new and innovative products they launch. In the several years they have increased their marketing spending by over 50%
  • Acquiring leading brands — McCormick's portfolio is constantly expanding with the brands they are consistently adding. Sales have only increased due to new additions and are expected to keep growing.

Value Proposition

  • In 2017 McCormick & Company bought Reckitt Benckiser's food division for $4.2 billion. This new acquisition expanded McCormick's already large portfolio by adding French's mustard and Frank's RedHot brands.
  • McCormick & Company have acquired other brands but this was their largest deal ever. The acquisition added 8% to sales and is expected to keep growing.

Competitive Advantage

  • Brand strength — McCormick & Company holds 20% of the multi billion dollar global spice and seasonings market, which is roughly 4 times more than its next biggest competitor. Not only is it a leader in the industry, it is the largest supplier of private label goods. Because of this, its relationship with retailers is of increased value.
  • Global scale — The company is well positioned on a global scale, reaching consumers in 150 countries and territories worldwide.

Headquarters

  • In October 2018, McCormick & Company moved their headquarters from Baltimore to Hunt Valley, Maryland. The new location will house 1,000 + employees in one 6 story, 350,000 square foot building.

Other Information

Part
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Part
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McCormick & Company - Competitors

Ten competitors of McCormick & Company are Campbell Soup Co, Conagra Brands, General Mills, Tyson Foods, Hain Celestial Group, Tiger Brands, TreeHouse Foods, B&G Foods, PepsiCo and Kraft Heinz Company.

1. Campbell Soup Co

  • Campbell Soup Co is a US-based packaged food and snack company, perhaps best known for its iconic Campbell Soup product line.
  • This company is currently highlighted as a main competitor of McCormick & Company by top-tier outlet The Wall Street Journal, business trade CNN Business, investor outlet Barchart and financial trade MarketBeat, among other financial and investor publications.

2. Conagra Brands

  • Conagra Brands is an American packaged foods conglomerate that offers a wide variety of products through commercial retailers and restaurants.
  • This company is currently mentioned as a key competitor of McCormick & Company by CNN Business, MarketBeat and Barchart, among other business outlets.

3. General Mills

4. Tyson Foods

5. Hain Celestial Group

6. Tiger Brands

  • Tiger Brands is a South Africa-based packaged foods company that produces a variety of consumer goods, ranging from personal care products to rice, pasta and other packaged foods.
  • This company is currently mentioned as a primary competitor of McCormick & Company by The Wall Street Journal and Barron's, among other credible media resources.

7. TreeHouse Foods

8. B&G Foods

  • B&G foods is an American company that primarily sells a variety of pickles, relish and other condiment brands.
  • This company is currently flagged as a significant competitor of McCormick & Company by The Wall Street Journal, Barron's and Barchart, among other news outlets.

9. PepsiCo

  • PepsiCo is a US-based manufacturer and distributor of beverages, snack foods and other consumer packaged goods.
  • This company is currently noted as a competitor of McCormick & Company by The Wall Street Journal and Barron's, among other business outlets.

10. Kraft Heinz Company

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Part
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McCormick & Company - Competitive Landscape - Part 1

Campbell Soup Company has a "Real Food Philosophy," which has enabled it to provide foods and drinks that are honest, good, authentic, and flavorful. Conagra Brands has several initiatives that help people who do not have access to food. In 2019, Campbell had revenue of $8.1 billion, while Conagra had revenue of $9.5 billion.

1. Campbell Soup Company

Competitive Advantage

  • Campbell Soup Company has a wide range of products which include soups, sauces, healthy beverages, and snacks. Its products are of high quality and live true to the company's purpose of manufacturing "Real food that matters for life’s moments."
  • Consumers trust Campbell Soup Company to produce authentic and accessible products. The focus on its two distinct businesses in North America (snacks and meals and beverages) makes it control well-known brands and maintain a strong position in the market.
  • Campbell Soup Co. has a "Real Food Philosophy" that has enabled it to provide foods and drinks that are honest, good, authentic, and flavorful." It's products use ingredients that are sourced with care.
  • The Real Food Philosophy enables the company to produce food that fits into people's real everyday lives.
  • Campbell Soup Company makes the biggest impact on its customers, employees, communities, and shareholders by setting and meeting high goals.

Strengths

  • Campbell Soup Company is led by its iconic Campbell's brand and includes more than soup. The portfolio contains foods such as "Late July snacks," non-dairy beverages, farm cookies, "Emerald nuts," "V8 beverages," "Prego pasta sauces," and many others. Beyond soup, there is much more to the company, and it is still changing in new and exciting ways.
  • Its products are sold to more than 100 countries and are tailor-made for people's real everyday lives, meaning that families of all kinds rely on Campbell Soup Company's foods. The company believes that they can serve the food in their own homes. It focuses on simple and healthy meals.
  • Following its real food philosophy, Campbell's Soup Company produces food that is prepared with care, accessible to all and has roots. It is committed to manufacturing food through transparent processes so that consumers can know what goes into their bodies.
  • Campbell has a long history of diversity on its board. It was honored by the Executive Women of New Jersey, the Forum of Executive Women, and the Women's Forum of New York for having four women on its board of Directors. It was also named as one of the 26 public companies in New Jersey that have made a significant impact on gender diversity.
  • Campbell soups have specific categories for different consumer needs and wants. There is low fat, fat-free, low-sodium, heart-healthy, oil-free, and other categories.

Weaknesses

  • Mismanagement of Campbell Soup Co due to inexperience and poor-decision making has led to accumulated debt and decreased earnings.
  • The company's adoption of a fresh food unit has been identified as a failure because the company is not equipped to ship fresh food. The inexperience in this market has led to operating losses.
  • The current investment in technology is not at par with the company's scale of expansion.
  • Campbell Soup does not have an effective marketing strategy for millennials and has a disconnect with them. In 2018, sales to this group reduced by 1.9 percent.
  • The company has not been able to tackle the challenges posed by new entrants in the industry and has lost a small market share in the niche categories.

Financial Information

  • In its 2019 annual report, Campbell Soup Company reported revenue of $8.1 billion.
  • Campbell Soup Company's price per sales is $1.75.
  • Its cash flow is $3.87 per share, and the price per cash flow is $12.15.
  • Its book value is $3.69 per share, and the price per book is $12.76.
  • The company's Earning per Share for the most recent fiscal year is $2.30.
  • The net income is $211 million.
  • The Return on Equity is 62.59%, while Return on Assets is 5.68%.

2. Conagra Brands

Competitive Advantage

  • Conagra Brands contains iconic and emerging brands. It is guided by an entrepreneurial spirit and combines a rich heritage of making excellent food with a keen focus on innovation. The result is immense respect for its great brands, food, margins, and reliable results.
  • Conagra is modernizing its iconic brands, leveraging new opportunities, and adapting to a changing environment. It has a culture that is set to grow and create shareholder value.
  • The company has the most energized and greatest impact on culture in food. It continuously challenges and disrupts conventions.

Strengths

  • Conagra advocates for nutritious food which is prepared safely. The ingredients are sourced responsibly.
  • Conagra also acts as a caretaker of communities and the environment. Examples of community initiatives are Matching Gifts, Dollars for Doers, and United Way, which are geared towards improving all aspects of the society.
  • Conagra's focus areas are: "Better Planet, Good Food, Stronger Communities, and Responsible Sourcing." These make it align with social and environmental initiatives.
  • Conagra has 50 locations all over the world.
  • Conagra Brands Foundation makes an impact on people all over the world who do not have access to food by raising awareness of food security. It also pulls expertise and resources to ensure that people can access quality wholesome food and knowledge to help them lead healthy, active lives.
  • Some of its partners are Feeding America and Child Hunger Corps.
  • Conagra Brands engages its employees in decision-making for issues such as the grant-making process. It values the exposure of employees to various situations.

Weaknesses

  • Some of Conagra's products have been in violation of the health and safety code. In May 2019, Conagra had to recall two of its products due to undeclared allergens and misbranding. It July 2019, it recalled canned beef products due to processing defects.
  • Conagra and its management have failed to provide precise information to investors. Girard Sharp and RM Law launched a national class-action lawsuit against Conagra Brands after reports that Conagra had violated state and federal law by issuing false statements about the company's business. The company also misled investors during the merger with Pinnacle brands, resulting in losses.
  • Project management is highly focused on internal activities rather than considering the external stakeholders' interests. This creates a potential for poor public relations and consumer dissatisfaction.

Financial Information

  • According to Conagra Brands Inc's 2019 annual report, its revenue was $9.5 billion.
  • 2018's revenue was $7.9 billion.
  • The net income for 2019's fiscal year was $678.3 million.
  • The Return on Equity was 12.34% while Return on Assets was 4.06%
Part
11
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Part
11

McCormick & Company - Competitive Landscape - Part 2

General Mills generated $16,865.2 million from sales in 2019. Tyson Foods generated $42,405 million from sales in 2019.

General Mills

Competitive Advantage

  • With manufacturing facilities in 13 countries and market presence in over 100 countries, General Mills is a leader in the global branded consumer foods and wholesome natural pet food markets.
  • General Mills competes with its competitors by adopting "unique consumer insights, effective customer relationships, superior product quality, innovative advertising, product promotion, product innovation aligned with consumers’ needs, an efficient supply chain, and price."

Strengths

  • General Mills produces a variety of products ranging from cereals to pastries, ice creams, yogurt, pasta, and vegetables under popular brands such as Cheerios, La Saltena, Hiagen Dasz, Betty Crocker, and others.
  • The company has a strong popularity among kids and homemakers through brands such as Cheerios and Hiagen Dazs for kids and Betty Crocker and Pillsbury for homemakers.
  • General Mills has a strong social media presence with 91K followers on Facebook, 97.3K followers on Twitter, and 42.1K followers on Instagram.
  • With a workforce of approximately 40,000 full- and part-time employees, General Mills has recorded annual profits for 5 consecutive years.
  • Furthermore, General Mills has established strong strategic partnerships with its suppliers, dealers, and retailers over the years.

Weaknesses

  • General Mills spends a lot of money on rent because a significant proportion of its properties are rented properties.
  • The company has a high employee turnover rate compared to its competitors, with reports that qualified employees are departing the company.
  • General Mills focuses mainly on ready-to-eat meals, ice cream, yogurt, convenience meals, flour, and snacks. However, all these market segments are on a decline at the moment, which is a critical challenge for General Mills.
  • The company is also facing fierce competition since the rise in popularity of the Greek yogurt, which has led to the decline of all other types of yogurt.

Financial Performances


Tyson Foods

Competitive Advantage

Strengths

  • Tyson Foods has a highly skilled workforce of about 141,000 employees which has made the company profitable in the last 5 years.
  • Through its customer satisfaction management department, Tyson Foods has been able to establish a high level of customer satisfaction.
  • Tyson Foods has a strong social media presence with 282K followers on Facebook, 56.9K followers on Twitter, and 6.8K followers on Instagram.
  • The company has a "well-established IT system that ensures efficiency in its internal and external operations."
  • Tyson Foods has a highly successful go-to-market strategy for its products.
  • Tyson Foods has a low-cost structure, as well as the automation of several stages of its production process, which ensures that the company's production costs are low. This enables the company to sell its products at a relatively low price.

Weaknesses

  • Compared to its competitors, Tyson Foods has a high attrition rate in its workforce.
  • Investments in research and development have not been successful compared to the fastest growing players in the industry. As such, Tyson Foods have had limited success outside its core business.
  • Experts have hinted that Tyson Foods lack proper financial planning in terms of cash flows. This brings about unplanned borrowing when there isn’t enough cash flow as required.
  • Tyson Foods spends a lot of money on rent because a significant proportion of its properties are rented properties.
  • Furthermore, "the profitability ratio and Net Contribution % of Tyson Foods are below the industry average."

Financial Performances

Part
12
of fourteen
Part
12

McCormick & Company - Competitive Landscape - Part 3

Hain Celestial Group is an international company, operating in the organic and natural food market. They have a presence in a number of countries around the world. Tiger Brands is a South African company with a 91-year history in that market. A listeriosis outbreak traced to one of Tiger Brands operations has resulted in a difficult 12 months for the company.

Hain Celestial Group

Competitive Advantage

  • Hain Celestial Group is the leading manufacturer of organic and "natural better for you" products. It has operations in India, North America, and Europe.
  • Products produced by Hain Celestial are available in all "natural" categories.
  • The marketing is based on the concept that their products are part of the "new normal", which encompasses health, wellness, and mindfulness.

Strengths

  • All Hain Celestial products are grown using sustainable farming practices. They use environmentally friendly business and manufacturing processes.
  • Their products are sold in more than 70 countries globally.
  • Hain Celestial is committed to providing only "healthier, better for you" food and personal care products. The products are available in regular grocery stores at affordable prices.
  • Consumers are made to feel they are making a positive impact when they purchase the products because of the sustainable way they have been produced.

Weaknesses

  • In their 2017 SEC reporting, Hain Celestial disclosed they had material weaknesses in their internal controls that were associated with financial reporting. This caused them delays in the 2016 year, and the necessary SEC documents were not filed in the required time frame.
  • Violations in the way sales and distributions were recorded saw the SEC issue "Cease and Desist" proceedings. This resulted in an official warning being issued to the company, although no fine was imposed.
  • The US market has experienced declining revenues over the last 2 years. They have limited the market to 11 brands and 500 stock keeping units as a result.
  • Ongoing issues in the US market have seen the share price fall to 2012 levels.
  • Although Hain Celestial is marketed as affordable, their prices are not as low as competitors in the same segment.

Financial Information

Tiger Brands

Competitive Advantage

  • Tiger Brands is a South African company that has operated in that market since 1921. They aim to "nourish and nurture lives every day."
  • They claim the proud history they have established in South Africa has given them an intrinsic understanding of the consumer and their needs.
  • Their long history in the South African market means many people have grown up with their products and are familiar and recognize them, which is key for any brand.
  • They have developed strong distribution networks throughout South Africa and the African continent.

Strengths

  • As a South African company, they are proud of the fact they give back to the community. Their marketing emphasizes that the brand's history has been woven into the South African fabric.
  • The products made by the company can be used by a consumer throughout their entire lifespan, which creates a familiarity.
  • Many of their products are South African consumer favorites.
  • They are a consumer-orientated company.
  • A B2B market segment has been developed by the company to cater specifically for restaurants, hotels, airlines, and other similar operations. This segment offers additional customization and flexibility around ordering and distribution to align with the customers' operations.
  • The company uses sustainable practices throughout its operations.

Weaknesses

  • The presence of the company outside South Africa is limited, with most of the international focus on the African continent. Currently, the brand is available in 55 different countries.
  • A listeriosis outbreak has resulted in a 12% drop in profits over the first half of 2019. The company is also going through a period of weak economic growth in South Africa.
  • A class-action lawsuit has been issued against the company as a result of a listeriosis outbreak at an Enterprise factory in Polokwane. Enterprise is a brand owned by TigerBrands. The company has indicated they are looking to sell that part of their operations.

Financial Information

  • Tiger Brands had annual revenue of $223.0 million over the 2018 financial year. This was a 28% decline from the previous year.
  • They employ almost 12,500 staff across their operations.

Research Strategy

We searched precompiled information on the websites of the companies, financial databases, and a range of media articles to determine the strengths, weaknesses, and competitive advantage in respect of each of the companies. A substantial amount of financial information was made available on Hain Celestial's website. The website for Tiger Brands did not contain financial information for the company.

We then attempted to locate the annual reports and financial statements for Tiger Brands. While searching a range of industry reports, we located a secondary website for Tiger Brands with a URL specific to South Africa. A summary of financial information relating to the company was able to be located on this website. The financial information was recorded in South African Rand, which we have converted to USD based on the current exchange rate of 0.0676 (R3.3 billion x 0.06759 = 223,034,760).


Part
13
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Part
13

McCormick & Company - Competitive Landscape - Part 4

Treehouse Foods

Treehouse Foods boasts itself for being nation’s leader amongst packers of private label pickles for the retail market, suppliers of private label salad dressing, and suppliers of private label broths and stocks for the retail market.

Competitive advantage

  • Treehouse Foods was honored with a coveted 2017 Food Quality & Safety Award in the large business category for its exemplary and inspiring quality and safety initiatives.
  • Treehouse Foods produces its products under two businesses — Bay Valley Foods and TreeHouse Private Brands (formerly the ConAgra Private Brands business).
  • Bay Valley boasts itself for being the nation’s leader amongst packers of private label pickles for the retail market, suppliers of private label salad dressing, and suppliers of private label broths and stocks for the retail market.

Strengths

  • Treehouse Foods has a successful track record of product innovation and developing new products.
  • Treehouse Foods has a string deal community where the dealers not only promote the company’s products but also invest in training the sales team to explain to the customers how they can extract the maximum benefits out of the products.
  • Treehouse Foods has a high level of customer satisfaction with its dedicated customer relationship management department, which can achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.

Perceived weaknesses

  • The organization structure of Treehouse Foods is only compatible with the current business model, thus limiting expansion in adjacent product segments.
  • Even though TreeHouse Foods is one of the leading organizations in its industry, it has faced challenges in moving to other product segments with its present culture and therefore has limited success outside the core business.

Revenue and Other Publicly available Financials


B&G Foods

B&G Foods attracts customers with its large and eclectic family of brands as it completed 20 acquisitions from 1997 through 2017 and now owns 51 brands, grew from $129 million to $1.4 billion in net sales (985% increase) in just a decade.

Competitive advantage

Strengths

  • B&G Foods has a reliable and robust distribution network that reaches the majority of its potential market.
  • B&G Foods boasts a highly skilled workforce through successful training and learning programs.
  • B&G Foods has a successful track record of integrating complimentary firms through mergers & acquisitions and has successfully integrated several technology companies in the past few years to streamline its operations and to build a reliable supply chain.
  • The company has adopted automation of activities that brought consistency of quality to products and has enabled them to scale up and scale down based on the demand conditions in the market.

Perceived weaknesses

  • The unique selling proposition and positioning of its products are not clearly defined, which comes out as weak marketing.
  • Based on the current asset ratio and liquid asset ratios, the cash can be used more efficiently by the company, which implies that financial planning is not done efficiently.
  • The Research and Development is not at par with its competitors in terms of innovation, and B&G Foods, therefore, comes across as a mature firm looking forward to bringing out products based on tested features in the market.

Revenue and Other Publicly available Financials

Part
14
of fourteen
Part
14

McCormick & Company - Competitive Landscape - Part 5

A competitive advantage for PepsiCo is that its branding is easily recognized by consumers all over the world. One of Kraft Heinz's strengths is that it is one of the largest corporations supplying beverages and food both to the North American market and globally.

PepsiCo

Competitve Advantage

  • The sustainable business practices they use are considered to be a contributor to their overall success in the market.
  • The history and experience they have gained over the decades they have been conducting business provides them with a solid foundation to consolidate their current markets and develop new ones.
  • A comprehensive food service program has been implemented to help their clients keep up with consumer preferences and to provide them with access to a range of innovative new products. This is key when introducing new products to the market and assists their partners in establishing a competitive advantage.
  • Products are often tailored to meet the individual taste preferences for specific markets based on consumer preferences in that market.
  • PepsiCo branding is recognizable globally by consumers.

Strengths

  • PepsiCo is one of the most recognizable brands in the world. It is sold in more than 200 different countries. Each of its 22 brands generates more than $1 billion in annual revenue.
  • Their commitment to sustainable and ethical business practices is recognized globally.
  • The company is divided into six regional divisions, with each division responsible for a specific geographical area. The divisions have a distinct history in their respective markets and have developed unique practices to maximize their success within that market. Products are developed to reflect the tastes of these individual markets.
  • PepsiCo has entered into external contracts in a number of the markets they operate in to recognize the importance of gender parity, pay equity, and prosperity for the local communities. This is significant in developing communities where some international companies use the lack of regulation in these areas to maximize profits.
  • A significant amount of proprietary research is completed by PepsiCo annually, which allows them to develop new products and refine current products, so they are in line with current consumer preferences.

Weaknesses

  • Many of the products produced by PepsiCo are high in sugar or fat. In some countries, they are subject to additional taxes as a result. This is impacting on profits. In Jordan, for example, a 50% sugar tax has recently been implemented.
  • The high fat and sugar content of their products has seen PepsiCo receive negative publicity because of their negative health impact. It has also resulted in the popularity of key products decline.
  • Some of the packaging used is not recyclable or biodegradable. The branded packaging used by PepsiCo is instantly recognizable. With international concerns regarding plastic in waterways growing, there is potential that the company will receive negative publicity as a result.
  • There is an increasing concern from consumers and governments regarding the additives and flavorings contained in food and beverage products. The laws around labeling and restricted food groups are often country-specific and regularly updated. The compliance costs associated with adhering to these regulations have the potential to impact on profits.
  • Some markets are considering regulating the packaging in product categories that PepsiCo competes in requiring plain packaging and labeling. Given that PepsiCo has a marketing strategy based on product recognition, this will impact future sales.

Financial Information

  • PepsiCo employees 267,000 staff globally. 114,000 of these employees are in the US.
  • The company had revenue of $64.7 billion in 2018. This was an increase of 3.7% over the previous year.
  • Their core operating profit was $10.6 billion.
  • Each share had a reported earning of $8.78.

Kraft Heinz

Competitve Advantage

  • The products produced by Kraft Heinz are great taste, high quality, and nutritionally sound.
  • Strong brand recognition by consumers in relation to a number of their key brands has provided a strong foundation for a successful marketing strategy.
  • Their 150-year history in the market has seen them develop a strong reputation for high-quality products at affordable prices. Their market presence over this significant period means that consumers have developed familiarity with their products.
  • The sauce and condiment product category is a key area of business.

Strengths

  • Heinz Kraft is the third-largest company providing food and beverages to the North American market and fifth-largest globally. Eight of their brands generate over $1 billion in revenue annually.
  • They own over 200 individual brands. Many of these brands are instantly recognizable to consumers.
  • Kraft Heinz has employees in more than 40 different countries.
  • Sustainable business practices have been integrated into all operations. They have made a commitment to reduce greenhouse emissions, energy consumption, water consumption, and waste to landfill by 15% by 2020.
  • They have developed partnerships with Stop Hunger Now and Feed America and have provided more than 2 billion meals to those in need.
  • The condiment and sauce product category is their most successful, representing 26% of their revenue.

Weaknesses

  • The company received notification in 2019 that the SEC is instigating aspects of their accounting practice.
  • Disclosures made by Kraft Heinz indicate financial write-downs totaling $1.2 billion. Two key brands are included in this write-down. This has resulted in their shares falling to an all-time low.
  • A number of issues relating to the merger of Kraft and Heinz in 2015 continue to impact negatively on the company's reputation, which has contributed to declining sales in key markets.
  • Consumer demand for healthier, unprocessed foods has resulted in falling sales for the company. They have been slow to react to the changing consumer demands and insufficient resources have been allocated to the development of new and innovative products.

Financial Information

Research Strategy

We searched a range of precompiled information on the websites of the companies, annual reports, and investment information to obtain an understanding of the competitive advantage, strengths, weaknesses, and financial information of both companies. Relatively little information was available regarding their perceived weaknesses. To obtain a more comprehensive picture of both companies, including their weaknesses, we reviewed a range of recent media publications and media releases.
Sources
Sources

From Part 05
Quotes
  • "They have a growing desire to incorporate dishes and ingredients from a wider variety of cultures into their diets. This is especially relevant to younger consumers, who are demanding more snack foods and ethnic flavours. Another rising trend is the increasing interest for premium products with an organic, all-natural, small-batch or craft positioning."
  • "Additionally, consumers are seeking greater opportunities to incorporate new ingredients into home cooked meals across cultures and provide gourmet flair to their meals (Euromonitor, 2017)."
Quotes
  • "Convenience, innovation in flavors and cost have been identified as the key drivers of consumers’ choices in condiments. This is according to a recent Comax Flavors report which has revealed the purchasing behaviors and consumers’ attitudes towards condiments, salad dressings, dips and dipping sauces."
  • "Targeting increasingly adventurous consumers, set on new discoveries and experiences, will be key to product development in the food and beverage industry in 2019, according to Innova Market Insights. "
  • "Consumers desire the convenience of ready-to-eat sauces and soups packed with a diverse range of flavor origins. Within this context, ethnic flavors are appearing high on the pecking order. Although classic recipes lead the market, there is also an increased demand for premium and convenient products across the globe."
Quotes
  • "Consumers do not appear to be limiting how often they are purchasing condiments, with a third of US consumers saying they purchased eight or more condiments in the last six months to Oct 2017. Yet, nearly the same percentage say they struggle to finish their condiments before they go bad. "
Quotes
  • "As consumers show more interest in environmental sustainability and ethical business practices, companies are increasingly selling a story with their products. "
  • "Websites or product labels may display information about a company's history and how products are made to interest the consumer. This marketing tactic is often successful with Millennials, who tend to see corporate transparency as a big factor when making purchasing decisions."
  • "As mentioned, consumers increasingly focused on health might cut out certain sauces and condiments from their diets based on the perception that these add-ons are loaded with unnecessary sugar, salt, and preservatives. Having light food options is especially important for older consumers like Baby Boomers, who are likely to have age-related health concerns."
  • "Consumer fears about possible health risks of consuming artificial additives and genetically modified organisms (GMOs) have driven growth for sauces and condiments labeled as "natural," "organic," and "non-GMO." Food companies looking to satisfy this skeptical demographic have submitted products to certification groups such as the Non-GMO Project in record numbers."
Quotes
  • "Based on distribution channel, U.S. sauces market is segmented into supermarkets/hypermarkets, convenience stores, online, specialist stores, and others, wherein ‘others’ include discount stores, health and beauty specialist retailers, forecourt retailers, and independent small grocers. "
  • "Among these, supermarkets/hypermarkets category accounted for over 70% share in the market, in 2018. Change in preference and rising number of supermarkets/hypermarkets, consumers largely prefer buying sauces via supermarkets/hypermarkets rather online channel, through online distribution channel is registering positive growth in the market."
  • "Moreover, the online channel is expected to be the fastest growing distribution channel category, and is expected to register highest CAGR during the forecast period. "
From Part 09
From Part 10