Why Dressings and Dips Add Value to Produce Sales

ONLINE EXCLUSIVE

From sweet caramel dips to chipotle aioli and chile guacamole dressings, the market for dressings and dips — the common accompaniment to salads, chopped carrots, cucumbers or celery — is growing fast.

Currently worth close to $11 billion worldwide, the dressings and dips market is forecast to continue to increase in value, reaching an expected $19 billion by 2030, according to Data Bridge Market Research.

But what are the key trends within this soaring sector, and how can grocery retailers best take advantage of them?

RIDING THE WAVE

A creation of Reunion Foods, a Toronto, Canada-based business, Mother Raw is a brand that has grown exponentially since its launch in 2019. Reunion Foods itself grew out of the original iteration of Protenergy Natural Foods, another Toronto food business that was sold to TreeHouse Foods in 2014. The “Reunion” of its name literally refers to the concept of reuniting the original Protenergy team under a new banner in 2017.

“We got the team back together and were looking for an opportunity in the healthy, delicious and affordable segment. We thought that was the future for North American consumers,” explains Brent Lunn, vice president of sales at Reunion Foods.

In identifying possible gaps in the market, Lunn says the Reunion team analyzed then-current offerings at a retail level, particularly in how many brands appeared to diverge from original dressings recipes.

“We found that a lot of salad dressings were using a lot of canola oil and sugar, and were very different from homemade dressings,” he says.

Reunion’s objective, Lunn continues, was to develop an alternative in the form of an “organic, plant-based, clean, healthy dressing.”

“We think the Mother Raw brand is quite different to anything else that is out there,” he adds.

The Mother Raw name, Lunn explains, grew out of a desire to reflect its emphasis on organic, plant-based ingredients. And it forms an acronym: “Real Authentic What-you-see-is what-you-get.”

Initially launched with dressings such as ranch, Caesar, balsamic and Mediterranean, the Mother Raw range has expanded over the last 24 months with a number of additions, and is also increasingly venturing into the dips sub-segment, with six products.

CONTINUED EVOLUTION

Headquartered in Sandpoint, ID, but with manufacturing plants in Michigan, Utah and Virginia, as well as Idaho, Litehouse Foods is another major player in the dressings and dips market.

According to Litehouse brand manager Kate Nees, Litehouse is expanding an already extensive dressings and dips lineup, with several new products to be commercially launched in the coming months.

“Litehouse is always evolving its offerings to meet the needs of our consumers, and that innovation spans all of our products, from new refrigerated salad dressing flavors, sauces, dips and freeze-dried herbs,” she says.

“This year, we are expanding our product lineup even further with the introduction of Litehouse Loaded Sauces, which are perfect for dipping, dunking, and adding more flavor to any dish,” she says. One of the new flavors in the Loaded lineup is the Litehouse Loaded Taco sauce, which will launch in May.

The expanded lineup adds to a range that features dressings such as Sweet Onion, Tzatziki Ranch, Red Wine Vinegar with Olive Oil, Organic Raspberry, Jalapeño Ranch, Avocado Cilantro, Buttermilk Ranch and Hatch Chile Ranch. On the dips side, existing products include Homestyle Ranch, Spinach Parmesan, Medium Salsa and Cream Cheese, and the sweet Pumpkin Spice Caramel, Low Fat Caramel and Old Fashioned Caramel.

Concord Foods is also increasingly moving into the dips market. The Brockton, MA-based company is a supplier of retail food products and custom ingredients to supermarkets, foodservice operators and leading food manufacturers.

Concord supplies such produce seasoning mixes as Asian Stir Fry, Guacamole, Southern Style Greens & Kale and Street Taco Seasoning. According to Concord Foods’ marketing manager, Samantha McCaul, the latest additions now available comprise new dry dip mixes — Hatch Chile Salsa Mix and Hatch Chile Guacamole Mix — and a new fruit dip. To make the dips, consumers mix the seasoning packet with fresh produce, such as avocados for the guacamole and tomatoes or tomatillos for the salsa mix.

McCaul says the fruit dip is a Cajeta Dip, which is a Mexican caramel dip made with goat’s milk. It complements the company’s existing range of sweet dips, including Simply Concord Caramel Dip, Simply Concord Chocolate Dip, Simply Concord Organic Caramel Dip and Creamy Caramel Dip.

INNOVATION TO THE FORE

According to Reunion’s Lunn, Mother Raw benefits from strong demand for organic dressings, which he believes will continue to grow in the 12 months ahead. “We believe we will continue to see demand for organic dressings, and we have seen a lot of interest from retailers,” he says.

Lunn says the company is also seeing strong interest for its new salad kits, which each contain a half-ounce single-serve sachet of a Mother Raw dressing. “We’ve seen a lot of demand for the salad kits from Day One,” he says. “We are now offering all of our varieties in that format, and they are really grabbing the attention of retailers and consumers.”

We find that there are three critical ingredients to making displays work: planning, location and promotion.”

– Samantha McCaul, Concord Foods, Brockton, MA

The kits were developed in collaboration with Hamilton, OH-based vertical farming specialist 80 Acres Farms, which supplies the lettuce and other salad ingredients. Lunn believes the kits are proving a hit thanks to the convenience of a pre-made salad kit, rather than having to make a complete salad from scratch.

For McCaul, rising demand for organics is a key trend. “Consumers are becoming more focused on their health and more concerned about the environmental effects of food production processes,” she says. Concord Foods offers multiple organic mixes, such as organic guacamole mix, organic salsa mix, organic banana smoothie mix and an organic strawberry banana smoothie mix.

MAKING THE MOST AT RETAIL

Embracing current trends and having an attractive range of dressings and dips is merely the first step for any brand. The next is having effective retail merchandising and displays in place to make sure those products, and their accompanying brand messages, reach the consumer.

For McCaul, grocery retail displays are crucially important to adding interest and excitement to the produce department, including related products like dressings and dips.

“We find that there are three critical ingredients to making displays work,” she says. “These are 1) planning; 2) location; and 3) promotion.”

McCaul argues that success is far greater when planning and coordination are involved. “It’s important to plan cross-merchandising displays with a focus on items with high sales volume and velocity — and build displays with the customer in mind,” she recommends. “When including non-perishable items, like Concord Foods, these items should have a strong tie-in with the fresh produce.”

When it comes to location, McCaul says the best placement for Concord Foods’ dips and seasonings is on the shelf, adjacent to relevant fresh produce items.

McCaul also advises that promotions for dressings and dips should be based on produce seasonality. Alongside this, she says that produce/companion items on Total Price Reduction (TPR) promotions should always be featured prominently.

“Stores should make sure to use promotional signage — identify the products and the intent of the display,” she adds.

For Mother Raw, there are two key factors to bear in mind when it comes to merchandising its products at a grocery retail level, says Lunn.

First, all Mother Raw dressings and dips require refrigeration. Second, as a relatively small brand, the company relies on secondary display and merchandising to make an impact on shelves.

Given the success of Reunion’s working relationship with 80 Acres Farms, Lunn suggests there is also strong evidence that targeted cross-merchandising of dressings or dips with appropriate produce functions well, pointing to both salad brands and pre-packed greens.

“We try to understand what tomorrow’s consumers are going to want and have the partnerships available to meet their needs,” he says.

McCaul concurs with Lunn’s assessment, recommending that dressings and dips be promoted during key events and seasons at a retail level, adding that such products should always be cross-merchandised and displayed with complementary items.

“Retailers should cross-merchandise with the fresh produce companion items,” she suggests. “For example, the Hatch Chile Guacamole Mix should be merchandised with avocados — especially during Hatch Chile season, which runs August-September. The Cajeta Dip should be cross-merchandised with fresh apples.”

Concord provides display-ready cases and shipper displays for its products, which makes it easy for retailers to merchandise.

MORE THAN A SPORTING CHANCE

In addition to product innovation, Litehouse invests in the impact that tailored packaging can make, especially when aligned with major sporting occasions.

According to Nees, Litehouse evaluates unique packaging and display opportunities at retail, citing the example of the recent testing of a limited-time packaging for Litehouse Homestyle Ranch that featured a new football design, which was aligned with the group’s Litehouse in the House football campaign.

“This packaging update not only helps us make a connection to our ‘Litehouse in the House’ campaign, but it also adds excitement to the refrigerated salad dressing, which is set to attract new consumers for football watch parties and tailgates,” she says.

Reunion takes a different approach for its Mother Raw brand.

“We’re an outlier in packaging,” says Lunn, referencing the company’s use of glass bottles, rather than plastic, for its dressings and dips. “All of our products are glass, both dressings and dips,” he explains. “It’s what our consumers are asking for.”

Although he admits that a switch to plastic containers would undoubtedly be cheaper, Lunn believes moving away from glass would break with both the brand image for natural, sustainable foods — and consumer expectations for the same.

POSITIVE OUTLOOK

According to Lunn, the last 18 months brought a huge number of changes for many companies in the dressings segment, and for related salad producers. This assessment echoes a 2022 Research and Markets report that found the high cost of raw materials had been a “hampering” factor for the dressing and sauces market.

Despite this, Lunn predicts a stable 2024. “We are not expecting to see dramatic price increases in most of our ingredients,” he says. “We think things are calming down from what we have experienced, although we have never had problems with supply. In fact, we run at 99% supply for all of our retail customers.”

Concord’s McCaul agrees, describing the supply outlook for 2024 as “excellent.”

Moreover, Lunn says the outlook ahead appears positive, not just for Mother Raw, but for the dressings and dips industry as a whole. “Healthy eating is becoming more and more critical for more and more people,” he says.

“We started this company because every parent is saying ‘eat more veggies’ to their kids, so if you are going to eat a salad with a dressing, for the love of God, it should be healthy. We have worked very hard to have a healthy, delicious and affordable product.”