HIGH-LEVEL SAUCES

Pasta sauce sales just keep bubbling along. A host of superpremium sauces using fresh tomatoes, imported olive oil and chunks of fresh vegetables as their key ingredients have become the driving force in the category, bringing sales from a simmer to a boil.Consumers like the rich, homemade taste these sauces deliver, while retailers like the higher margins and price tags they bring to the shelves.

Pasta sauce sales just keep bubbling along. A host of superpremium sauces using fresh tomatoes, imported olive oil and chunks of fresh vegetables as their key ingredients have become the driving force in the category, bringing sales from a simmer to a boil.

Consumers like the rich, homemade taste these sauces deliver, while retailers like the higher margins and price tags they bring to the shelves. While traditional pasta sauces are often offered as loss leaders selling for well under $1, the new upscale products appear to be selling with minimal discounting, usually bringing in more than $2 a jar.

"The pasta sauces are doing wonderful," said John Burger, category manager at Randalls Food Markets, Houston.

"In products like Mama Rizzo, Classico and Paul Newman -- the upscale varieties -- we have always done well over our market share on them. These [new sauce brands] are just complementing that. They are new and stimulating to the category," Burger said.

"The upscale/gourmet sauces are our fastest-growing segment and currently they reflect the best-selling category," said Michael Shultz, senior vice president at Hughes Family Markets, Irwindale, Calif.

"We stock the new Barilla sauces from Campbell's and Five Brothers from Van den Bergh. These upscale sauces have been received very well here, and have not hurt the sales of the more inexpensive products," said George King, buyer-merchandiser at Fleming Cos.' Massillon division, Massillon, Ohio.

"Classico was the first brand in the upscale type, but when we took it on we did not discontinue any other brands because we figured Classico created a new segment in the category. These upscale brands have expanded the category," he added.

Aside from broadening the category, sales of the new generation of sauces have been helped because consumers are using them as a key ingredient in a wide variety of pasta, meat, seafood and poultry dishes.

"Manufacturers are now portraying these products as not just sauces for pasta any longer. They are now cooking sauces and they are being used a lot of different ways -- on pastas, rice, chicken, meat, seafood, and they are really easy to use. It is a category that is growing very fast," said a spokesman for Montvale, N.J.-based A&P.

"One of the reasons why there is so much activity and new-product introductions is because restaurants have really developed this area. They are using a lot of different sauces and styles and people now recognize them. When they are introduced in a jar at store level and the consumer has already tasted the variety in a restaurant, it is a good aid in helping reach that buying decision," he said.

For example, the Food Emporium division of A&P stocks Patsy's Marinara Sauce from the famous Manhattan restaurant. It retails for $6.99 a 32-ounce jar.

Vern Buford, head grocery buyer at Rice Food Markets, Houston, also found manufacturers to be redefining the category.

"It seems to me that most jarred pasta sauces are trying to get into the upscale and get away from the bottom of the market. It looks like they are trying to concede the lower levels of the pasta sauces to the canned and take their glass jars to the upscale consumers," he said.

Pasta sauces, according to Ginny Marcin, a spokeswoman for Campbell Soup Co., Camden, N.J., are divided into three different segments: mainstream, which is the largest sector of the business; value sauces, which are primarily canned, and superpremium.

"The superpremium segment represents about 12% of total pasta sauce volume, and is the most active and growing category, increasing 18% over the past year," she told SN.

"The premium segment has been building momentum over the past year as the category has evolved and matured," said Steven Luttmann, associate brand manager at Van den Bergh Foods, Trumbull, Conn.

According to Information Resources Inc., Chicago, sales of spaghetti and Italian sauces for the 52-week period ended July 16 totaled more than $1.25 billion, an increase of 7.2% from a year ago.

Figures provided by A.C. Nielsen Co., Schaumburg, Ill., found that for the 52 weeks ended June 10, the upscale pasta sauces showed the most unit growth. Classico from Borden, Columbus, Ohio, was up 34.5% to almost 73 million units, while Ragu Hearty from Van den Bergh Foods showed a 42.5% growth rate to almost 79 million units.

Advertising is key in getting consumers to sample the new products, retailers say, and cross-merchandising can help drive sales even further.

"Price promotion, with or without a coupon, is effective for the moderate brands. For budget brands, buy-one-get-one-free works well, and price points of under $2 for premium sauces tends to increase those sales," said Emily G. Holdstein, senior vice president of Wonder Market Cos., Worcester, Mass.

"The advertising support that is given to the product as it is introduced has stimulated sales. Couponing is becoming important for this category, and is a main area of support," said the A&P spokesman.

"Between the sauces and the pasta we usually have one on sale every week. We also frequently cross-merchandise the pasta sauces in other areas of the store, like the meat department," said Phil Mannino, director of operations at Food Circus Supermarkets, Middletown, N.J.

But he cautioned that steep promotions can cut into margins.

"The margins on pasta sauces are usually pretty good, but when they are featured at something like 59 or 79 cents a jar, it is usually on a promotion at a zero margin," he explained.

"Promotions are what lead shoppers to pick a particular brand, causing this to be a very promotionally driven category," said Al Young, category manager at Big Y Foods, Springfield, Mass.

"The best way to advertise, merchandise and promote the category is to promote the items as a major feature and to distribute the product to the stores directly. We also cross-merchandise with pasta, grated cheese, etc., to get the extra sales. Pasta sauce and dry pasta with the correct retail will draw the consumers to the store," Young explained.

"Because of the way they are being promoted to the consumer, it is easy to do cross-promotions," said the A&P spokesman. "Particularly, our Food Emporium division does well in cross-merchandising across from the meat case or the seafood case, or other areas in the store."

Hughes Markets finds hot feature prices and displays, usually tied in to a pasta promotion, work best at stimulating sauce sales, according to Shultz.

"When it comes to pasta sauces, there are several opportunities for cross-merchandising. Aside from pasta, sauces can also be successfully cross-merchandised with olive oil, salad dressing, wine, bread, etc.," he said.

"We find that the sampling helps to build sales," said Fleming's King.

Aside from the rich sauces, some retailers are having success with "healthy" sauces that are low in sugar, fat and sodium.

"In our Rice Epicurean stores the fat-free is selling well," said Buford. "It appears that reduced-fat is on its way out and is being replaced by fat-free."

"A rather small but vocal group of shoppers demand the reduced-fat, reduced-sugar, reduced-calorie and reduced-sodium products," said Shultz of Hughes Markets.