HUL, Heinz lead growing interest in food spreads

Food companies are increasingly focusing attention on the emerging category of spreads. Pegged at Rs 1,000 crore annually, the category — which includes mayonnaise, sauces, ketchups and sandwich spreads — is growing at 15-20 per cent per annum.

While ketchups and sauces are not new to the Indian consumer, products such as mayonnaise and sandwich spreads are. Hindustan Unilever (HUL) has just launched Kissan Creamy Spread in three flavours. Billed as an alternative to butter, the product is priced at Rs 26 for 100g and Rs 62 for 250 g according to industry sources.

HUL's moves come in the wake of initiatives undertaken by rivals such as Heinz. Two months earlier, Heinz launched a mayonnaise in the marketplace, in addition to a chutney-based dip. According to channel sources, the mayonnaise costs around Rs 70-75 for 280g.

FieldFresh Foods, a joint venture between Bharti and Del Monte Pacific, is likely to launch mayonnaise and mayonnaise-based products in the retail market in the next few months, according to the firm's business head, Yogesh Bellani. "The category is being led by innovations on the institutional side," explains Bellani. "Out-of-home consumption is growing. And, thanks to this trend, quick service restaurants and other dining outlets are offering more of these products as part of their menu. So, people are developing a taste for them. This, in turn, is fuelling retail consumption."

At the moment, FieldFresh offers its mayonnaise and mayonnaise-based products to the institutional segment only. By some estimates, the institutional segment constitutes about 60 per cent of the Rs 1,000-crore category. "But the retail segment definitely shows promise," says Bellani.

This point is endorsed by incumbents such as Fun Foods, acquired three years before by Dr Oetker, the Germany-based foods major. "We have a strong foothold in mayonnaise and mayonnaise-based products in India, and we see that consumption for it at the retail level is growing," says Oliver Mirza, managing director, Fun Foods.

The latter also supplies its products to the institutional segment, but the focus, says Mirza, remains on the retail segment. Another driver of the spreads category in India, say experts, is modern trade and high-end general trade, where retailers are open to the idea of keeping products beyond the core items of grocery and other essentials. "This is part of the increased awareness of international food habits," says Mirza.

Higher disposable incomes are also driving consumption at the retail level, he adds.