Spreads sales could jump 65% to $6.5B by 2018

July 15, 2014

Indulgent tastes, versatility, and cross-category appeals drive popularity of spreads – a category still on the rise.

Originally published in Facts, Figures & the Future.

America is discovering schmear delight – as specialty nut butters, upscale cream butters, hummus and chocolate tantalize taste buds and lead the growth of spreads at U.S. food retailers.  

So many flavors and textures tempt consumers today, spreads have become a fun, easy way to ingest protein without having to cook, says F3.  Their portability and lightweight suit snacking occasions, and their versatility makes them meal companions as well.   

Indeed, says Mintel, it was the hot pace of new product innovations that drove 34% growth in the nut-based and sweet spread category to $3.9 billion between 2008 and 2013.  More innovations in ingredients, flavors and multiple uses will drive another 65% sales increase to $6.5 billion between now and 2018, the research firm forecasts.

Where should CPG innovate?  One good area could be in wedding indulgent tastes and textures to health benefits.  According to Mintel, 55% of consumers want more nut-based and sweet spreads with benefits such added vitamins or antioxidants, 47% want spreads with health claims, and 36% want varieties without additives or preservatives.  “High-protein claims are important to nut-based spread purchases, while sugar-related attributes such as ‘no added sugar’ or ‘no high fructose corn syrup’ are important to those purchasing fruit spreads,” Mintel adds, suggesting as well that makers of gourmet spreads consider using natural or organic ingredients, which “may also warrant a higher price point.”

Mintel food analyst Amanda Topper notes, “Greater competition from other brands both within and outside of the nut-based and sweet spreads market will have an impact on the category.”  Therefore, she urges manufacturers “to promote the versatility of their spreads for use as an ingredient, dip, snack and beyond to help increase product appeal.  Spreads made from natural ingredients that are free from additives, and spreads with nutrition-boosting claims will continue to be important for new product development.”

Dollar sales of specialty nut butters soared by 24.21% to $402.6 million in U.S. multi-outlet retailers, including supermarkets, drug stores, mass market, military commissaries, and select club and dollar stores, in the 52 weeks ended April 20, 2014, reports IRi, a Chicago-based market research firm.  Unit sales for this period rose 17.39%.  Within this segment, Ferrero USA, the maker of Nutella, commands more than half the sales, at $211.9 million, and private label is in third place at $26.5 million.

A far bigger segment – butter and butter blends - moved up 6.48% to $2.08 billion, on a 3.66% unit sales gain in the same period, the IRi data show.  Concurrently, the dollar sales of margarine spreads slid by 4.86% to $1.79 billion, on a 5.42% unit decline.  Why have consumers shifted back to butter?  People want shorter ingredient lists today, chefs on TV cook with it, and Land O’Lakes has added olive oil and canola oil varieties to make its butter more spreadable, reports the Minneapolis Star-Tribune, which cited USDA figures that the nation’s per capita consumption of butter rose to 5.6 pounds in 2012.