Salad days for upstarts

Jack Neff, Contributing Editor

Ken and Annie move up, while Unilever's Best falls short

Big, established players rule the supermarket and supercenter aisles, especially in established but modestly growing categories. For small regional players trying to break in, the going just gets tougher as both the competition and the retail customers get bigger and bigger.

 

Or so goes conventional wisdom. But the salad dressing business is defying it.

When Bestfoods launched a new line of salad dressings under its regional Hellman's and Best brands in 1997, it did so with much fanfare and heavy marketing support. The leap from mayonnaise to the adjacent salad dressing section seemed like a natural. And with flavors such as Roasted Tomato Balsamic Vinaigrette, Spring Onion Ranch and Citrus Splash, the new dressings brought variety to a category where old favorites dominated.

 

Yet Unilever, one of biggest companies in the global food business, recently pulled the plug on the Hellman's and Best salad dressing brands following its purchase of Bestfoods in 2000.  The brands were a $45 million business only a year ago, but with Unilever under heavy promotional pressure from rival Altria Group's Kraft, the company decided its money was better spent behind jazzed-up, new squeezable versions of the mayonnaise and its much larger Wishbone salad dressing brand.

 

Small companies, big impact

 

Amid the clash of the salad dressing giants, however, some of the little players have been thriving. Among those gaining market share are mom-and-pop operations such as Ken's Foods' Ken's Steak House brand, which with more than $100 million in retail sales has quietly has become the No. 4 brand in the category, despite large gaps in its coast-to-coast distribution.

 

It's not that the big players are exactly on the run. Wishbone, which received increased marketing support once Unilever decided to refocus on bigger brands, saw sales rise 9.3 percent to $274.3 million for the 52 weeks ended Feb. 23, according to Information Resources Inc. (IRI).  Kraft saw sales rise a more modest 1.5 percent to $452 million, just behind the category's 2 percent growth rate to $1.45 billion. And Clorox's Hidden Valley Ranch grew 6.9 percent to $190 million.

           

But outgrowing them all has been Ken's Foods, up 12.9 percent to $109 million -- the latest in several years of double-digit growth for the Marlborough, Mass.-based company. Ken's has grown from salad dressings handmade at the Steak House of the same name in the 1950s to a company of more than 500 employees in three plants, including the Marlborough facility and ones in the Atlanta and Las Vegas areas. The latter two plants were added relatively recently, with the Las Vegas facility opening only last year.

 

Sales to retailers make up only about 40 percent of Ken's overall wholesale sales of more than $200 million, which also include private-label dressings and co-packing of some of Newman's Own salad dressings. Both those businesses have been robust, too. Overall private-label dressing sales rose 16.6 percent to $116.1 million in the 52 weeks ended Feb. 23, according to IRI. Newman's own saw 6.6 percent growth to $54.7 million.

 

Variety and creativity

 

Andy Crowley, president of Ken's Foods, attributes the company's success mainly to the variety and creativity of the line's recipes and hard work. "And we're a little more nimble," he said. "We're willing to do custom formulations [for retailers and foodservice accounts]. We're willing to do regional formulations."

 

But he's not looking to step on the toes of any giants. He adds: "The big guys are good at this as well."

 

Despite the national reach of most of his competitors, however, the salad dressing business is still very regional in nature, Crowley says. Vinaigrettes are big in the Northeast, ranch and honey mustard in the South and Southwest, and Ken's does whatever it can to cater to these regional whims. Though its market share is growing, the company still isn't a truly national player. It lacks distribution in the upper Midwest, including Chicago, and in the Pacific Northwest. "There's still a lot of opportunity to expand," Crowley says.