Food Division to make its numbers for the year, it was essential for Franks to grow its market share. While the brand had been growing in step with the category, the team knew that to really win in the category Franks growth had to outpace the hot sauce category. So far, the team had debated three possible strategies which could deliver the desired results. They were: 1 . Focus on a specific region of the country and compete aggressively to steal share 2. Attract new users by driving hot sauce category penetration 3. Innovation to attract users in the Mexican style segment of the category
The brand had enough resources to pursue only one growth strategy. Approach would create the best chance to grow? Background Which The first bottle of Franks Redroot sauce emerged from Stillness’s pickling plant 87 years ago in 1920. In 1964, Buffalo wings were born at the Anchor Bar in Buffalo, New York. Franks Redroot (FRR) was the secret ingredient in these original Buffalo wings. In 1996, Franks Redroot developed a pre-made buffalo wing sauce to make preparing wings even easier. In 2007, Franks: – was the category volume leader with 15. 2% share – had No. 2 dollar share with 16. , only 3 pats behind Tobacco – was the wing segment leader with 23% dollar share and 21% volume share. Franks Redroot uses proprietary peppers in its hot sauces -to deliver a flavor prattle Tanat no toner not sauce NAS. I Nils proprietary pepper yelled a roll, rear color, flavor and mild heat level that can’t be duplicated. Franks grows its peppers in both Mexico and in New Mexico. The peppers are then made into a mash and aged in New Mexico for 7-12 months. After the aging process, the pepper mash is sent to a production plant in Springfield, MO, where the product is cooked and special spices re added to give food a surge of flavor.
Franks Redroot Original contains all natural ingredients and no gums or thickeners, a claim that not all hot sauces can make. Consumers use Franks Redroot products with a wide variety of foods both as an ingredient and as a food topper. Franks comes in four flavors: Original (used in 1964 in the first Buffalo wings ever served in Buffalo, New York) Chile N Lime Extra Hot Buffalo Wing Sauce The brand’s most loyal consumers speak passionately about using FRR as their condiment of choice to energize their food.
They seem to view their heavy use as a edge of courage and a testament to their unwillingness to tolerate boredom in any form. They will try it on Just about anything and never hesitate to recommend Franks too friend. Buffalo – A Key Trend Buffalo flavor is a hot trend that doesn’t seem to be cooling down. At a growth rate of +54% it is the fastest growing flavor trend and is one of the top four flavors on menus today. Buffalo Wing consumption is huge, consumed by approximately 60% of Americans. Two thirds of them eat Buffalo wings out of home but only a third claim to make Buffalo wings at home.
FRR actually sells more volume to foddering operators than to consumers (40% Back of House Market Share), as the nation’s restaurants sauce more wings with FRR than any other sauce. Category Overview The category is broadly segmented into two main segments – American style and Mexican style hot sauces. West Indian hot sauce is another segment but represents a very small share. Hot Sauce is defined as a sauce made out of peppers that comes in a bottle and is usually red. Franks Redroot is Just one of the many brands in the American not sauce category Tanat also Includes, most notably, ‘exes Pete, Louisiana and Tobacco Brand Pepper Sauce.
The category’s most well-known sauce is Tobacco Sauce, the number one brand in hot sauces, but it is much hotter than Franks. Fry’s most direct competition is the sauces with a more similar heat profile. See Exhibit 1 for category sales and share data. The category has grown steadily for the last several years and, despite flat penetration, the category shows no signs of slowing down as consumers continue to seek bold and exciting flavors (see Exhibit 5 for Category Penetration and Buy Rate by Brand).
Brand choice is driven by consumer’s preference for the optimal blend of flavor and heat, a non-overpowering taste, quality and brand affinity. Category rejection is minimal – only 10% of consumers reject the category outright and express no interest in purchasing. It is expected that category growth will therefore come from non rejecters of the category. Specifically, turning “lapsed users” into “active users” and increasing the frequency/occasions among “active users”. Category users are significantly more likely to be male and reside in the South.
Consumers are divided into light, medium and heavy users. Heavy users use Hot, Tobacco, or Wing (HTH) sauce every day, medium users use HTH once a week and light users can be defined as using HTH less often. Heavy users are significantly more likely to be African American & Hispanics and reside in the south. Light users are Caucasian and are more likely to reside in the Northeast. Heavy users, by definition, are everyday users and light users are significantly more likely to have used HTH sauce with an “ethnic meal”. See Exhibits 6-8 for User Demographics.
The main barriers for non-users trying HTH is the perception that HTH is “Too hot”, “Too spicy’, and “Too overpowering”. Additionally, the desire for “something sweeter” is the main reason for no longer using HTH sauce. Other non-users in the should also play a role in why HTH has not been used in the past twelve months. Some of the primary barriers as to why lapsed users are not more active can be overcome. The key barriers are due to limited use, I. E. “l use it more sparingly’, “l only use it for certain recipes”, others in the household I. E. Others in H don’t like/ use it”, “My partner/family doesn’t like it” and flavor “l want more flavor”, “l want something sweeter”, “Too hot”, “Too spicy’, “Too overpowering”. Lapsed users may not be as experimental and may need guidance as to different ways to use HTH sauce. For many users, HTH sauce is a family tradition. Family members and friends tend to serve it as the introduction to HTH sauces, 40% of users are introduced to HTH in this way and 13% are introduced when a friend or relative told them about a HTH. Others, 19%, tried HTH sauce while out at a restaurant.
Few, 6%, become users solely through an in-store environment. According to a study commissioned by Research International, word of mouth and through restaurants are the best ways to introduce HOW sauce to new users (see Context Y The shopper and the decision maker at point of purchase are largely one in the same. When shopping for HTH sauce, brand name and flavor are the key drivers of brand choice. In fact “Flavor” plays a more important role than “Heat & Spice” in purchase decisions. 25-29 year olds and Midwest consumers are more price sensitive while Northeast shoppers are searching for a particular type of sauce.
Though brand name and flavor are important in the purchase process, consumers like to experiment in the HTH category. Users will tend to have a repertoire of many brands. In fact, over a quarter do not make a decision until they are in the store. The decisions at point of purchase do not appear to be price driven, however, those who ONLY use Tobacco are more loyal and generally always buy the same brand. Key Players Tobacco In 1868, Edmund Inclemency, created a fiery condiment from a mixture of aged ripe red peppers, premium vinegar and Avery Island salt.
He called it [email protected] Brand Pepper Sauce. One hundred and forty years later Tobacco is made in much the same way it was back then except now the aging process for the mash is longer – up to three years in white oak barrels. It is still made on Avery Island, Louisiana, and the Inclemency Company is one of the Use’s biggest makers of hot sauce producing as many as 720,000 two-ounce bottles of Tobacco sauce each day. Texas Pete Texas [email protected] is manufactured by the TWO Garner Food Company in Winston-Salem, North Carolina. The brand is best known for its 3. Oz bottles with their bright red sauce, shaker top, and white and yellow label featuring the name in red and “Texas Pete”, a red silhouette cowboy. The cayenne peppers used in Texas Pete are aged for two years to soften their skins, and the company claims this also enhances the products heat profile. The peppers are then combined with vinegar, salt, Jonathan gum and sodium beneath. One of the issues surrounding the sauce is the inclusion of Jonathan gum, a thickener hat allows for less overall pepper pulp in the recipe to achieve the desired texture, which some hot sauce fans find distasteful.
Texas Pete is not as hot as Tobacco which the company acknowledges through its tagging “Texas [email protected] are all tout Louisiana Louisiana “The Original” Hot Sauce is a cayenne pepper sauce produced by Bruce Foods, a Cajun and Mexican food company, founded in 1928 in New Iberia, Louisiana. It is made from aged peppers, vinegar, and salt and is bright red and thin with a moderate heat level. Louisiana is not as hot as Tobacco sauce and the company uses he milder heat as a selling point, calling the sauce “Not too hot, not too mild.
Louisiana “The Original” is most common in 6 oz. Shaker bottles and is known for its yellow, blue and red label and yellow plastic safety seal adorned with the “Original” logo. Tobacco is seen by consumers as a high quality, heritage brand, Franks is seen as modern and milder while Texas Pete is operating in the value segment (see Exhibit 10 for the Category Perceptual Capsule). Franks user profile is slightly younger (ages up to 39 years old) compared to the Tobacco user profile (see Exhibit 11 for age profiles of brand trials). See Exhibit 4 for sizing and pricing by brand.
Sales and Share FRR shares is the volume market leader with 15% share but is #2 in the category in terms of value share. See Exhibit 1 for national share data and Exhibit 2 for regional shares. Rationality The Hot Sauce category has some pronounced regional dynamics, as ethnic groups and regional cuisines strongly influence usage and flavor profile preference. Generally, the category is strongest in the southeast and the west. Hot sauces (excluding Tobacco) are strongest in the West and Wing sauces are strongest in the Northeast and Southeast regions.
Some brands are clearly regional players, and reference by region varies significantly even for national brands like Tobacco and Franks Red Hot. See Exhibit 2 for Regional Brand Performance and Exhibit 3 for category development by region. Key Measures by Brand Amongst consumers Tobacco’s total brand awareness remains nearly universal while Franks spontaneous awareness has bounced back after a period of decline (see Context 12 Tort category Awareness Day Brand) ranks Retort Orlando Is ten most well-known variety with 55% awareness, followed by Wing Sauce which has 38% awareness.
The Extra Hot and Chile n Lime variants are less well known with 30% and 21% awareness respectively. Franks is neither strong in converting awareness into trial nor in converting trial into loyalty, relative to Tobacco and Louisiana. However, maintaining loyalists is a brand strength. See Exhibit Franks appears to be rebounding on several key global brand attributes such as high quality, value for money and is a brand for me as well as on some of its core category attributes, including not too hot, won’t overpower and better tasting. (See Exhibits 13, 14 and 15 for Brand Image Trends).
However, very little differentiation exists in the category. Franks minor points of differentiation include being not too to, alive, delicious, and modern. Strategic Options Having considered all the data and trends, the team has identified three potential paths to share growth. Each has its pros and cons and the team must choose a single option to move forward. Option 1: Regional share conquest Given the barriers to use that keep non-users out of the category, it may be easiest to target consumers who are already using other brands.
Franks Red Hot would stand to gain significant sales and share if it can close the performance gap between its Northeastern stronghold and the other regions of the country. This task s made difficult, however, by the fact that most consumers are happy with their current sauces and feel no pressing need to change brands. Southeastern consumers use hot sauce heavily as a condiment, and while they generally buy sauces with the same basic flavor profile as Franks they also show an affinity for less expensive brands.
Western consumers use more hot sauce than the rest of the country, but a heavy Hispanic population and Latin cuisine drive a strong preference for Mexican-style sauce brands. Option 2: Drive category penetration As the category volume leader, FRR has more to gain than other brands if it can role Increases In category penetration. I en team reels content Tanat Franks equity is “cool” enough to create aspiration appeal among 20-something consumers who enjoy spicy food but don’t buy hot sauce. One team member has described this target as “loyal Franks users who Just haven’t met us yet”.
As the brand that started the Buffalo craze, Franks could also tap into a huge population of people who enjoy wings and are therefore familiar with the FRR flavor profile. The team worries, however, that non-users’ fear of “too hot” and “that’ll hurt” will be difficult to overcome. Additionally, while wings are very popular at restaurants, frying them up at home is a messy hassle. Even the most devoted wing eaters are generally content to buy them rather than tackle the process at home, thus potentially limiting the volume opportunity of this path.
Option 3: Compete more directly with the fast-growing Mexican-style brands The team has definitely taken note of the high growth-rates shown by Taping and Chula – both Mexican-style sauce brands. While several of the American-style sauces have lost ground, the Mexican brands as a group are clearly winning. Participating in this segment is certainly an option – the team could launch a green jalapeño-based sauce or a chipolata-flavored extension that would be a much stronger fit with Mexican cuisine than the current FRR based cayenne and vinegar flavor profile.