Christopher Wahrman Dr. Stassen MKTG 4443 Tomato Ketchup Spring 2014 Christopher Wahrman Dr. Stassen MKTG 4443

About the Category Tomato Ketchup can be found in nearly every household in America. It is a staple in the condiment universe and known by many as the quintessential topping for hotdogs, hamburgers and french fries. It is because of this widespread popularity and notoriety as one of the most most popular condiments that I have chosen to analyze it for this audit. While regular tomato ketchup still dominates the category, I have found that specialty ketchups have begun penetrating the market and creating unique competition.

Product Snapshot Tomato Ketchup TOTAL CATSUP (COND/GRAV/SAUC) OZ. Total Consumption BehaviorScape Framework   LifeStyle BehaviorStage Cosmopolitan Centers Affluent Suburban Spreads Comfortable Country Struggling Urban Cores Modest Working Towns Plain Rural Living Total Start-Up Families HHs with Young Children Only < 6 91 94 135 105 123 115 Small Scale Families Small HHs with Older Children 6+ 118 92 112 116 143 117 Younger Bustling Families Large HHs with Children (6+), HOH <40 152 150 175 196 167 209 178 Older Bustling Families Large HHs with Children (6+), HOH 40+ 188 165 190 202 173 Young Transitionals Any size HHs, No Children, < 35 44 68 81 53 67 101 65 Independent Singles 1 person HHs, No Children, 35-64 39 42 50 56 52 64 51 Senior Singles 1 person HHs, No Children, 65+ 37 32 38 47 Established Couples 2+ person HHs, No Children, 35-54 109 108 140 111 Empty Nest Couples 2+ person HHs, No Children, 55-64 106 95 122 104 Senior Couples 2+ person HHs, No Children, 65+ 74 77 89 83 96 98 119 100

Heinz Del Monte Hunts Private Label Demographic Variables % Volume   % Volume Index Race of Head of Household White 70.7% 102 Black 11.6% 97 Hispanic 12.5% 100 Asian 3.1% 72 Other 2.1% 94 Number of Persons 1 Person 11.2% 41 2 Persons 28.7% 89 3 Persons 19.4% 119 4 Persons 18.8% 143 5+ Persons 21.9% 197 Household Income Under $10,000 6.3% 82 $10,000 - $19,999 8.2% 73 $20,000 - $29,999 9.7% $30,000 - $39,999 10.0% 99 $40,000 - $49,999 8.9% $50,000 - $74,999 18.7% 104 $75,000 - $99,999 14.1% $100,000 - $149,999 14.6% $150,000 or More 9.6% 107 % Volume Index   58.7% 85 18.8% 157 16.3% 130 2.9% 67 3.4% 152 14.5% 53 29.1% 90 15.3% 95 17.3% 131 23.8% 214 9.9% 129 12.9% 116 11.9% 109 127 11.7% 18.7% 104 9.7% 82 7.0% 57 5.3% 59 % Volume Index   65.4% 95 13.7% 114 15.2% 121 3.2% 74 2.6% 116 14.1% 52 29.1% 90 18.7% 115 18.5% 141 19.6% 177 7.3% 11.6% 103 11.1% 101 12.1% 120 10.5% 19.9% 111 11.7% 98 9.9% 80 6.1% 68 % Volume Index   69.4% 101 12.9% 108 13.1% 105 2.0% 48 2.6% 116 13.4% 49 27.2% 84 17.1% 19.0% 144 23.4% 210 9.8% 127 14.2% 130 11.7% 115 10.8% 120 18.1% 9.2% 78 7.9% 64 4.3%

Category Role I selected Ketchup somewhat out of limitation. Mustard is my favorite condiment was unfortunately taken when selections were being made and ketchup was the next best thing. I also wanted to choose a product that is a staple in many homes yet a category that I was unsure of the differentiation between demographics. Size, in U.S. Sales $515 million Not exactly a huge category but not small either.

Assigning a Role to the Category

Stores Audited 5 Stores Audited by Christopher Wahrman Walmart Super Center #144 (MLK) Marvin’s IGA #220 (College) Ozark Natural Foods (College) Harps #176 (Garland) Aldi’s (MLK) All of these stores lie in Fayetteville, yet they lie across the city and may pull from different demographics within Fayetteville due to their location.

Stores Audited Fayetteville-# of SKU’s Walmart Supercenter MLK- 28 (Deepest) Harps on Garland- 18 Marvin’s IGA on College- 24 Ozark Natural Foods College- 7 Aldi on MLK- 1 Total: 52 SKUs found.

Retailers SKU Percents Store # SKU % of Category WMMLK 28 52.85% IGA 24 46.15% HRPS 18 34.62% OZKNF 7 13.46% ALDI 1 1.92% Not too surprising to see that Walmart has the majority of the SKU’s found. However IGA had nearly as large of an assortment with 46% of the total SKU’s found. They also had many SKU’s unique to it whereas Walmart’s shelf space consisted mostly of Heinz and Hunts.

Changes in Category Heinz has greatly increased its size options and varieties of Ketchup since 2010 adding smaller 20oz. bottles and new varieties including Balsalmic Vinegar, Simply Heinz, and dip n’ squeeze packets. Marvin’s IGA has introduced Melinda’s ketchups. While not a private label, they are unique to Marvin’s IGA and cannot be found at the other stores audited in Fayetteville. Prices have stayed fairly similar, raising slightly for some SKUs and decreasing slightly for others. The category has grown overall from 34 SKU’s in 2010 to 52 in 2014. While the store audited were slightly different from the 2014 data, there is still a great increase in the # of SKU’s found at Walmart, IGA and Harps.

The Suppliers Heinz dominates the category having with 15 out of the 52 SKUs. (nearly 30%) Hunt’s lags behind having only 7 unique SKUs among the 5 stores audited. (13.5%) Private label has a smaller presence than I would have guessed with 13 out of the 52 SKUs shared among three manufacturers (Walmart, AWG and Aldi’s), across the 5 stores audited. Ozark Natural Foods shelved only private manufactures and charged nearly double for similar and even smaller size containers as Walmart and Harps did for Heinz and Hunt’s. Del Monte had a surprisingly low amount of shelf space in the context of their presence across grocery aisles showing up with only two at Walmart and five at Harp’s, which were the only two stores which carried the brand. We will discover why, despite its good scores among low income demographics, it has so few facings.

SKUs 52 Total SKU’s found in audit Walmart on MLK carried the most SKUs at 28 Among the 5 stores Heinz had the most SKUs at 15 Hunt’s followed in second with 7 SKUs Private label (comprised of 3 manufacturers) had 13 total. This means 17 SKU’s composed the rest of the category, spread amongst 12 different manufacturers. Heinz, Hunt’s and Private label therefore dominate the Ketchup Category.

Listing of Firms Dominant Brands Heinz Great Value Hunt’s Burmans Unique Brands by Store Walmart Aldi’s Harps IGA Ozark Natural Foods Struggling Brands Del Monte Red Gold Great Value Burmans McIllhenny Tobasco Red Gold Melinda’s Walden Farms Muir Glen Organic Woodstock OrganicVille Annies Naturals Sir Kensingtons Westbrae Natural

Tomato Ketchup Facings

Gross Margins To arrive at the gross margins for this category, I had to find the highest possible input for unit 2 to create (mostly positive gross margins across each manufacturer. Cost per ounce was generally from 30 to 60 cents per ounce while some of the Ozark Natural Food ketchups were a great deal higher. For Heinz I had to increase the unit 2 so because there is no way they would be paying .04 per ounce.

Gross Margin Dollars

Mean Gross Margin

Circular Trade Areas: Fayetteville Grocery Stores Demography Walmart MLK Marvins IGA Harps Garland Ozark Nat. Foods Aldi's MLK % HHs HHs Index Race of Head of Household   White 77.80% 113 83.2% 121 82.9% 120 83.3% 76.3% 111 Black 7.90% 66 6.1% 51 6.0% 5.9% 50 1.1% 9 Hispanic 5.10% 41 4.0% 32 4.1% 33 15.0% 119 Asian 5.30% 123 3.1% 74 3.8% 88 3.6% 85 0.9% 22 Other 4.00% 178 3.5% 156 3.2% 141 139 6.6% 295 Number of Persons 1 Person 48.00% 177 42.3% 41.8% 154 23.4% 86 2 Persons 31.10% 96 33.1% 102 33.0% 29.5% 91 3 Persons 11.40% 70 12.8% 79 13.4% 83 18.0% 4 Persons 6.30% 48 8.1% 62 7.6% 58 7.7% 114 5+ Persons 3.20% 29 3.7% 37 14.1% 127 Household Income Under $10,000 25.90% 339 20.5% 268 18.7% 244 17.6% 230 4.6% 60 $10,000 - $19,999 23.40% 209 20.1% 180 18.8% 168 17.2% 9.5% 84 $20,000 - $29,999 14.20% 130 12.9% 118 12.6% 115 12.5% 16.8% $30,000 - $39,999 11.90% 12.0% 12.4% 122 13.1% 129 10.2% 100 $40,000 - $49,999 7.50% 7.9% 6.8% 76 6.9% 10.3% $50,000 - $74,999 8.10% 45 9.2% 52 9.7% 54 10.5% 21.8% $75,000 - $99,999 27 5.4% 46 6.7% 56 7.0% 59 11.7% 99 $100,000 - $149,999 3.90% 7.1% 9.0% 73 9.4% 12.2% $150,000 or More 1.90% 21 4.8% 53 34

Circular Trade Areas: Fayetteville Grocery Stores Demography Walmart MLK Marvins IGA Harps Garland Ozark Nat. Foods Aldi's MLK % HHs HHs Index Age of Head of Household   Age 18 - 24 27.40% 651 21.4% 508 18.8% 447 17.3% 411 7.5% 178 Age 25 - 34 29.70% 197 25.3% 167 28.5% 189 27.6% 183 19.2% 128 Age 35 - 44 13.80% 80 14.3% 82 16.1% 93 16.2% 19.4% 112 Age 45 - 54 10.20% 51 12.7% 63 12.4% 62 12.6% 18.3% 91 Age 55 - 64 9.80% 13.1% 68 12.3% 64 65 15.5% Age 65 - 74 5.10% 39 57 6.8% 52 7.0% 53 10.4% 79 Age 75 or More 3.90% 37 5.8% 54 5.1% 47 6.6% 9.7% 90 Age and Presence of Children Age < 6 5.20% 71 69 5.4% 74 78 10.9% 147 Age 6 - 17 8.10% 44 9.6% 10.7% 58 11.0% 60 19.6% 106 Age < 6 & 6 - 17 3.00% 46 4.0% 61 4.5% 8.9% 135 No Children 83.60% 124 81.3% 120 79.4% 118 78.7% 117 60.7% Housing Tenure Own 17.40% 27 30.6% 34.7% 35.9% 55 57.1% 88 Rent 82.60% 236 69.4% 198 65.3% 186 64.1% 42.9% 123 Education of Head of Household Not a High School Graduate 9.10% 70 8.7% 67 6.2% 6.0% 13.8% High School Graduate 18.30% 72 17.4% 15.1% 59 16.4% 31.1% 122 Some College 40.50% 141 33.1% 115 35.5% 33.9% 25.6% 89 College Graduate 18.00% 95 22.4% 23.8% 125 24.1% 127 18.7% 98 Post College Degree 14.10% 103 18.4% 134 19.5% 142

Category Strategy Walmart MLK Heinz Product continues to provide highest GM$ and GM% so maintain or even raise the shelf space Del Monte Despite it being favorable among lower income households, it is one of the worst sellers and should be kept only to keep the depth of the category at a good point. Harps Garland Private Label Harps should slightly decrease the shelf space for its private label category due to its lower GM$ than shelf space. Hunts Hunts should also be given slightly more shelf space to match the %gross margins with the number of facings so need can be met. Marvin’s IGA College Other IGA should run deal on their Melinda’s and Walden Farms ketchups. With the right angel they could see traffic from specialty ketchup enthusiasts. Hunt’s Hunt’s shelf space should also be decreased slightly due to lower gross margins.

Walmart Ketchup Selection

Category Review Heinz dominates the category Carried by three out of the five stores Comprises 50% of the shelf space at Walmart and over 25% at the other two locations It is because of it’s high gross margins and high sales that it is stocked so high. Private label should remain stagnant as it is an unpopular choice against the household names of Heinz and Hunt’s. Category has grown greatly over the last four years introducing many new sizes in popular national brands as well as different varieties Del Monte should try and increase deal due to very low gross margins percent's and total dollars.