Ben Miller

Innovation is the hot topic of the day in the business world, and it seems that nearly every company in nearly every industry is at least paying lip service to the importance of innovation. But have some market niches and product categories reached the end of innovation?

The other day, I happened to stumble across a consulting report on the Food Navigator website, which discussed innovation within the $3 billion "sandwich spread" market category. The idea of talking about mayo, ketchup and mustard may seem a bit, well, banal, but the example really highlights the difficulty of innovation within such a narrowly-defined market niche. What do you do when ketchup, mustard and mayo control a combined 99% of the market category? What company in its right mind would spend millions of dollars on R&D to find a disruptive sandwich spread category to rival the Big Three of ketchup, mustard and mayo? Anyway, here's the excerpt from the consulting report:

"Lack of innovation and consumer demand for healthier products has resulted in a stagnant US market for once popular sandwich spreads such as ketchup, mustard and mayonnaise, according to a new report. Published by Packaged Facts, the report reveals the sandwich spread market remains stuck at $3 billion, and is likely to continue struggling... In 2005, mayonnaise dominated the market with a share of 59%, followed by ketchup and mustard with shares of 25% and 16% respectively. And although the sandwich spread market declined by 2% as compared to 2004, all three categories have more or less maintained their respective market shares.

According to the report, there have only been 36 new product introductions in the category between June 2005 and June 2006 - most of which were launched by smaller players in the market – and this resulted in “little hope” of driving substantial market growth. However, touting the health benefits of some sandwich spreads specifically formulated to meet the needs of health-conscious consumers, such as lycopene-rich ketchup and low-fat mayonnaise, have helped to stave off further market decline. Similarly upscale, gourmet, and organic versions of the popular spreads have helped to renew interest in the market as well."

According to the report, big name-brand American companies are desperate to boost sales of sandwich spreads. (Back in the day, we called 'em condiments) They are experimenting with ‘healthier-for-you' spreads, ethnic-inspired spreads and alcohol-infused spreads. (Memo to self: Go to the supermarket and buy some of these alcohol-infused condiments!)

What do you think? Have we reached the end of innovation in the "sandwich spread" market category? (Actually, this is a bit of a trick question, since I think the "sandwich spread" category is entirely too narrow a market niche. These companies need to develop a Blue Ocean Strategy and re-define their market category entirely. Otherwise, they will be stuck trying to make incremental improvements that will have very little impact on the overall market category.)

[image: The double-fisted Mr. Hot Dog with ketchup and mustard]