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The global hot sauce market size was USD 2.54 billion in 2020. The spread of COVID-19 has provided substantial challenges for hot sauce raw material suppliers and processors. Based on our analysis, the global market exhibited a lower growth of 4.91% in 2020 compared to the average year-on-year growth during 2017-2019 due to limited consumption in the foodservice sector. The global market is anticipated to grow from USD 2.71 billion in 2021 to USD 4.38 billion in 2028 at a CAGR of 7.1% in the 2021-2028 period. The increase in CAGR is attributable to the rising popularity of spicy and umami flavored food. The increasing consumer preference towards exotic and innovative cuisine varieties is further anticipated to boost the global market.
Limited Availability of Raw Materials during COVID-19 Pandemic to Hamper Growth
The coronavirus pandemic has affected businesses with varying degrees of intensity across different regions and stages of the value chain. The demand for hot type of sauces has increased as consumers are requested to practice home quarantine in most countries, which has given them a platform to cook fresh at home. On the other hand, people are advised to stock up essentials and packaged food products that can positively affect the global market. The shortage of raw materials and laborers has negatively affected the hot sauce market growth in the initial few months.
The industry is now reworking its current models to navigate the impacts of the COVID-19 pandemic. This will certainly require serious efforts on lines of innovation and technology upgrade. In the food segment, hot sauce and cooking are witnessing a steady spike as people are getting smart with their culinary experiments. They are experimenting with different cuisines to bring out the joy of dining out at home as restaurants and cafes continue to remain closed amid the pandemic. Despite the strong demand for cayenne pepper sauces, supply chain disruptions have led to a delay in product processing, manufacturing, and demand-supply volatility.
Although the demand for hot sauces is increasing during this period, mandatory government laws such as complete lockdown in various economies have negatively impacted the chili sauce market. The border closure situation in major spice and herb producing and exporting countries like India, China, and others has disrupted the trade of raw materials required to produce the sauce mentioned above. The imposed lockdown and stay-at-home orders led people to cook their meals at home, which positively impacted cayenne pepper sauce sales. With more relaxations on rules, the market for cayenne pepper sauce has started gaining more traction. The growing inclination towards home cooking to maintain overall health and wellness is projected to support the market's growth.
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Rising Adoption of Premium Products is a Prominent Trend
Premium product offerings in the market are expected to make higher profit margins in the upcoming years. According to the U.S. Bureau of Labor Statistics, the price trend for sauces, condiments, spices and seasonings, has seen an uptick of 10.89% in the last few years. A part of this increase is attributed to the increasing availability of innovative and premium product offerings attracting customers' attention due to their functional superiority. Several companies are indulged in the production of various premium chili sauces in the market to capitalize on the ongoing trend. For instance, Gringo Bandito incorporates various premium ingredients to produce a premium cayenne pepper sauce variety. Ingredients used are Scotch bonnet peppers, habaneros, water, distilled vinegar, Mexican onions, garlic, salt, spices, and xanthan gum.
Increasing Demand for Healthy Indulgence to Spur Product Sales
The global marketplace has witnessed a considerable growth trajectory of hot sauces due to their evolving popularity and enhanced consumer's inclination towards innovative and bold flavors. The increasing young population and rapid globalization have led to the advent of diversity in young people's food choices. These people are significantly proffering spices attributed to produce flavors such as peppery, spicy, and others, thus fuelling revenues in the global market.
There is a rise in the consumption of fast food among the busy urban population, which is also considered another factor for the increased demand for sauces, especially in developing countries of Asia Pacific. Customers worldwide are opting for healthy indulgence in a way that provides taste and beneficial traits such as superior nutritional profiles, non-GMO, and organic retail positioning. This trend is set to deliver a significant spur to the sales of these sauces both in developed and developing markets.
Surging Consumption and Innovations in Mexican and Asian Cuisines to Drive Growth
Globally, the primary factor driving the demand for hot sauces is the influence of Asian, especially Indian and Latin cuisines across all geographies. For instance, the U.S. has the largest population of Mexican immigrants, followed by China and India - this trend influences the population dynamics with the rapidly evolving dietary patterns. The popularity of such regional and ethnic cuisines is expected to drive the sales traction of innovative products such as cayenne pepper sauce.
The developed western markets have witnessed significant growth in the inflow of different immigrants, mainly from the Asia Pacific and South American regions. This particular factor has resulted in the rising popularity of their cuisines which are known to utilize various types of chili sauces, in which spicy condiments are primarily used. There is a growth in the hospitality and the tourism sector worldwide, which has further deepened the internationalization of various cuisines. These days, consumers are seeking numerous bold and new ethnic flavors. Among the younger consumers, the gourmet cooking trend has broadened the availability of multiple cayenne pepper sauces in retail.
High Fluctuations in Raw Material Prices to Impede Growth
A major restraint in the hot sauce industry is the price fluctuation, especially raw materials used, such as tomatoes, pepper, chili, jalapenos, and others. The sudden outbreak of the COVID-19 pandemic globally can cause a disturbance in the transportation service, which is predicted to hamper the raw material prices. For instance, China and India are the leading exporters of tomatoes. The sudden outbreak of COVID-19 across the globe is expected to impact the exports of various regional vegetables, including tomatoes. This could eventually result in a shortage in the market. As a result, the prices of tomatoes are predicted to increase.
Similarly, the retail prices of chili peppers in China rose in the year 2018 as there was a delay in the entrance of dried chili peppers in the market due to bad weather conditions. This further resulted in product scarcity in the market. The prices of straight peppers, pointed peppers, and sweet peppers also increased.
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Tabasco Pepper Sauce Segment to Hold Major Share in Upcoming Years
On the basis of type, the market is classified into tabasco pepper sauce, habanero pepper sauce, jalapeno sauce, sweet and spicy sauce, and others. The tabasco pepper sauce segment accounted for approx. 23% share in the global market in 2020. The rising consumer's inclination towards bold, spicy, and combination flavors is expected to support the steady growth of the segment.
The popularity of sweet and spicy sauce is growing considerably across the globe due to their tastefulness, as well as healthy quotient. Moreover, premiumization in sweet and spicy sauce offerings, increasing popularity of "better for you" ethnic food products, and rising consumer interest in innovative condiments that are laced with exotic and spicy flavors are projected to offer huge growth opportunities to the segment.
Global Hot Sauce Market Share, By Type, 2020
Product Sales through Mass Merchandisers to Grow at the Fastest Pace in Near Future
Based on the distribution channel, the market is characterized by mass merchandisers, specialty retailers, convenience stores, online retail, and others. The mass merchandisers segment captured the lion's share in 2020 across the globe as supermarkets and hypermarkets are highly preferred by consumers for the shopping of condiments and food ingredients such as chili sauce. However, in the upcoming years, sales of chili sauce through online retail channels are expected to expand due to the increasing consumer interest in online shopping as they offer high convenience and wide product & brand choices. Moreover, the rising internet penetration in emerging economies is anticipated to support the steady growth of the segment.
North America Hot Sauce Market Size, 2020 (USD Billion)
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The market size in North America stood at USD 1.13 billion in 2020. This region's dominance in this market is attributed to consumers' high spending power. Also, the intensifying diversification in food flavors makes it possible for chili sauce to become a potential staple in the American kitchen rather than being a fringe ethnic food. The wide popularity of chili sauce in countries such as the United States and Canada has positively impacted the trade of the product across the region, which is a beneficial aspect associated with the growth of the market. The United States and Canada are among the top five global importers of chili sauce.
Based on the revenue, Asia Pacific secured the second-largest position in the market in 2020. The gradually growing population in major Asian economies, such as China and India, and the expansion of the foodservice industry in these economies are aiding in escalating the sales volume of various chili sauces. Earlier, chili sauce was majorly a part of restaurants, cafes, and small and large food joints, but increasing consumer interest in mimicking the restaurant-like taste at home has made it possible for chili sauce variants to pave their way in Asian households.
On the other hand, the Middle East and Africa is expected to exhibit a comparatively slow growth rate due to the less expenditure on fast food and more preference for native condiments and sauces. The sauce market in South America is getting rapid recognition as a significant ingredient in the preparation of widely consumed meat-based food products and snacks, vegetable and stew preparation, and as an accompaniment for food products such as sandwiches, pizzas, salads, grilled or fried seafood, and others.
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Companies to Introduce Innovative Variants to Remain Competitive
The market is moderately consolidated with the existence of a few prominent global players. The emergence of new key players during the upcoming years and multiple innovative product launches are predicted to extend the global market's scope. Companies operating in the global market are embarking on new product launches and partnerships with relevant stakeholders for product marketing and portfolio broadening.
For instance, in February 2019, McCormick & Co. Inc. signed a partnership agreement with Buzzfeed to launch a new app called "Flavor Maker," as it is expected to have an impact on growth by focusing on young consumers. Similarly, in March 2019, TPZ Ventures, a manufacturer and cultivator of cannabis products, introduced a cannabis-infused 'Puerto Rican-style' hot sauce for sale at dispensaries throughout Iceland.
An Infographic Representation of Hot Sauce Market
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The market research report includes quantitative and qualitative insights into the industry. It also offers a detailed market analysis including market size and growth rate for all possible segments. Several key insights presented in the report are an overview of the parent market, competitive landscape, the regulatory scenario in critical countries, consumer buying behavior, recent industry developments such as mergers & acquisitions, and key hot sauce market trends.
Value (USD Billion)
By Type, Distribution Channel, and Geography
By Distribution Channel
Fortune Business Insights says that the global market size was USD 2.54 billion in 2020 and is projected to reach USD 4.38 billion by 2028.
Registering a CAGR of 7.1%, the market will exhibit promising growth in the forecast period (2021-2028).
Based on product type, the tabasco pepper sauce segment is expected to lead during the forecast period.
Intensifying demand for hot sauces across the rapidly growing food service industry is the key factor driving the market.
Kraft Heinz Co, MacCormick & Co. Inc., Campbell Soup, Unilever Group, and Conagra Brands Inc. are a few of the leading players in the market.
North America dominated the market in terms of share in 2020.
Based on the distribution channel, the mass merchandisers segment holds a major share in the global market.
The premiumization of products is the current market trend.
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