The Economics of Ketchup

Ketchup is the most widely used condiment in the United States. It can be found in 97% of all kitchens, a showing matched only by salt and pepper according to Gidman (2010). Ketchup has been popular in the United States for nearly 200 years and today is consumed by 93% of the population. According the NPD Group, a market research firm, 56% of ketchup is consumed on three main foods: Hamburgers, hot dogs, and French fries which remain the most eaten foods for kids and adults, according to a Survey of National eating Trends (2010).

Heinz is the king of ketchup It claims 60% of the ketchup market. Heinz ketchup has more than doubled their sales and volume of its nearest competitor Hunts. Hunts is the second major ketchup brand which is followed by a smaller market share of various generic, private labels and gourmet ketchups. Del Monte has the smallest market share of these top four ketchup categories (2010).

Heinz was founded in 1869 by Henry John Heinz, the Heinz brand rules the ketchup market with registered sales of $267.1 million in 2005. ConAgra, the maker of the second place Hunt’s Ketchup, trailed behind with a 16 percent. Del Monte barely made it with a 5.3 percent of market share falling behind the private label and gourmet brands that held a 17 percent. (Gidman, 2010).

However in 2008, a blind taste test of 20 ketchup brands was conducted and 35.8 million tons of ketchup was consumed at this taste testing in Toronto, Canada. In search for a favorite, Hunt’s ketchup ruled the contest with “Best Overall Ketchup with America’s Choice Tomato Ketchup as first runner up. Heinz followed the contest in second runner up and Best Healthy Ketchup as third.

Ketchup has become more competitive since its creation and will continue to be more competitive in the future due to the growing demand and need. Despite the failed brand extensions and competition from more culturally influenced condiments, Smith does not see a decline in the ketchup category coming anytime soon and he looks to local food markets as proof. Many gourmet food stores carry at least 15 different types of ketchup and these are not the basic three brands (2010). Restaurants are also serving fresh ketchup, which they make themselves, which shows ketchup to be an exciting field that hasn’t grown stagnant. Furthermore, there is an international market for the ketchup. Ketchup is being used on everything from pasta, rolls, meatballs, fishballs, etc. There is a change according to the local need. For instance, Kraft Foods, produced a paprika flavored ketchup for the European market. (2010). With this international appeal, ketchup is gaining notoriety in the market place.

While the food industry is growing overall, sauces have managed to out perform the whole lot, according to a new report from Mintel International Group, Chicago, on the U.S. ketchup market. This accounted for nearly $3 billion in sales in 2001 with a strong continual growth over these past few years. With inflation-adjusted growth averaging 3.2% annually over the past five years, ketchup sales are well ahead of the overall food price trend, which is closer to 2.5%. Ketchup sales have grown an average of only 1.5% per year. Thus, the industry has been successful in increasing prices.

Tomato Ketchup is one of the demanding condiments of fast food industry. It is mainly used with burgers, chips, French fries and even as a base for other sauces. With its evolution in 18th century, the ketchup has changed from thin and watery liquid to thick tomato sauce. The global tomato ketchup market is growing at a rapid pace due to changing food habits of the people in developing nations, easy availability and its taste enhance properties. Tomato being the major ingredient of tomato ketchup provides various anti aging and health benefits to the consumers. With the presence of a very small number of large international players, the tomato ketchup market is highly fragmented with a high share taken up by the local companies. It is also in great demand as more and more families are forced to eat meals at home during these difficult economic times.

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