Mayo wars: how the big two are trying to splatter each other
The big two are toe-to-toe in battle, using price cuts and unsubtle new products to batter each other. But the truth may be that the market’s salad days are over, says David Millward
Amonth ago, Heinz announced its latest product – chocolate mayonnaise. It was a lovingly made concoction, combining the finest Belgian chocolate with a creamy white condiment. It was, the company said, “seriously good”.
There was just one snag. The whole thing was an April Fool’s Day prank by the UK press office – and like all really good hoaxes, completely believable.
The fact that so many people fell for the joke is not altogether surprising, given that a furious battle has erupted between the two biggest players in the mayonnaise market.
One New York tabloid has spoken of “mayhem in the mayonnaise aisle” as Kraft Heinz and Hellmann’s – or Best Foods as it is known west of the Rockies – fight it out.
Between them, the companies have cornered more than three quarters of the US market, according to the latest figures produced by Mintel.
But they are feeling the pressure. Euromonitor calculates that US mayonnaise sales fell by 6.7pc between 2012 and 2017.
The market is also becoming crowded with supermarkets producing their own mayonnaise which, in common with most store brands, is likely to be cheaper.
Then there are the smaller independent interlopers such as Stonewall and Primal Kitchen, which are offering their own array of flavoured mayonnaise.
Whether it is for health reasons or a desire for change, customers have been looking for variety. Jostling for space alongside traditional mayonnaise are alternatives ranging from chipotle flavour to a version made with avocado oil.
The response from the big two was to launch a price war, with mayonnaise prices reportedly falling by 0.6pc over the past year. Heinz dropped first and Hellmann’s – still comfortably the market leader – followed.
“We’re engaging toe to toe,” said Graeme Pitkethly, chief financial officer at Unilever – Hellmann’s parent company – on a recent investor call.
But a couple of months ago, the scrap took a slightly surreal turn as the two rivals parked their tanks on each other’s lawns.
The first shot in the war came when Heinz decided to start selling “Real Mayonnaise” under its own label in March – alongside the longestablished Kraft brand, which had been in stores since 1930, and Miracle Whip, which dates back to 1933.
This, the company said, was a product made from “cage-free eggs” and was as good as a mayonnaise made from scratch in a customer’s own kitchen.
Just to emphasise the point, the new product was sold in a bottle shaped like an egg.
The message was hardly subtle. Hellmann’s was not taking this lying down, announcing it was launching its own brand of “Real Ketchup” – a product that it clearly regarded as superior to the venerable Heinz version.
Hellmann’s made great play of the fact that its ketchup contained only tomatoes, honey, vinegar, spices, onion powder, and salt.
“We saw this as an opportunity to elevate an American staple by stripping it down to only the most essential ingredients,” said Russel Lilly, Hellmann’s marketing director.
“We’re giving people a choice when it comes to feeding themselves and their families with a brand they know and trust.”
On April 6 – apparently National Tomato Day in the US – the company teamed up with an “authentic Belgian fry shop” to dish out free pommes frites with its reimagined ketchup to passers-by in New York City. Heinz turned up the heat, announcing plans for a new product of its own, which it called “mayochup” – a mixture of mayonnaise and ketchup.
As innovations go it was pretty small beer.
The concoction is common in Latin America and the Caribbean, and is even sold as “fry sauce” in Utah.
But as a publicity stunt, it was remarkably effective.
Customers were invited to mix mayonnaise and ketchup in whatever proportion they wished and give their verdict on Twitter. More than 500,000 people liked it.
Others were less than impressed, with one Twitter user describing it as “disgusting”. However, there is no such thing as bad publicity. The flurry of social media interest, complete with Twitter users putting forward their own bottle designs, suggests the marketing wheeze was proving very effective.
“Heinz was very clever,” says Dawn Schneider, an assistant professor of marketing at Lewis University in Illinois. “It was engaging with its customers and generating banter. At the very least it has given new life to the brand.
“It is more about the conversation in today’s marketing world and the Heinz name is becoming prominent in the summer just as people are buying stuff for the barbecue season.”
Underpinning the PR battle between the two behemoths is a need to remain on the consumers’ radar, explains Neil Saunders, managing director and retail analyst at Globaldata.
“A lot more brands are coming through that are gaining traction, which is harmful to traditional players like Heinz and Hellmann’s. “In addition, there are niche brands and high-end brands that are gaining ales.”
Analysts such as Bob Allen, food and beverage leader at Grant Thornton, believe the big two had, up until now, been slow to respond to falling sales.
But the pace has quickened over the last few months.
“Everybody is doing something new,” says Marcia Mogelonsky, director of insight at Mintel Food & Drink. “If you go into a store there are so many different labels now. There are labels for fashionista mayonnaise, and mayonnaise produced with cage-free eggs, as well as vegan mayo, with no eggs.
“The problem is many people are fleeing the category altogether.”
Given the decline in the market, the two companies have little choice but to fight it out, argues Rao Unnava, dean of the graduate school of management at University of California, Davis.
“This category has not been doing very well and if you are a market leader and you see your revenue decline it damages your position.
“It has been a cash cow and when you see it decline, you have to fight back.”
But some experts, including John Quelch, dean of the Miami Business School, suggest that both companies are wasting their time.
“What is happening is they are reducing their profitability as they slug it out.
“There are only two things for which consumption does not increase when prices are drastically reduced – toilet paper and mayonnaise.”
Following Heinz’s move into mayonnaise, Hellmann’s launched its own ‘Real Ketchup’