Even after topping the $1 billion annual sales threshold, Rao’s Homemade is acting more like an upstart brand than a bright spot in an otherwise gloomy food sector.
The premium Rao’s sauce, which The Campbell’s Company purchased in 2024 as part of its $2.7 billion acquisition of Sovos Brands, posted a 14.5% increase in consumption during its most recent quarter, according to the company. Still, consumer awareness and household penetration for Rao’s trails many of the leading mainstream brands, including Campbell’s own Prego sauce, creating plenty of optimism for Rao’s growth prospects.
“It really is about democratizing very high-quality food and making sure it's available and affordable,” said Risa Cretella, president of Campbell’s meals and beverages division. “We know that investing to get people to try just one jar will have ongoing benefits because we have the proof.”
Rao’s, which traces its roots to a small 1890s New York City restaurant, entered retail stores in the 1990s after its owner, Frank Pellegrino, Sr., wanted to make his sauces more widely available. Even today, the restaurant doesn’t take reservations and has just 11 tables that are “owned” by long-time patrons.
Sales of the jarred Rao’s sauce have surged more than 450% during the last seven years by touting the premium aspect of its product, with tomatoes grown in the foothills of Mt. Vesuvius in Italy and the inclusion of clean-label ingredients such as fresh basil, fresh onions and Italian olive oil. It’s been a major beneficiary as more inflation-weary consumers turned to the sauce to make restaurant-style meals at home instead of spending more money to eat out.
But while the premium angle is a draw for some consumers, the price tag that comes with it has proven to be a turnoff for others; one that Campbell’s is working to overcome.
Campbell’s has periodically offered discounts on Rao’s sauces to attract consumers discouraged by the $8 price tag. It’s also investing more in advertising to tout its ingredients to show consumers why it's worth the price. The company found that once shoppers try Rao’s, they’re more likely to become repeat consumers.
“Even though it's one of the most expensive pasta sauces on the retail shelf, it's fundamentally a tremendous value, and getting people to recognize that will be key to driving growth in the future,” Cretella said. “As a consumer, what we want you to feel is like, ‘Oh, now I understand why this jar of pasta sauce is worth it.’”
Red sauce is still responsible for the majority of sales for Rao’s, but the brand also has a presence in jarred soups, frozen meals and dried pasta. More recently, Campbell’s has prioritized building its lineup of creamy sauces, such as peppered parmesan and roasted garlic, which are especially popular among millennials. Creamy is also the fastest-growing colored sauce category, according to the company.
“The category has really evolved,” Cretella observed. “One of our strategies ... is how do we evolve the category to have more representation of different colors of sauces? Certainly, red will always be the foundation that you want to anchor the aisle with red sauce, but really driving new occasions and attracting new buyers by bridging from red to creamy.”
