Kraft Heinz is quite literally spicing up one of its most popular products.
Today, the CPG mega-company debuts new spicy versions of Heinz Ketchup and 57 Sauce. The new Heinz Hot Varieties line adds spice from different peppers to the classic sauces to create different levels of heat. There are three levels of Spicy Ketchup — Chipotle for a medium spice, Jalapeno for a hot spice, and Habanero for extra hot spice. The new Hot 57 Sauce comes in only one spice level, and gets its heat from jalapenos.
While Kraft Heinz is often associated with its ketchup and other condiments, the company has been almost completely absent from the hot sauce segment to date. This launch, as well as the forthcoming market entry of Ed Sheeran-created Tingly Ted’s sauce, are bringing the company into the hot sauce segment in a big way.
Pedro Navio, Kraft Heinz’s U.S. president of Taste, Meals and Away from Home, said in an email that the hot sauces are a well-calculated effort to drive growth in the United States. According to Facts & Factors, the global hot sauce market is on track to surpass $4.9 million by 2026, with a compound annual growth rate of 7.9%.
Based on consumer research, Navio said, the company found that as the hot sauce segment has matured, so have consumers’ perceptions of it. They don’t just want generic mild, medium and hot sauces, he said. They care about the peppers that give the sauces their heat.
They’re also more likely to try something new from a brand they know and trust, he said.
The sauces are the newest innovations for Kraft Heinz to drive growth in North America, Navio said. They are part of the company’s Taste Elevation portfolio, which includes sauces and condiments. This segment represents 30% of Kraft Heinz’s total products and drives more than $8 billion in net sales, he said.
Heinz Ketchup on its own is one of the company’s top selling brands, with more than $1 billion in sales annually, according to CEO Miguel Patricio’s presentation at the Consumer Analysts Group of New York conference in February. It’s one of the brands the company has designated as a candidate for growth, Patricio said in the presentation. The brand has strong margins, it is in a good market position, and does better than the average Kraft Heinz brand. Patricio said that the company plans to invest aggressively in its “grow brands” to capture category white spaces.
At the CAGNY presentation, Carlos Abrams-Rivera, president of Kraft Heinz’s North America Zone, mentioned this kind of innovation as “personalized sauces,” building on the strength of Kraft Heinz’s iconic brands and the growing consumer customization trend.
While Kraft Heinz has focused on improving execution and efficiency in the past few years, the company is now zoomed in on innovation. Navio said it’s the biggest driver of the company’s growth, and Kraft Heinz is working to use creative ideas to both build something new and reinforce what people think about the brands they love.
Kraft Heinz has developed a process for this kind of development called One Innovation Engine, Navio said. This approach reimagines product development and leverages breakthrough technologies to create a portfolio that delivers value for consumers based not only on current needs, but future ones as well.
At CAGNY, Abrams-Rivera said One Innovation Engine includes cross-functional dedicated teams that work together to quickly develop new products. The company is looking for $2 billion in net sales just from these innovation projects by 2027, the leaders said at CAGNY.
Items like Spicy Ketchup and Hot 57 Sauce are just the beginning of Kraft Heinz’s innovations planned for 2023. Navio said the company is planning to deliver 80% more innovations in 2023 compared to last year. The company is making bigger bets — like creating plant-based versions of some of its iconic cheeses — and using research to better inform what they are doing.
“For many of our product innovations, we’re taking a ‘fail fast, fail forward’ approach that allows us to gather insights directly from consumers to inform broader expansion and future innovation,” Navio said.