Production, Consumption and Exportation Trends

Salsa, in its various forms, is ranked among the top condiments sold in the U.S. as the consumer’s demand has been gradually increasing over the years, particularly for the traditional sauces such as Ketchup and Mayonnaise. This demand has been driven by growing appetite for the Hispanic cuisines which refers to Mexican food, Spanish dishes, Central American and Caribbean countries recipes. Moreover, the rising income is another trigger of this market stipulation.

In the U.S., Salsa term refers to red colored tomato-based sauce made up of vegetable or fruit like onions, garlic and peppers. The per capita supply of these popular ingredients for Americans reached 129 pounds (~58.5 kg) in 2019, which is a substantial amount being used in salsas. It’s worth mentioning that the available processed tomatoes is 65 pounds (29.5 kg) per capita, which is 3 times higher than the available fresh tomatoes.

Average availability per capita of fresh tomatoes salsas has recorded higher growth between 2010-2019 compared to 2000-2009 (figure 1), indicating a shift of consumer behavior towards fresh-based products that are considered as healthier choices than the processed ones.

In 2014, the ERS researchers analyzed the U.S. consumption of vegetables and have concluded that over three-quarters of it is used in sauces and mixed foods like pasta sauce . Spaghetti, pasta and other mixed sauces dominate the tomato consumption in homemade food with 24% of total tomato sources, followed by raw tomato which contains less sodium and calories. As for the away from home, pizza is the largest tomato sauce with 32% of total tomato consumption (figure 2).

The U.S. exports of sauces to the world has been increasing between 2002 and 2021 at a CAGR of 7.6%, reaching a record of USD 1,931 million (figure 3). Main exported sauces are preparations for sauces and prepared sauces, mixed condiments and seasonings (such as mayonnaise, salad sauces, mixed seasonings among others) (76%); tomato ketchup and other tomato sauces (16%); soya sauce (4%); and mustard flour and meal whether or not prepared and mustard (4%) . As for their destinations, the aforementioned are exported to Canada (36.3%), Mexico (16.8%), Chile (3.7%), Japan (3.3%) and Saudi Arabia (3.3%), receiving over 50% of total U.S sauces exports .

China is one of the main competitors in the sauces market for the U.S. along with Italy, Netherlands, Germany and others (figure 4). The sauces, dressings and condiments market is ranked one of the high potential products for growth in the Chinese market during the upcoming years .

Import Trends

Although the U.S. is one of the main exporters of sauces worldwide, the country’s exports have increased gradually over the years, from USD 517 million to USD 1,830 million between 2002 and 2021 indicating a growing demand for this product (figure 5). The main suppliers of sauces for the U.S. in 2021 are Canada (23%), Italy (18%), Mexico (15%), Thailand (7%) and China (7%) (figure 6).

Lebanon’s exports to the U.S. have been fluctuating over the years until 2019 when the exporting has become a pressing need, that is crucial to survive the local financial and economic crises. Lebanese sauces exports have hit record high of USD 1,181 thousand in 2021, 52% higher than the exported amount in 2019 (figure 7). Moreover, during the last years, the country’s awareness to export to the U.S. has increased with the total exports to the states growing at a CAGR of 49% between 2019 and 2021 .

As per the ITC trade map, Lebanon has an untapped potential for tomato ketchup and other tomato sauces exports of around USD 32 thousand, as for the exports of preparations for sauces and prepared sauces, Lebanon has surpassed its potential which is USD 611 thousand .

Share of Imports and Unit Price in 2020

The sauces market includes a wide range of products with different base ingredients. Based on the Vegetables and Pulses outlook (November 2021), the producer price index for tomato catsup and sauces has increased 4.1% from the 4th quarter of 2020 to the same quarter in 2021.

Table 1: Processed vegetables: U.S. Producer Price Indices, 2020–21 2020 2021 4th Q Change (%) 1st Q 2nd Q 3rd Q 4th Q 1st Q 2nd Q 3rd Q 4th Q (f) Quarter Year PPI for Tomato catsup and sauces 161.1 160.5 159.6 161.7 162.4 163.0 164.0 168.3 2.6 4.1 Source: https://www.ers.usda.gov/webdocs/outlooks/102665/vgs-367.pdf?v=6888.5

The value of both, sauces exports and imports have increased over the years, at a CAGR of 1.8% and 1.4% respectively between 2012 and 2021. However, the import value in thousand USD per ton remains slightly higher than the export unit value in 2021 of around 6%.

Table 2: Trade Value in Thousand USD per Ton of Sauces (HS 2103) (2012-2021) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Import Value in USD/Ton 1.881 1.899 1.972 1.927 1.911 1.981 1.988 1.950 1.998 2.136 Export Value in USD/Ton 1.718 1.741 1.714 1.682 1.685 1.728 1.854 1.891 1.928 2.014 Source: ITC Trade Map

Changes in the American Market

In 2020, sauces and seasonings ranked among the three top categories with new products along with beverages and snacks, all contributing to 41.9% of total products newly introduced to the U.S. market. It’s worth mentioning that these 3 products were in the top 5 products during the 2015-2020 stint. This indicator highlights the high level of innovation in the sauces and seasonings market, accounting for 12.2% of total new products in the U.S (figure 8).

Top claims for these categories are kosher (9.3%), low allergen or no/reduced allergen (7%), gluten free (6.5%), no additives/preservatives (5.2%), GMO-free (5%), ethical-environmentally friendly packaging (4.4%), ethical recycling (4.1%), social media (3.8%), organic (3.6%) and free from added/artificial preservatives (2.9%) (figure 9). These categories are the new emerging food trends in the U.S. market, thus touting your products under any of this category will help you reach out to higher number of consumers.

One of the foremost changes in the U.S. market is that children are heading towards healthier choices, with less sweetened and sugary foods. As per the ERS’s loss-adjusted food availability data between 1994 and 2008, american kids are limiting their intake of sweeteners compared to adults . However, during the last years, the U.S. market has been shifting with a growing food awarness on healthier choices, natural food and enviromental impact, which is partially linked to the impact of the pandemic on the population’s attitude and consciousness.

In terms of shopping behaviours, many changes have occurred since the start of the pandemic, mainly reflected in the consumer performance and purchase preferences with the increased health concerns and travel restrictions. However, trends are taking the lead towards digitalization, mainly online shopping and delivery to your doorstep. The COVID-19 crisis has speed up the technological inclusion of the different generations around the world especially that consumers have prioritized their wellbeing while purchasing any product. Based on the latest figures published by Deloitte from their annual holiday survey, the average online spending standing at USD 924 between 2018 and 2021 is double the average of in-store spending at USD 440 during the same period. Whilst the online spending has increased 5% between 2018 and 2021, the physical spending dropped by 3% (figure 10).

In light of these sharp drifts, any product targeting the US market should bring the consumer’s online experience to the fore, especially with the global expansion of the COVID-19 pandemic and its new variants. However, the importance of the e-commerce market will be emphasized in the market entry section (Check Section 2).

Beside the swelling preference for online shopping, consumers are focusing on their personal health and basic hygiene, which is manifested in the accelerated demand of organic, natural and fresh goods. As per Mckinsey’s report on “how COVID-19 is changing consumers behave across all spheres of life”, e-commerce, health and wellbeing are the main emerging trends in consumer’s behavior after the pandemic outbreak. Therefore, it’s highly recommended that you chase the newest trends and needs in terms of package, hygiene, health, organic, fresh and safety, especially when forging new partnerships in foreign countries.

- Brokers/Export Mediators: These export intermediaries will assess and evaluate the company’s products to access the US market by providing them with consultancy and guidance, and ensure a wide exposure to buyers, distributors, industry’s professionals, associations, related businesses along the entire supply chain, and other potential stakeholders and connections. It will facilitate market entry, ease access to compliance procedures and provide needed information to create business deals. This will be the first stage for any company to enter the US market.

- International Fairs and Exhibitions: The participation in international fairs and exhibitions while targeting B2B meetings is identified as a priority to find potential buyers. Various projects are being implemented in Lebanon under international, non-governmental and public entities to increase the marketing exposure of Local manufacturers at overseas trade shows. The support comprises sponsoring and organizing the participation of Lebanese SMEs that are already exporting or willing to export in leading international fairs and exhibitions, an opportunity to meet buyers, build connections and go international. The Investment Development Authority of Lebanon (IDAL) covers part of the exporters’ participation fees in key international fairs that are beneficial for Lebanese exporters. However, the Productive Sectors Development Programme (PSDP) is currently providing institutional support for IDAL in order to achieve its export support activities. It’s worth mentioning that being members of any of the following entities will help you to exhibit your products in international fairs: Association of Lebanese Industrialists (ALI), Qoot Cluster (Berytech), Fair Trade Lebanon (BIEEL Initiative) and Oxfam. For more info on the list of fairs and exhibitions check Section 4.

- Other Indirect Connections: e-commerce platforms are thriving in the US, especially after the boom induced by the pandemic. Amazon, eBay, Alibaba, Walmart and others offer several options to distribute your product by either distributing it directly to consumers or receiving orders and the seller will be responsible for shipping their orders. In addition, connecting with the Lebanese diaspora could be another way to reach out to importers in the US who are from Lebanese origin and bringing Lebanese products to the country.
For the list of buyers, importers and distributors check ANNEX 1

Six main culture-related dimensions have been identified by Geert Hofstede and other experts for societies to arrange and shape its structure. However, cultural behaviors and attitudes differ between societies, and even within one society, not all people act the same way. Nonetheless, common manners are detected between the society members and reflected in the dimensions below:

Power Distance: the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally.

There is a large gap in the score of Lebanon and the US on power distance. While Lebanon follows a hierarchical and centralized system, the US emphasizes the uniqueness of the individuals which leads to power inequalities.

Individualism: the degree of interdependence a society maintains among its members.

While Lebanon scores low on individualism reflecting its collectivistic society, the US follow the “Liberty and Justice for all” principle as one of the most individualist countries worldwide. This is manifested by ensuring equal rights for American citizens as well as government. Within the work environment, information is circulated between the team, from employees to managers as they are both being consulted for their knowledge and expertise. However, employees are likely to be independent, self-efficient and create new initiatives. As for Lebanon, society members are related to their “group” whether their family or not, and therefore, handling responsibility for their group members.

Masculinity: whether society is driven by competition, achievement and success (masculine) or dominant values in society are caring for others and quality of life (feminine).

Both countries, Lebanon and the US score high on masculinity highlighting its masculine society. In the US, this behavior is combined with the individualistic culture. Americans work mostly on showing their success as winners in work and life as well not only on achieving their targets.

Uncertain Avoidance: the extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these.

Lebanon scored midway and thus, shows no clear preference. Nevertheless, the US scored low, below the average, undertaking innovative concepts, either a product or business idea and willing to accept them. It’s an open-minded community that encourages the freedom of speech.

Long Term Orientation: how every society has to maintain some links with its own past while dealing with the challenges of the present and future.

Both Lebanon and USA score low on long-term orientation indicating normative rather than pragmatic societies. People in both societies exhibit great respect for traditions, a relatively small propensity to save for the future, and a focus on achieving quick results. In the States, people are empirical and are affected by the “can-do” mind set. This is highly reflected in the business field, where Americans evaluate their work on a short-term basis including incomes and losses, leading workers to attempt achievements in short duration.

Indulgence: the extent to which people try to control their desires and impulses

Lebanon scores low on indulgence indicating a restraint culture, while the United States is ranked as an indulgent society with opposite perspectives. Restrained societies have a tendency to cynicism and pessimism. They have the perception that their actions are restrained by social norms and that self-indulgence is wrong. Restrained societies do not put much emphasis on leisure time and control the gratification of their desires. Although many campaigns have been launched against drugs in the US, the country is still facing a high rate of drug addiction under the concept of having a work-life balance. However, the US is considered as a proper/ puritanical society while many preachers show up on the TV as unethical.