Choosing sides: growth in side dishes is restrained by increased competition from convenience foods, coupled with a lack of innovation in aging product lines. To reverse their fortunes, major manufacturers will have to update their products, making them more flavorful and convenient

Prepared Foods, Jan, 2004 by William A. Roberts, Jr.

Despite racking up almost $2.3 billion in sales in 2003, the side dish category continues to see only moderate growth. In a new report on "Side Dishes," Mintel International Group (Chicago) attributes the category's performance to aging product lines and a lack of interest by larger suppliers. As a result, small, private companies produce many of the leading side dishes.

Mintel found a smaller, private company responsible for the category's greatest increases from 2000 to 2002. Bush Brothers (Knoxville, Tenn.) witnessed sales growth of nearly 20% over the period. Savvy advertising, regional expansion and product introductions fueled the growth rate, which was almost 10 times the rate of increase of the category as a whole.

Unilever's side dish sales grew 8% in that time frame due, in large part, to its introduction of Ragu Express in the pasta and sauce segment. The side dish that some have taken to eating as a meal garnered $20 million in sales in 2002, the year after its launch. In spite of that success, the pasta and sauce segment, as a whole, lost sales for the period.

Such was not the story for baked beans and potato products, with each posting notable increases. However, significant, long-standing declines in plain rice led to the dismal overall performance of the category. As Mintel notes, "Few new innovative products (are) bucking the trend of slow decline for the category as a whole."

Plain rice leaders suffered the steepest losses, with products from Mars (Hackettstown, N.J.), Riviana Foods (Houston) and Kraft (Glenview, Ill.) enduring a steady loss of consumer interest. Other market leaders in the segment posted unimpressive results, also, noting sales declines even in current dollars from 2000 to 2002. For many of the industry's major companies, side dishes serve as a secondary market, paving the way for smaller private companies such as Bush Brothers and Zatarain's (Gretna, La.) to achieve success by devoting far more attention to their respective segments.

Most side dish products are considered easy and quick to make, but consumers do not perceive them as new and exciting. Many simply have not been updated to match current consumer preferences or cooking styles. And, many first were introduced before the 1980s and reflect the trends of the time--mild flavorings, soft textures and limited use of herbs or spices.

Since the 1980s, Baby Boomers have sought new flavors, and manufacturers responded with Americanized versions of Asian, Italian and Mexican foods. The increasing popularity of ethnic cuisines and bolder, more flavorful products could prove a means of reviving the category. Already, a new wave of items incorporates a variety of herbs, spices and peppers, offering much stronger flavors than previously existed. Zatarain's New Orleans style rices, which feature chili pepper, cayenne pepper and a variety of hot spices, took the bolder route and saw sales jump nearly $20 million in 1999.

Also offering a new or ethnic flavor have been the Near East-Middle Eastern brands from PepsiCo (Purchase, N.Y.) and the Asian rice selections available from Unilever (Englewood Cliffs, N.J.) under its Lipton brand. Sales of rice mixes in 2003 surpassed plain rice as the largest segment of side dishes. The volume of plain rice undoubtedly was greater, but the higher price of rice mixes propelled them over the top.

Nevertheless, sales of rice mixes declined by nearly 3% in constant prices from 1998 to 2003. The declines began in 2000, fueled by the same factors negatively impacting sales of plain rice. Between 2003 and 2008, sales of rice mixes are expected to increase by 6% at current prices and decline by 6% at constant 2003 prices. Sales should be strongest in brands featuring Asian, Middle Eastern and Cajun flavors, and Mintel believes this indicates "a potential for new products that feature spices found in other popular ethnic dishes."

The Plain, The Plain

One segment's gain is another's loss, however, and unfortunately for plain rice manufacturers, the success of rice mixes has been at the expense of their products. Sales of plain rice declined by 20% in constant prices from 1998 to 2003. Private label products led the plain rice market, slightly "ahead of the 23% market share posted by Riviana.

Unfortunately, the immediate future of plain rice products does not hold much promise. Mintel believes sales will fall by 9% at current prices and by 19% at constant 2003 prices from 2003 to 2008. The decline will be the result of continually declining cooking skills and consumers' unwillingness to cook from scratch. Furthermore, flavored rice dish offerings likely will present further competition to plain rices.

Bean Better

Sales of pork and beans and baked beans were flat in constant dollars from 1998 to 2002, a fairly sad situation considering baked beans alone are the fastest-growing category of side dishes. The bright spot came from Bush Brothers' brands, which steadily introduced products, increased regional distribution and provided substantial advertising support to its products. The early 1990s saw Bush Brothers products benefiting from studies touting the positive impact of beans on health, as a low-cholesterol source of protein and fiber. Similar to rice (and for many of the same reasons, Mintel discovered), beans posted their steepest drop in 2000, due to new products in the shelf-stable aisle, such as Kraft's Stove Top Oven Classics meals.