Why the market for expensive pasta sauce is expected to grow
Why the market for expensive pasta sauce is expected to grow
The Campbell Soup Company announced this week that it’s acquiring Sovos Brands, maker of Rao’s tomato sauce, in a deal valued at $2.7 billion. Rao’s has its roots in a Harlem restaurant that’s known for being impossible to get into. And its jarred sauce is not cheap.
This acquisition provides Campbell’s with a foothold in the high-end pasta sauce market, which happens to be a growth area.
A jar of Rao’s marinara sauce can go for about ten bucks. And while that’s pricey by tomato sauce standards, Campbell’s CEO Mark Clouse argues it’s cheap if you compare it with going out for Italian.
“How many people are spending $20 on a Italian meal that they’re ordering from maybe not the best of restaurants?” he said. “That consumer’s the one, and that’s a pretty broad base. That’s the opportunity, right?”
And with the economic future more iffy, people who’ve been going out a lot will likely eat in more.
But they’ll still want it to taste like they’re eating out, says Bloomberg Intelligence analyst Diana Rosero-Pena.
“That is a way for people to kind of rationalize being able to say, “OK, I’m saving money not going out, so I’m going to probably spend a little bit more money on better ingredients.”
Rosero-Pena noted that premium pasta sauce sales are growing faster than sales of regular priced sauce.
And Campbell’s Mark Clouse said that only 14% of households in the U.S. buy Rao’s products now.
“And that’s really in the Campbell’s wheelhouse, right? Our opportunity to market and drive awareness and household penetration is really a strong core competency,” he said.
Because while it may be hard to get a reservation at the original Rao’s restaurant, Campbell’s wants people everywhere to be able to buy all the ten dollar jars of sauce that they want.
Don’t want to spend ten bucks on jarred sauce? “Marketplace Morning Report” host David Brancaccio shared his mother Ruth’s recipe for made-from-scratch pasta marinara. You can check it out here.
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