July 2 (Bloomberg) -- Ronen Zohar wants man caves everywhere to stock hummus along with the salsa and beer.
The chief executive officer of PepsiCo Inc.’s Sabra Dipping Co. venture recently approved its first national U.S. hummus television commercials. One instructs consumers to “dip life to the fullest” by dunking carrots and chicken wings into the mashed chickpea concoction. Sabra soon will kick off as the National Football League’s official dips sponsor.
While the goal is to make a Middle Eastern dip comprehensible to middle America, Zohar faces a lot of work to make it a regular part of Super Bowl parties and Fourth of July celebrations. Salsa sales are more than double those of flavored spreads like hummus. Still, those spreads are growing at a 14 percent pace as Sabra and its main competitors, Nestle SA’s part-owned Tribe and Kraft Foods Group Inc.’s Athenos, appeal to Americans’ desire to eat healthier.
“Most of the people in the U.S. never tasted hummus,” the Israeli-born Zohar said. “You have to change their mindset that even if the name is strange and the brown color of the hummus is not as appetizing, it tastes wonderful.”
The way Zohar figures it, the path to expanding the hummus category, which he estimates at $700 million to $800 million, will come in three stages. First, get people to dip it. Next, get them to spread it, like on toast. The most recent TV commercials show it being spread like mayo on a cold-cut sandwich. The final step: hummus as a side dish, the way it’s eaten in the Middle East.
“We are only now at the first stage,” Zohar said. “It’s only an issue of time.”
Sales for White Plains, New York-based Sabra are concentrated in the U.S. Northeast, which is dipping in earnest and ready to use hummus as a spread within a few years, Zohar said. The U.S. West is only now turning on to hummus, he said. U.S. household penetration is about 18 percent, according to Nielsen.
Also spelled hommus, the dip is made by blending steamed chickpeas with a paste called tahini made from shelled sesame seeds. The mixture is generally flavored with olive oil, lemon juice and garlic. Flavors including roasted red peppers have helped drive demand, said Sarah Schmansky, director of retail programs for researcher Nielsen Perishables Group.
Taste and texture are key to acceptance, Zohar said. Sabra has tailored the grainy hummus found in the Middle East to a smoother version Americans like better. They also favor a less nutty flavor, so Tribe keeps the percentage of tahini below 20 percent, Chief Executive Officer Adam Carr said. The company has debuted a limited-run flavor called “Everything” to appeal to bagel lovers.
Hummus makers are converting kids, too, marketing single-serve packs for snacking and lunch boxes. Some school systems serve hummus as a vegetarian entree, even as others ban peanut butter because of allergy concerns.
Sabra, a joint venture between PepsiCo and Tel Aviv-based Strauss Group Ltd., controls about 60 percent of the U.S. refrigerated flavored spreads market, having grown almost 20 percent in the year ended May 19, according to Information Resources Inc., a Chicago-based market researcher. The next three competitors -- Tribe, Kraft and Cedar’s Mediterranean Foods Inc. -- together held almost 20 percent.
That wasn’t always the case. Kraft’s Athenos led the category seven years ago with a 31 percent market share. At the time, Sabra held a 10 percent share, behind Tribe and Cedars.
PepsiCo declined 0.4 percent to $81.68 at the close in New York. The shares have risen 19 percent this year, compared with a 13 percent gain for the Standard & Poor’s 500 Index.
Sabra took over the market person-by person, handing out millions of samples a year from roving trucks. Zohar used PepsiCo’s clout with retailers to help take up residence in the grocery deli section.
The surge has woken up Taunton, Massachusetts-based Tribe, which is looking to “leapfrog” from its current position, said Carr, who was hired away from PepsiCo a year ago to reignite the brand.
“Sabra’s done a good job building the category,” he said. “We would tell all the other competitors to watch out.”
Athenos, meanwhile, has concentrated its recent advertising on its market-leading feta cheese, taking a holistic approach to the Mediterranean foods trend, said Gwen Gray, senior director of Dairy Snacking.
“While we haven’t grown at the rate of the category, our sales remain strong,” she said.
Cedar’s Chief Financial Officer Chris Gaudette said his small private company doesn’t have deep pockets and retail power to compete toe-to-toe with Sabra, so it is concentrating on all-natural hummus.
Grocery chains are hurrying into the trend as well, boosting sales of private-label refrigerated flavored spreads 21 percent, to 9 percent of the market.
To defend its turf, Sabra is doubling what it says is already the world’s largest hummus plant, in Virgina, and is working with farmers to ensure a consistent U.S. chickpea supply. Contests centered on the NFL sponsorship will debut in the fall.
“When people taste hummus,” Zohar said, “they change their mind about it.”
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