Reference no: EM133649360

Case: In recent years the U.S. condiments and sauces market has been upended by one product:  hot sauce. According to Fortune Business Insights, the global hot sauce market is projected to grow from $2.89 billion in 2022 to $4.72 billion by 2029.  Despite the rapid growth over the past two decades, the industry has experienced lower than expected growth since the pandemic.  Still, the growth in the category has outpaced BBQ sauce, ketchup, mayo, and mustard. 

Why is hot sauce so popular?  Multiple factors are driving this evolution.  Primarily, the increasing influx of Latin American and Asian immigrants has helped make spicy food more mainstream.  Hot sauce aficionados existed in pockets around the country for years, but the product has become more prevalent in many households and restaurants.  Second, millennials have shown an increasing desire for exploring new and exotic flavors in their food.  Research points to the changing palate preferences of this demographic, with individuals now valuing having a variety of hot sauce flavors and heat levels available at home and when eating out. 

Among the many brands within the industry, Cholula has worked to establish itself as arguably the most recognized Mexican hot sauce.  The product was first introduced to the U.S. market in 1989 in regions like Texas and Southern California that had larger Hispanic influences.  Gradually though, distribution expanded nationally and Cholula appeared widely in both restaurants and grocery stores.  Initially, the product was positioned alongside other Mexican food staples like taco mix and tortillas.  While this placement strategy was crucial to kick-starting sales, management was cautious to avoid "pigeon-holing" the brand.  In other words, the Cholula team wanted consumers to perceive the products as one that was instead versatile and could be used across different types of foods. 

Cholula achieved this shift in brand perception through organic social media advertising.  Knowing that the millennial submarket responds well to peer influence and a sense of discovery, Cholula encouraged its fans to share descriptions and photos of their meals using the product in creative ways on social media.  Recently, Cholula has also begun focusing on creating relationships with restaurants and changing its packaging to be more restaurant-friendly post-COVID. 

Questions:

1. As chapter 2 discusses, hot buttons are very important to recognize. Identify the hot buttons that you feel are important in the hot sauce industry. Provide a brief explanation of each.  Please identify 2.
2. Chapter 5 explains customer trends in terms of two broad categories-demographic trends and cultural trends. The case already outlines some demographic considerations.  Beyond those, identify at least one trend in each category and give an example of how Cholula could act on that trend (the examples should be your ideas, not those from outside sources).  Please do not use something Cholula is already doing.
3. Brand loyalty was discussed in Chapter 9. What has Cholula done to increase loyalty?  Develop one new idea the company could try to increase loyalty (this must be your original idea).