It’s mayhem in the mayonnaise aisle.
Hellmann’s maker Unilever PLC and Kraft Heinz Co., which owns Miracle Whip, are cutting prices and slinging out new concoctions as they battle changing eating habits, an array of new competitors and each other.
The two, which together account for more than 80% of U.S. mayonnaise sales, are duking it out because they are at risk of losing shelf space to faster-growing rivals.
U.S. sales of mayonnaise fell 6.7% between 2012 and 2017, according to Euromonitor. Small mayonnaise brands, though, which made up just 3.2% of the market six years ago, have almost doubled their share and last year made up 6.1%.
Niche brands have elbowed into many supermarket categories, marketing themselves as healthier than traditional packaged, processed foods. Grocers are offering their own house labels. And an explosion of specialty and flavored mayonnaises and other new condiments is shaking up the sandwich staple, which until recently hadn’t changed much in more than a century.
“Condiments are more competitive than they’ve ever been,” said Jennifer Healy, head of marketing for the Heinz brand. “Ten years ago, it was much more simple.”
Miracle Whip and Kraft Mayo, Kraft Heinz’s other big mayonnaise brand, have been squeezed between less-costly offerings on one end, and Hellmann’s and other premium brands on the other. Miracle Whip—which doesn’t call itself “mayonnaise” because its oil content doesn’t match food regulators’ definition—lost almost 1 percentage point of U.S. market share between 2015 and 2017. It and Kraft Mayo have just over 30% of the market, according to Euromonitor.
Ms. Healy said Kraft Heinz is engaged in a mayo push, last month launching a brand—Heinz Mayo—that uses simple ingredients and cage-free eggs. The company also is developing a mayonnaise-ketchup combination that it is calling “mayochup.”
Hellmann’s, called Best Foods west of the Rockies, has raced ahead. While overall mayonnaise sales have declined, it boosted its U.S. market share by 3.5 percentage points in the past three years and now has just over 50% of the U.S. market.
Hellmann’s and Kraft Mayo have come out with new flavors and variations, such as avocado-oil mayonnaise and roasted garlic and spicy chipotle flavors. Kraft revamped the Miracle Whip recipe last year, going back to its original ingredients and replacing high fructose corn syrup with sugar. “It was a huge investment for us,” said Eduardo Luz, president of Kraft Heinz’s U.S. grocery business.
But the big brands have lost some cachet. Beverley Tanel, a Dallas-area mother of three, said she used to buy both Miracle Whip and Hellmann’s mayonnaise to use in different recipes. “They each have their place,” she said.
But she hasn’t been buying as much lately. “I’ve gone away from it for health reasons,” Ms. Tanel said. Instead, her 16-year-old daughter has her buying avocado-oil mayonnaise from a small brand called Primal Kitchen, which markets its mayonnaise as sugar-free and canola-free, among other things.
The stakes are high for Big Mayo. Condiments rank among the top 10 most profitable types of food to manufacture, according to market-research firm IBISWorld. Mayonnaise ingredients—basically oil, water, eggs and vinegar—are cheap. Giant companies that have made and marketed mayonnaise for years can “reduce cost and improve margins,” said Manny Picciola, a partner at L.E.K. Consulting.
The extra profit is important at the same time packaged-food sales generally are slowing. And Americans still eat a lot of mayo—whether on sandwiches or in things such as potato salad and chicken salad. Excluding salad dressing, mayo is the country’s biggest “table sauce” by volume and sales value, according to Euromonitor, beating even ketchup.
To keep customers and lure new ones, Unilever and Kraft Heinz have been offering discounts. Mayonnaise prices for the first quarter fell 0.6% versus a year earlier, while overall packaged-food prices were up 1.6%, according to Nielsen.
“Kraft went down in price and Hellmann’s followed,” said Wayne Spencer, president of promotional planning company T-Pro Solutions.
“We’re engaging toe to toe,” Unilever Chief Financial Officer Graeme Pitkethly said on a recent investor call. Kraft Heinz’s Ms. Healy said, “We’ve been consistent on how we promote, and we promote less than our competitors.”
Both sides are also advertising heavily. A television spot for Kraft Heinz’s new Heinz mayonnaise takes a swipe at “yesterday’s brand,” a jar with a blue top just like Hellmann’s.
Unilever and Kraft Heinz’s battle is spilling into other condiments, too. Hellmann’s last month launched “Hellmann’s real ketchup” in the U.S.; it is sweetened using honey instead of high fructose corn syrup. Heinz recently started selling its own honey-sweetened ketchup.
“We saw this as an opportunity to elevate an American staple,” said Russel Lilly, marketing director of Hellmann’s. “It’s time for ketchup to evolve.”
Not everyone agrees. “It tasted like weak barbecue sauce,” said Orlando, Fla.-based food blogger James Emerson, who picked up a bottle of honey-sweetened ketchup at his local grocery store last month. “This just doesn’t seem right.”
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