Omsom is taking Asian food mainstream as demand grows for ethnic packaged food
Big players like Kraft Heinz, McCormick and General Mills are looking to tap into the opportunity too.
Asian food startup Omsom is setting its sights on the growing ethnic packaged food market.
Similar to how Cava (CAVA) and Chipotle (CMG) popularized Mediterranean and Mexican food on their way to becoming multibillion-dollar enterprises, Omsom aims to win America over with its Asian cooking sauces and packaged spicy noodles.
"The white space we found was that Asian American stories and flavors are taking America by storm," Omsom co-founder and CEO Vanessa Pham told Yahoo Finance for the season two premiere of Lead This Way. "But when you walk into the mainstream grocery store, and you look at the shelf, it is not ... up to par with what you're seeing in restaurants and even in movie theaters."
Pham and her sister Kim Pham originally came up with the idea while hiking in Bolivia in 2018. The duo juggled building the idea on nights and weekends while continuing their careers in finance.
"As a daughter of Vietnamese refugees, I think I was on a safe path. I just wanted to do right by my parents' sacrifices and refugee journey," Pham said. She was leaning into the idea of "de-risking" but felt like she wasn't honoring her potential.
By 2019, the two sisters quit their jobs to work full-time on Omsom, bootstrapping the business for the first year.
"I was 24, Kim was 26, ... we really did not have anything to work with as far as funds. We put everything we had into the business," Pham said.
To supercharge their vision of a "proud and loud" Asian food brand, the Phams applied to the Mars SEEDS of CHANGE Accelerator and were the only pre-launch business to be a part of the program. They received a $50,000 equity-free grant to start, and the process helped connect them with others who were eager to support the brand.
Their current investors include Jen Rubio, founder of luggage company Away; Shan-Lyn Ma, founder of wedding platform Zola; Jared Smith, founder of RXBar; and VC founder Elly Truesdell of New Fare Partners.
As of March 2024, the pair, who first launched their products during the start of the pandemic in May 2020, have sold more than 4 million products in over 2,000 stores. Their products can be found in the aisles of Whole Foods (AMZN), Target (TGT), and Sprouts (SFM).
According to Prophecy Marketing Insights, the ethnic food market is currently valued at $50.7 billion and is expected to increase at an annual growth rate of 5.80% to reach $84.7 billion by 2034.
Social media may have played a key role in the category's rise, Truesdell told Yahoo Finance over the phone.
"Younger consumers are much more informed through social media; through digital channels [they] have been able to educate themselves and be more exposed to international foods," she said, adding: "There's a lot of appetite, no pun intended, for global flavors across younger generations."
The total ethnic grocery store market, which includes items beyond food like alcohol, floral, general merchandise, health, and beauty, grew 1.4% from a year ago to $114.69 billion, with the Asian market jumping 3.2% year over year, per NIQ data.
The Asian food market, in particular, has even greater potential, according to Truesdell.
"There's still a little bit of intimidation factor around making all of these foods from scratch for yourself at home," Truesdell said, drawing consumers to ready-to-eat packaged goods made by companies like Omsom.
Others are joining the fray, such as Hong Kong-based DayDayCook (DDC), which went public on the New York Stock Exchange last November. In the US, the company is offering a Singaporean line of noodle kits and soup and a Korean line of curries, marinades, and stir-fry sauces.
CEO Norma Chu told Yahoo Finance its "north star vision is to become the General Mills for Asian food."
The post-COVID impact of more Americans cooking at home, the rising cost of dining out, and a more health-conscious consumer are all providing a "huge opportunity going forward," according to Chu.
"The demand is higher, much higher now, especially since the pandemic," Chu said. "Convenience, eating healthier, ... and eating delicious meals is going to be a must. Consumers are looking for basically products that can fit or check all these three boxes."
Freedom Finance Global PLC equity analyst Georgy Vashchenko told Yahoo Finance that the US ethnic food market is expected to grow by a single digit on an annual basis. The Asian market is expected to expand even faster, "driven by factors such as rising disposable incomes, changing consumer preferences towards convenience, and increasing urbanization."
And there's "a lot of space for small players" thanks to improvements in the US supply chain, allowing more customers access to the food at local and chain grocers, said Vashchenko.
Big players have been tapping into consumers' changing palettes as well.
McCormick & Co (MKC) named Tamarind, a sweet and tangy flavor often used in African, Indian, and Middle Eastern cooking, as its 2024 flavor of the year. In the year prior, the team named its Vietnamese Cajun Style Seasoning the flavor of the year.
General Mills (GIS) has dumplings and wonton brand Wanchai Ferry, which it gained in its acquisition of Pillsbury back in 2001.
A Kraft Heinz (KHC) spokesperson told Yahoo Finance that "new and diverse flavors" are "one of the fastest growing and most attractive spaces within our portfolio."
Per Kraft Heinz's Foresights & Trends Exploratory Research report from 2023, half of Gen Z’s favorite foods are ethnic, and 54% of consumers say they often buy global food or drinks. Last year, Kraft Heinz launched six limited-time Heinz sauces to restaurants, including flavors like Harissa Aioli, Creamy Chimichurri, and Yuzu Wasabi, some of which will hit grocery store shelves in 2024.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
