The hot dog, a North American icon that is most famously associated with street vendors and baseball, has survived two world wars, a couple of depressions, and a plethora of “bad press”. Its success can likely be attributed to many factors such as good taste, cultural influence, marketing prowess, or even affordability. It’s one the least expensive meats on the market, and although many can probably argue that it barely qualifies as a meat, very few can downplay its success.
Originally from Germany, the hot dog was originally a sausage in a bun. Today, the hot dog is distinct from sausage in every possible way, including taste, size, ingredients, culture, and region. Hot dogs gained significant popularity while being sold on the streets of New York and St. Louis by German immigrants dating as far back as 1870. After making their first appearance in the late 19th century, hot dogs became synonymous with baseball and other sporting events.
Today, ballparks are expected to sell over 20 million hotdogs. But the hot dog market extends well beyond street vendors and baseball. Retail sales make up the bulk of hot dog sales. Once the hot dog was packaged and shelved, large scale hot dog producers emerged quite rapidly. Once consumers were able to take eat the ballpark frankfurter in the comfort of their own home, hot dog sales soared – specifically during summer months.
Hot dog sales between Memorial Day and Labor Day make up approximately 38% of all annual hot dog sales. The month of July is the highest grossing month for hot dog sales with over 10% of all retail sales – it’s been coined “National Hot Dog Month”. In 2011, there were more than 700 million hot dog packages sold at retail stores, not including Wal-Mart.
Even though more Americans are demonstrating a concern for their personal health, hot dog sales do not seem to be slowing down. In fact, hot dog producers should be credited for being ahead of the curve, as they have already provided healthier, natural, and organic hot dog brands. These new brands are driving sales and are expected to continue driving sales for the next few years. Hot dog producers are also experimenting with ingredients and different flavors. Beef seems to be the least popular choice among younger consumers, who are showing a keener interest in pork and chicken.
Criticism over hot dog ingredients dates as far back as the middle of the 19th century. The term dog was derived from speculation that hot dogs used dog meat – this practice was common among Germans when making sausage. Most hot dog producers claim that the hot dog is made from meat trimmings and powdered dressing such as concentrated mustard, soy, salt and liquid corn syrup.
Definitions of “meat trimmings” vary and have varied over the last 100 years. Beef, pork, and chicken are the common meats used in hot dogs. The all-beef hot dog (also known as the frankfurter) was for many decades considered to be the delicatessen of hot dogs. Today, consumers are more concerned about the quality of meat rather than just a simple preference of beef, chicken, or pork.
Despite the harsh criticism over ingredients, the business of hot dog production, distribution and appeal in America is a great example of savvy business efforts. Hot dog producers should be credited for their strategic efforts in national distribution and targeted marketing.
Like artisanal cheese, the hot dog has segmented markets across the country. These regions or segmented markets have specific preferences over hot dog flavors, casings, and sizes. For example, New York style dogs and Chicago dogs are completely different in flavors and dressing. In 2012, New Yorkers spent more money on hot dogs in retail sales than any other market in America. Los Angeles was a close second with $92 million. Cities such as Washington, Chicago, San Antonio and South Carolina trail behind with an average of $35 million in annual hot dog sales.
There are two key markets in the hot dog business – grocers and small business vendors such as ballparks and street vendors. Some hot dog producers build their niche in one or the other – or in some cases both. Whichever they choose, one thing is clear, grocers are where the money is, and today hot dogs are a $2.5 billion industry because of packaged take home hot dogs.
Although there are many hot dog producers, there are only a handful of heavy hitters that control retail shelves throughout America. Here’s a list of the top five.
5 Nathan’s Famous
Annual Sales: $71 Million
Nathan’s Famous was founded in 1916 at the corner of Surf and Stillwell avenues in Coney Island. The company was originally a nickel hot dog stand co-founded by Nathan Handwerker. Handwerker, originally from Poland, and his wife, Ida, created the hot dog’s secret recipe using a secret spice. Nathan’s son Murray would later inherit and lead the expansion of the company throughout various neighborhoods in the New York area.
For the last 40 years, Nathan’s Famous has sponsored one of the most competitive hot dog eating contests in the world. Even hot dog eating champion Takeru Kobayashi has participated in and won the televised contest. Today, annual sales of Nathan’s Famous hot dogs have reached $71 million, making it one of the most successful and recognizable hot dog brands.
4 Vienna Beef
Annual Sales: $100 Million
Vienna Beef operates out of Chicago, one of America’s famous hot dog cities. The company branded itself as a 100% all beef hot dog, which proved to be a very successful marketing campaign as the brand spread throughout the streets of Chicago. Today the company sells to over 1,500 licensed vendors, which includes vendors in Germany, Japan, Hong Kong, Mexico, and Canada.
Vienna Beef’s hot dog sales most notably soared during the Great Depression, when the hot dog’s affordability proved to be very convenient for unemployed workers and their families. From that point on, Vienna Beef would use vendor exclusivity to steadily grow their business.
3 Kunzler & Co
Annual Sales: $345 Million
Founded in 1901 by German born Christian Kunzler, Kunzler & Company Inc. is a successful food manufacturer and processor located in Lancaster Pennsylvania. Although the company produces other meats such as steaks, bologna, and sausage, the hot dog’s retail sales have driven overall sales. Kunzler & Co only employs approximately 500 employees, but records annual revenue of $345 million.
2 Oscar Mayer
Annual Sales: $523 Million
Formerly the number one hot dog producer in America, Oscar Mayer was recently demoted to second place. Originally founded by a German immigrant, Oscar Mayer and his brother Gottfried made bratwursts in Chicago’s northside. The brothers profited from sales in popular German neighborhoods. The company started marketing early by supporting events such as Chicago’s 1893 World Fair.
From that point on, the company steadily grew with nearly 50 employees. By World War I, the company decided to expand by purchasing a processing plant in Wisconsin. Success seemed eminent and the company recorded better than expected profits.
In 1981, Oscar Mayer shareholders decided to sell the company to General Foods. Eventually, through subsequent mergers and acquisitions, Oscar Mayer would belong to Kraft – one of the world’s largest food producers.
1 Ball Park Franks
Annual Sales: $565 Million
Since Sara Lee Corporation acquired Hygrades from Hanson Industries in 1989, Ball Park Franks (the eventual successor to Hygrades) has gained significant popularity among American moms and teenagers. It’s been labelled the current preferred brand and with the help of Sara Lee’s distribution, Ball Park Franks surpassed Oscar Mayer as the leading hot dog producer.
Today, Sara Lee continues to use less of its own branding on products and more natural or organic associated brands, such as Hillside Farm.