Building a brand: From Jersey base, Rao’s Homemade is becoming billion-dollar Italian food business

In a crowded food category, Rao’s Homemade caught lightning in a bottle.

In business terms, that means it’s turned a mostly only Northeast-based high-end pasta sauce into a company that’s on pace to be a billion-dollar megabrand.

Risa Cretella.

Risa Cretella, chief sales officer for Sovos Brands, has played a major part driving that growth, which brought it a more than five-times revenue boost in four years and a new national relevance.

And it did it all from New Jersey. More specifically, it did it from a bank building that dates back to the ’20s in downtown Montclair. The company has inhabited the former office of Montclair Savings Bank since 2018.

Cretella said the Garden State base, which was the next step for it after a New York City founding, just makes sense. She looks at it like this: The Northeast is one of the best markets for Italian food. Rao’s, while being a leading brand nationally, is the clear leader among pasta sauce brands in the region.

“So, could we run a successful Rao’s business somewhere else in the country? I’m sure we could,” she said. “But, being embedded in that market is definitely part of the magic. And being embedded in a community like Montclair … right downtown, instead of in a corporate park … surrounded by people that love and buy our brand, we felt there was something very authentic about finding a home like that.”

From its Montclair base, the food business has drawn up a playbook for how to cross the billion-dollar threshold within about three years.

“We’re the No. 2 (pasta sauce) brand nationally, with 14% household penetration,” Cretella said. “But, to flip that, 86% of households don’t buy Rao’s sauce. And that’s one of the most powerful proof points for our ability to build this brand in the coming years.”

Rao’s pasta sauce.

The ready-made Italian sauces are the heart and soul of the brand, Cretella added, but the brand is also branching into other product segments. Besides the obvious one, dried pasta, Rao’s is also introducing soups, frozen Italian dinners and pizzas in grocery stores nationwide.

“And we’re the fastest-growing brand in every category in which we participate,” she said.

The company has experienced a compelling level of repeat business with its products, Cretella said. It expects that brand loyalty will help it as it ventures into other product categories, even with the higher-end price tag associated with the brand’s core products.

“Yes, we’re the most expensive pasta sauce on the shelf,” Cretella said. “It’s still a tremendous value for a family to be able to get a jar of sauce and a bag of Rao’s pasta for $10 to feed a family of four.”

All of Rao’s recent growth is occurring under the Sovos Brands umbrella. That food business, which also operates Noosa Yoghurt and Michael Angelo’s, acquired Rao’s in 2017.

When that deal went through five years ago, the sauce-maker’s business checked in at under $100 million.

“It’s a very special experience for a team and a company to create a billion-dollar brand like this,” Cretella said. “I think what we’re most excited about is we’re doing this in service of providing great, authentic Italian food to Americans.”

Cento loves its location

Cento Fine Foods’ tomatoes.

In the same aisle or an adjacent one, maybe a few rows down from Rao’s Homemade, there’s another brand of Italian products with a New Jersey base that’s achieving market-leading status.

The iconic yellow-labeled Cento Fine Foods, known for its canned San Marzano tomatoes, is the country’s top company for plum tomatoes. It’s got a strong presence in the tri-state area, with hundreds of products on ShopRite store shelves and a 60-plus employee base of operations in West Deptford.

Maurice Christino, a vice president at Cento, explained that the business was founded in the ’60s in South Philadelphia before it moved to Westville. It then resettled to its current West Deptford home in the early ’80s.

For the company, which of its many Italian goods also produces olives, capers and roasted peppers, being where it is in New Jersey allows it to be the purveyor of international delicacies it is.

Maurice Christino.

“We’re not the only ones with this idea, of course, but being in such close proximity to shipping containers coming in and out of Port Elizabeth and major highways serves us well,” he said. “We import from Italy, Spain and quite a few other countries, so we have to have shipments and trucks coming in and out quickly in a free-flowing area for business.”

That proximity has helped the company as it has scaled up over the past 10 to 15 years, rewarding a combination of national and local marketing efforts and chefs promoting the product through various mediums. But it didn’t make them immune from the supply chain disruptions that Christino said came to bear on any company that relies heavily on the shipping industry.

While contending with that development, the company has also dealt with the same inflationary pressure on food products and materials as just about any business that shares space on grocery store shelves.

“It’s something everyone is trying to manage as best as they can,” Christino said. “At a certain point, it’s a question of how expensive can something like tomatoes realistically get? So, for us, it’s about keeping everything in line (with customer price expectations) while still delivering what they know to be a premium quality product from us.”