The new name will be changed to “Paprika Sauce Hungarian Style”, reported the German weekly Bild am Sonntag on Sunday.
Knorr had rejected a demand to rename “Zigeunersauce”, meaning “gypsy sauce”, in 2013 according to the German news agency dpa.
Civil rights groups have long stood firm in their appeal to rename the sauce brand including in 2013 when their request was denied.
The popular spicy sauce, a staple in many German households, will within a few weeks show up with the new name in supermarkets across the country, Bild am Sonntag reported.
The renaming of the brand follows recent international debates over racism, especially in the United States, where big national companies have also renamed traditional brands in response to concerns about racial stereotyping.
“Zigeuner” is a derogative German expression for the Roma and Sinti minority groups who have lived in many European countries for centuries. Roma and Sinti are still discriminated against in Europe.
They often live below the poverty line and on the margins of society without equal access to education, jobs, or the opportunity for upwards mobility.