Specialty Food Magazine

Summer 2020

Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.

Issue link: https://www.e-digitaleditions.com/i/1256204

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Page 71 of 91

S2 | THE STATE OF THE SPECIALTY FOOD INDUSTRY 3 % 8.9 % The Specialty Food Market at a Glance The coronavirus pandemic was unfolding as Mintel compiled data and survey responses for this year's Specialty Food Association State of the Specialty Food Industry report. While sales data based on the past three calendar years show a strong industry, the impact of COVID-19 on food retail, foodservice, and the supply chain is profound and still evolving. We have included COVID-19 impact commentary throughout this year's report, and in its companion Category Tracking & Forecasts, to provide insight on market ramifications, challenges, and opportunities in the current unsettled business environment. As an essential business channel open during the pandemic, food retail experienced significant sales growth. At presstime, brick-and-mortar retail sales surged two to three times previous levels in many categories. Specialty brands may have seen an initial sales spike, followed by out-of-stocks as distributors and some retailers prioritized essential items on orders and shipments. Consumers also traded down to conventional items to extend their dollars. But as stay-at-home orders continued for successive weeks, they also started stocking up on indulgent products. Many consumers have been hit with un- and underemployment and a recession will shift consumer behavior through 2020 and into 2021. Consumers increased their online grocery shopping to the point that bottlenecks, out-of-stocks, and delivery delays became commonplace. Acosta data indicated that 51 percent of consumers ordered groceries online in the month ending April 7; much higher than prior months. Many shoppers say they'll continue to order online more than prior to COVID-19. By some estimates, restaurateurs say they have only a 15 percent survival chance if the crisis lasts six months. Even those that do survive expect social-distancing regulations will limit foot traĊ½c and dampen sales by 50 percent or more for the foreseeable future. Distancing rules will also mean sta' cuts and new back-of-house rules, resulting in less food produced. The supply chain has focused on essential operations, cutting out unnecessary spending. Specialty brands are temporarily SKUing down, while ramping up production of top sellers and should regularly communicate to their distributor and retailer network the SKUs in which they are best stocked. Retailers are typically scaling back on promotional plans and category reviews, though they recognize they must continue to seek out new innovations and correspond with brands. By the end of 2019, specialty food sales hit $158.4 billion, a 10.7 percent increase since 2017, but growth had slowed as the market matured. Foodservice and online sales continued to be bright spots in growing sales, though both now have di'erent landscapes due to COVID-19. As for the three-year industry growth, food inflation played a role as unit sales did not keep pace with dollar sales. It's notable that the specialty food and beverage market continued to outpace sales of all food, growing three times faster than the entire food and beverage market during 2017-2019. In 2019 more categories than ever before (12) achieved at least $2 billion in annual sales. Several categories grew significantly more than the overall market, as you'll see in the following pages. COVID-19 The Impact of Specialty food sales growth: All food sales growth:

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