Specialty Food Magazine

APR 2012

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.

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Page 3 of 63

EDITOR'S LETTER Insights from the Supply Chain T he results of 2012's "State of the Specialty Food Industry" report reveal a robust industry with U.S. retail and foodservice sales hitting $75 billion. According to the annual report, compiled for NASFT by Mintel International/SPINS, the top-selling categories were: Cheese and Cheese Alternatives; Meat, Poultry and Seafood; and Chips, Pretzels and Snacks. To dive beyond the hard numbers, each year manufacturers, importers, brokers, distribu- tors and retailers are interviewed for a firsthand glimpse of the supply chain's challenges and opportunities. Cash flow, rising expenses and increasing competition are among top concerns, led by spiking costs of raw ingredients. Manufacturers report these costs are up by as much as 25 percent over the past two years, spurring reduced mar- gins, higher prices and cutbacks. To combat challenges, the industry is moving forward with business-building innovations, such as increased social media marketing, more in-store demos and smaller packaging sizes at varying price points. Here is a sample of what members of the supply chain had to say in their own words: Manufacturer: What innovations do you have planned for 2012? Manufacturer: "Partnering with other businesses to cross-promote our products." Broker: "We're doing more demos than ever before." What are the biggest threats to your business? Distributor: "We seem to be undercut more and more by competing compa- nies for the same lines." "Costs of labor, ingredients and shipping." Retailer: "Big-box stores mimicking fine products and taking market share." What is your biggest gripe? Importer: "Free fills and all of the marketing dollars and requirements of the big retailers and distributors." Distributor: "The transition of good brands into the mass markets. Our smaller specialty customers can- not compete with their pricing." What are the effects of rising food prices on your business? Manufacturer: "Higher costs have caused us to absorb some costs but we've also had to raise our prices." Broker: "It's helped—rising prices makes premium products look less pricey compared with mainstream." Read the supply chain's full comments on these and other topics at specaltyfood.com/onlinehighlights, and weigh in with your own thoughts. In the meantime, turn opposite p. 32 to explore the extensive data defining the specialty food industry in 2012. And save the date of April 11 at 2 p.m. (ET), when NASFT will offer a webinars@work session that will probe deeper into the facts and figures of this year's report. |SFM| By Denise Purcell HAVE A COMMENT? Visit specialtyfood.com/dpurcell/supplychain Editor, Specialty Food Magazine dpurcell@nasft.org facebook.com/specialtyfoodmedia APRIL 2012 1

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