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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Online slows traditional sales growth. While the specialty food industry enjoyed an overall upturn, 2016 growth at retail and foodservice slowed over the previous year, to 5.5 percent versus 9.1 percent in 2015. Increased purchases online contributed to slower year-over-year growth, says Mintel. Manufacturers report a decreasing per- centage of sales from brick-and-mortar retailers. While those stores still account for the most sales (64 percent), numbers have trended downward since 2014, as channels like third-party e-commerce sites and their own direct-to-consumer websites have gained ground. Mainstream retail channels heat up. Millennials, a conve- nience-oriented con- sumer group, buy specialty foods wher- ever they shop. This trend has helped drive sales in multi-unit grocery and mass merchants, where growth outpaced that of natural or specialty chains for the first time. Emerg- ing discounters like Aldi and Lidl, which offer specialty products, are both planning significant U.S. expansion, which is concerning to retailers. Foodservice is a bright spot. Despite some rough patches among restau- rant chains, foodservice is a promising channel. Manufacturers say fine dining restaurants are among their fastest growing channels, and point to other foodservice institutions like hotels and universities as among their biggest successes last year. The sector is ripe for continued growth as foodservice opera- tors seek out specialty products to enhance menus, create efficiencies, and provide solutions. Even traditional retail- ers are citing success with cafes and cater- ing services. Producers could well position themselves to determine how their products fit in foodservice and to build up their contacts and infrastructure to service the channel. Center store is still alive. Fresh and perish - able categories are king, but center-store is hardly dead, and retailers shouldn't be too aggressive with space allocation cutbacks. Grocery—shelf-stable specialty foods—accounted for 61 percent of the total specialty food market in 2016, or $36.2 billion. It was led by strong growth performance in categories like wellness bars and gels, and nut and seed butters, which grew 20 percent or more. Consumer interest shifts to sustainable. Organic, non-GMO, and local often make the supply chain's list of claims more interesting to consumers today and in the near future. This year, the sustain- able claim is getting more attention from the supply chain. Close to 40 percent of manufacturers produced sustainable products, up from 22 percent last year. Among retailers, sustainable products accounted for 16 percent of product sales, and share increased notably this year. Along with non-GMO, the supply chain predicts sustainable will be the claim most interesting to consumers in the next three years. b y R o n Ta n n e r a n d D e n i s e P u r c e l l he specialty food industry continues to grow at a strong clip. Dollar sales hit $127 billion, a 15 percent jump in total sales between 2014 and 2016, according to the "State of the Specialty Food Industry," an annual report published by the Specialty Food Association and Mintel. By comparison, all food sales at retail grew by an anemic 2.3 percent. Total unit sales for specialty foods were up 13.1 percent. Specialty foods are outpacing their non-specialty counterparts in almost every category, as consumers continue to become more aware of quality in their food choices. Categories aligned with better-for-you options, health and wellness, and freshness are grow- ing fastest. Here are five insights from this year's research. On the following pages, you'll find report highlights along with key opportunities and takeaways. T Download a Summary Report with complete charts and data, as well as more information at: specialtyfood.com/stateindustry2017 ABOUT THE RESEARCH The Specialty Food Association's "State of the Specialty Food Industry" is a joint research project prepared by Mintel and SPINS/IRI. The research encompasses the three most recent calendar years of sales data and includes figures for 61 specialty food categories, pulled from the SPINS database of mainstream and natural food stores. In addition, Mintel surveyed specialty food manufacturers, importers, distributors, brokers, and retailers to develop the statistics presented in this report. S2 STATE OF THE SPECIALTY FOOD INDUSTRY 2017