The State of the Specialty Food Industry 2017
The 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 growing fastest.
According to the research:
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.
Mainstream retail channels are heating up. Millennials, a convenience-oriented consumer group, buy specialty foods wherever 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.
Foodservice is a bright spot. 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.
Following are some top-level statistics on the size of the specialty food industry at retail and top-selling categories. For more data and insights, see below how to download the Summary and Full Reports.
Seventy-eight percent of specialty food sales happen at retail; between 2014 and 2016 retail sale growth was slightly stronger than foodservice, 15.4 percent versus 13.7 percent.
Specialty retailers achieved total sales of nearly $6.4 billion in 2016, about 11 percent of the total market. Dollar sales grew 12 percent between 2014 and 2016, the most modest among retail channels during this time period.
Specialty Food Sales by Category
According to this year’s research:
- Specialty beverage sales are growing faster than food sales. Specialty beverages hit $10.5 billion in 2016, about 18 percent of the total specialty retail market. Beverage growth outperformed that of food between 2014 and 2016, at 24 percent versus 15 percent. Water, Refrigerated Juices and Functional Beverages, Shelf-Stable and Refrigerated RTD Tea and Coffee are all driving this increase.
- Fresh and perishable categories are king, but center-store is hardly dead. 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 Water, Wellness Bars and Gels, and Nut and Seed Butters, which all grew 20 percent or more.
- The snacking segment now commands about 28 percent of the total specialty food market. Sales reached $16.3 billion in 2016, a 16 percent jump. Of the 13 snack segments represented in the report, about half experienced growth of more than 20 percent, led by jerky and meat snacks.
Specialty foods account for 14.8 percent of all food sales at retail, equaling categories such as meat and produce. Protein continues to dominate, with the top two categories—Cheese and Plant-Based Cheese and Frozen and Refrigerated Meat, Poultry, and Seafood—at $4.42 billion and $3.74 billion, respectively. Seven of the 10 fastest growing categories are Refrigerated or Frozen. Only four of 61 specialty categories recorded sales declines between 2014 and 2016.
More highlights from the supply chain:
• Manufacturers’ net profits have risen to 18 percent, despite growing costs for certification, ingredients, and production.
• Gluten-free, Non-GMO and Convenient/Easy to Prepare led product innovation plans of manufacturers for 2017.
• Seventy percent of distributors plan to expand their specialty food SKU count in 2017.
• Sales share in foodservice has been declining slowly but steadily for importers, with 36 percent saying it was their slowest-growing channel this past year.
• Retailers’ average transaction size increased 19 percent in 2016.
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.
Specialty foods are defined as foods or beverages of the highest grade, style, and/or quality in their respective categories. Their specialty nature derives from a combination of some or all of the following qualities: uniqueness, origin, processing method, design, limited supply, unusual application or use, extraordinary packaging, or channel of distribution/sales.
READ DEFINITIONS AND BRAND EXAMPLES for the 61 categories included in this research. (DOWNLOAD PDF)
DOWNLOAD THE FULL 2017 STATE OF THE INDUSTRY REPORT (COMING SOON)
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