Foodservice providers cleaning up with specialty foods

Sales of specialty foods through foodservice in the US increased 13.7% to $27.7 billion between 2014 and 2016 as consumers make specialty foods and beverages a regular part of their away-from-home meal purchases.

Consumers — particularly Millennials, it seems — are willing to pay higher prices for specialty foods and often perceive them as having various health and wellness benefits compared to non-specialty foods.

The Specialty Food Association has released its annual State of the Industry report, which examines the vibrant $127 billion industry in detail. Largely fuelled by small business growth, total sales jumped 15% between 2014 and 2016.

“Consumer preferences for specialty food products are growing at double digits, outpacing mainstream food staples,” said Phil Kafarakis, president of the Specialty Food Association.

“Consumers are also making purchases wherever they happen to be, changing the retail food environment. The eagerness of all retailers — including mass market, e-commerce and foodservice — to capitalise on these consumer trends is transforming the marketplace. Our research indicates that accelerated growth will continue.”

Top trends identified in this year’s SFA research include:

• Sales growth. While growth at retail and foodservice have slowed — up only 5.5% versus 9.1% in 2015 — growth in third party e-commerce and direct-to-consumer websites have gained ground, accounting for almost 36% of sales.
• Retail channels heating up. Millennials — one of the top-growing consumer segments — buy specialty food 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.
• Centre store alive and well. Grocery, shelf-stable specialty foods accounted for 61% of the total specialty food market in 2016 ($36.2 billion). Strong growth performance was seen in categories like wellness bars and gels, and nut and seed butters.
• A shift to sustainable. Close to 40% of manufacturers produced sustainable products, up 22% from last year. Among retailers, sustainable products accounted for 16% of product sales. Along with non-GMO, the supply chain predicts sustainable will be the claim most interesting to consumers in the next three years.

Consumers are especially focused on specialty foods in the refrigerated sections. Categories with the biggest sales growth in this area include refrigerated juices and functional beverages up 30.7%, refrigerated lunch and dinner entrees up 33% and yoghurt and kefir up 27.2%.