The Specialty Food Industry

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% 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. Seventy-eight percent of specialty food sales happen at retail; between 2014 and 2016 retail sale growth was slightly stronger than foodservice, 15.4% versus 13.7%. Specialty retailers achieved total sales of nearly USD6.4 billion in 2016, about 11% of the total market. Dollar sales grew 12% between 2014 and 2016, the most modest among retail channels during this time period. According to the research, specialty beverage sales are growing faster than food sales. Specialty beverages hit USD10.5 billion in 2016, about 18% of the total specialty retail market. Beverage growth outperformed that of food between 2014 and 2016, at 24% versus 15%. 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% of the total specialty food market in 2016, or USD36.2 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% or more. The snacking segment now commands about 28% of the total specialty food market. Sales reached USD16.3 billion in 2016, a 16% jump. Of the 13 snack segments represented in the report, about half experienced growth of more than 20%, led by jerky and meat snacks. Specialty foods account for 14.8% 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 USD4.42 billion and USD3.74 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. Manufacturers' net profits have risen to 18%, 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% saying it was their slowest-growing channel this past year. Retailers' average transaction size increased 19% in 2016.

Web: www.specialtyfood.com