Specialty Food Magazine

Summer 2018

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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S12 STATE OF THE SPECIALTY FOOD INDUSTRY 2018 *Brick-and-mortar retail channels include sales from natural, specialty, and MULO*** outlets as well as an estimate for specialty food perishables (PLU or random-weight specialty items sold in Bakery, Deli, Meat, and Seafood) sold in these outlets. In addition, these figures include estimated specialty food sales from Trader Joe's and Whole Foods Market and the internet. ***MULO or Multi Outlet, which is representative of following channels: total U.S. grocery, mass, total U.S. drug, total Walmart, dollar, military, and club Source: Mintel/SPINS/IRI TOTAL U.S. DOLLAR SALES OF SPECIALTY FOOD BY MARKET SEGMENT WHERE ARE SPECIALTY FOODS SELLING NOW? 0 2 4 6 8 10 The real growth is in foodservice and online. Foodservice accounts for 21.6 percent of the market and is growing faster than brick- and-mortar retail. It grew 12.8 percent in the 2015-2017 timeframe, and growth was better in restaurants in 2016-2017 than the previous year. Online specialty food sales hit $2.2 billion in 2017, 21 percent growth since 2015. Though the channel represents just 1.6 percent of the total market, it's the fastest growing. Within brick-and-mortar retail, conventional supermarkets and mass merchandisers take the lion's share of specialty food sales. Mainstream channels dominate with 82 percent of total retail sales in 2017. Since 2015, these retailers are the fastest growing retail channel, growing 17 percent to $52.5 billion. But when we examine consumer preferences, supermar- kets have already lost a lot of ground while mass merchandis- ers, clubs, and online are improving standing. Consumers are seeking specialty foods at value-based pricing and are amenable to buying in bulk. Natural supermarkets have the smallest share at 7.2 percent but figures don't include Whole Foods and Trader Joe's. From a consumer shopping perspective, it's noteworthy that the gap is closing on traditional supermarkets and natural food stores over the past four survey cycles. Specialty food sales are growing but where exactly is the growth? The retail market for specialty foods in brick-and-mortar and online grew 10.7 percent between 2015 and 2017. But over the last five years, the maturing market has continued to see diminishing growth rates. Retail sales grew 4.8 percent from 2016 to 2017 versus 5.8 percent from 2015 to 2016. Still, its performance continues to outpace the overall retail food market, which grew just 1.4 percent during the same period. "Nothing will ever replace human-to-human great service. There's a theater that you've got to begin to embrace as a retailer, otherwise the [customer should just] click on an item and have it sent to their door." TOTAL MARKET BRICK-AND -MORTAR CHANNELS* FOODSERVICE ONLINE RETAIL CHANNELS 0 $30,000 $60,000 $90,000 $120,000 $26,900 $28,200 $30,350 $1,835 $126.0 $133.1 $140.3 BRICK-AND-MORTAR RETAIL CHANNELS* $2,018 $2,220 $ MILLIONS FOODSERVICE ONLINE RETAIL CHANNELS 5.6% 5.4% 5.7% 4.8% 7.6% 10.0% 10.0% 4.7% 2015-16 2016-17 *Brick-and-mortar retail channels include sales from natural, specialty, and MULO*** outlets as well as an estimate for specialty food perishables (PLU or random-weight specialty items sold in Bakery, Deli, Meat, and Seafood) sold in these outlets. In addition, these figures include estimated specialty food sales from Trader Joe's and Whole Foods Market and the internet. ***MULO or Multi Outlet, which is representative of following channels: total U.S. grocery, mass, total U.S. drug, total Walmart, dollar, military, and club Source: Mintel/SPINS/IRI ONLINE $ 2 . 2 B I L L I O N S A L E S I N 2 0 1 7 2 1 % G R O W T H S I N C E 2 0 1 5 GROWTH RATES OF SPECIALTY FOODS BY MARKET SEGMENT $97,310 $102,872 $107,743

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