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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OFF! $$ S16 STATE OF THE SPECIALTY FOOD INDUSTRY 2018 10 TAKEAWAYS Fresh Foods VEGAN CHEESE nut milk B I K E P O W E R E D $$ $ $ FISHSICLES 100% REAL FISH 70% ALL FISH POPSICLES FRESH FREE RANGE Sign up for the Specialty Food Association's webinar, The State of the Specialty Food Industry: Trends | Sales Data | Category Forecasts July 26, 2018 • 2 p.m. EST Visit the Learning Center on specialtyfood.com. 1. Retail growth is strong but slowing. The retail market is increasing but at a slower rate, which we've seen as a pattern for the past few years. While specialty's growth still far outpaces all food, the market is maturing. Yet, the supply chain sees potential in emerging channels like convenience and drug stores. 2. The foodservice opportunity. Foodservice is growing faster than retail—12.8 percent versus 10.7 percent—and its growth increases each year. Opportunity exists even beyond traditional restaurants at stadiums, university campuses, hospitals, and other outlets. Foodservice within retail shows enormous promise: grocerants, prepared foods, and meal kits are in demand. 3. Online: the fastest growing sales channel. Sixty-six percent of SFCs purchase online versus 53 percent in 2015. Consumers are not either/or shoppers with online and brick-and-mortar. The strongest SFCs buy the most categories online as well as in stores, indicating sales and engage- ment crossover. 4. Mainstream markets are dominant. M a i n s t r e a m i s t h e f a s t e s t g r ow i n g brick- and-mortar retail channel. Younger consumers skew toward this channel. But iGen is indicating that it will shop anywhere—clubs and discount grocery stores are on the rise. Specialty stores will need to claim their role as community centers offering education and knowledge to thrive. 5. Fresh is it. Mainstream outlets are upping their game with more perishables and refrigerated offerings. In fact, anything with a health halo is the trend to follow. 6. Plant-based: beyond niche. These products dominate the four top catego- ries in terms of specialty foods share of total market and plant-based is driving growth in some of the categories forecasted to grow the most by 2022. Not just a fringe diet for vegan consumers, the trend has become a mainstream movement with chains like White Castle adding the Impossible Burger to its menu. 7. iGen—the future core SFC. iGens have arrived. This generation is engaged and has a greater awareness of specialty food than its predecessors. Engaging them now translates into long-term customers. But don't think of them as younger millennials. Their points of view differ just enough to drive change. 8. Young consumers think small. Supporting smaller companies is important to iGen philosophy. This bodes well for specialty as does the fact that young consumers are not as brand loyal as past generations. "Products are about place, and where they're from, and who is the face behind it," says the business manager and buyer for a specialty supermarket chain. "And people want to know 'what are you doing with the money you make from me buying your product? Are you aligned with a charity?'" 9. Mass-market competition. Many thriving specialty categories (water, rice cakes, jerky and meat snacks, RTD tea and coffee) are also growing well in the total market. Mainstream manufacturers are capital- izing on their own non-specialty versions of these products—an area of growing concern to specialty food makers. 10. Innovation fatigue? Trends and new product rollouts happen at a rapid clip in today's market, leaving the supply chain to wonder when consumers hit a limit. "There's a trend of trends lasting a shorter and shorter duration. People get interested and then they're bored with it," notes a specialty retailer. "This [easy boredom] is a millennial thing, and it will continue as an iGen thing." Brokers, distributors, and retailers also caution not to rush to innovate with the latest hot item; many startups need to come to market better prepared to do business in the specialty food category. Denise Purcell is editor of Specialty Food Magazine.

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