Specialty Food Industry Sales Hit $127 Billion In 2016

Sales continue to grow as Americans embrace specialty food and beverages, according to the Specialty Food Association (SFA), which reports that the industry is taking its place as an integral player with traditional and non-traditional specialty food retailers, foodservice operators and distributors.

SFA’s annual State of the Industry report, released Thursday, examines the $127 billion industry in detail. Largely fueled by small business growth, total sales jumped 15 percent between 2014 and 2016. Growth also is driven by product innovations and wider availability of specialty foods through mass-market outlets. Sales through foodservice increased 13.7 percent to $27.7 billion as U.S. consumers make specialty food a regular part of their away-from-home meal purchases.

“Consumer preferences for specialty food products are growing at double digits, outpacing mainstream food staples,” said SFA President Phil Kafarakis. “The products our members create appeal to consumers looking for authentic tastes and foods with fewer and cleaner ingredients.

“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 capitalize on these consumer trends is transforming the marketplace. Our research indicates that accelerated growth will continue and one of the things we’ll be doing at SFA’s 2017 Summer Fancy Food Show in June will be further exploring the projections we have for the future.”

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

• Sales growth—online accelerates, traditional slows: While growth at retail and foodservice have slowed, up only 5.5 percent vs. 9.1 percent in 2015, growth in third-party e-commerce and direct-to-consumer websites have gained ground, accounting for nearly 36 percent 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

• Center store alive and well: Grocery, shelf-stable specialty foods accounted for 61 percent 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

• Shift to sustainable: Close to 40 percent of manufacturers produced sustainable products, up 22 percent from last year. Among retailers, sustainable products accounted for 16 percent 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 percent, refrigerated lunch and dinner entrees up 33.0 percent and yogurt and kefir up 27.2 percent.

The full State of the Specialty Food Industry report, produced in conjunction with market researcher Mintel, is available here.

About The Author

A former newspaper editor and publisher who has handled digital duties for The Shelby Report since 2011. She once enjoyed leisurely perusing the grocery store aisles but, since having a baby in 2016, is now an enthusiastic click-and-collect shopper.

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