NEW YORK — The Specialty Food Association (SFA) released its annual report State of the Specialty Foods Industry Reportrevealing that the specialty food market reached total sales of $175 billion in 2021, up 7.4% from 5.8% the previous year, when the sharp decline in foodservice offset the outsized gains physical retail and e-commerce.
“The specialty foods market has thrived in two challenging years, with our latest research showing that specialty continues to grow at a faster rate than all foods,” said Denise Purcell, vice president, content and education at the Specialty Food Association. “Growth will continue, but at a slower pace than the industry experienced during the pandemic-influenced whirlwind of groceries and home meal preparation in 2020 – and will depend on the bandwidth of the supply chain and changes in challenges such as inflation, shipping issues, cost increases, and material shortages.
The annual research on the state of the specialty foods industry is a review of market size and sales; dollar and unit sales growth; penetration of specialty food categories; 10-year tracking and forecasting in key categories. New this year: sales forecasts for retail, restaurants and e-commerce; video interviews with members of the supply chain; and a closer look at sales and opportunities in specialty perishables departments.Key facts and figures:
Top 10 Retail Dollar Sales Categories
- Meat, Poultry, Seafood (Frozen, Chilled)
- Cheeses and vegetable cheeses
- Chips, pretzels, snacks
- Bread and pastries
- Coffee and hot cocoa, non RTD
- Appetizers (chilled)
- Chocolate and other confectionery
- Desserts (Frozen)
- Appetizers, lunch, dinner (frozen)
Top 10 fastest growing categories
- Tea and coffee RTD (Refrigerated)
- Creams and Creams (Chilled)
- Appetizers (chilled)
- Breakfast foods (frozen)
- Aperitifs and snacks (Frozen)
- Pasta (Chilled)
- Fruits and vegetables (Frozen)
- Sauces, pasta and pizza (Shelf-life)
- Sodas and soft drinks
Glimpses and takeaways
- The impact of the supply chain on growth The industry sectors that will see growth in the next few years depend in part on the bandwidth of the supply chain. Manufacturers continue to report that they are unable to properly forecast their sales because they often do not know what their suppliers’ shipments will look like. Shipping times also fluctuate, causing delays in the production schedule. All of this influences how manufacturers formulate their products, as they evaluate SKUs they can confidently produce, made with ingredients they can reliably source, and priced appropriately to make a profit despite the rising raw material costs.
- BIPOC and women-owned brands in demand Consumers want more BIPOC and women-owned brands and retail buyers and food service operators are looking for incubators, brokers, b2b wholesalers and distributors, and even sales consultants who specialize in supporting and growing their these marks. The presentation of these brands has moved well beyond seasonal features to align with observed months such as Black History or Women’s History, and will continue to expand.
- The next distribution formats The pandemic has given retailers insight into the store formats shoppers want next and smaller footprints with minimal human contact are in demand. Expect rapid growth in these formats at traditional grocers, who are also reintroducing areas since the COVID downturn with new ideas.
- Herbal Challenges The overall herbal specialty retail market grew by 6%, surpassing $7.7 billion in 2021, following an exceptional growth of 26% in 2020. Herbal growth topped the overall of the specialty retail market, which grew 4% in 2021 and 20% in 2020. However, some herbal categories were among the 12 in total that grew specialty sales slower than the overall market in 2021. These include yogurt and plant-based yogurt; Tofu; Creams and creamers (Long shelf life); Vegetable milk (Chilled); and Milk of vegetable origin (Long-life milk). The largest growth gap is in plant-based (chilled) meat substitutes. It increased by 34% in specialties but by 66% in the market as a whole. Historically, this category was 97% specialty items, but this has changed over the past three years and now non-specialty items are contributing much of the growth.
- Specialty drinks grow faster than food During the initial peak of COVID in 2020, specialty foods grew faster (21%) than beverages (16%), but that changed in 2021 as specialty beverages grew twice as fast than food. This amounts to consumers viewing some products as essential and others as discretionary. In this case, food was more of a priority for consumers during the initial phases of COVID, but over time consumers expanded their shopping lists to include more specialty beverage purchases. Made-to-order alcoholic beverages like hard seltzer, hard kombucha and fermented functional cocktails, in particular, are growing rapidly.
- Opportunities in perishables New this year, the SFA took a closer look at sales of specialty perishables, which are expected to reach nearly $33.5 billion in 2022. Sections) are critical to the specialty, both in scale and in as a good source of growth. For specialty retailers, perishables represent attractive and creative merchandising and execution. Additionally, they are important centers for emerging food and beverage innovation that could eventually migrate into packaged product categories. After being challenged by shutdowns during COVID, perishables may expand to better meet consumer needs for hot, ready-to-eat or take-out, heat-and-eat meals; meal kits; sandwiches, side dishes and salads; breakfast foods; confectionery and desserts; and hot and cold drinks.
The report will be discussed at the 66th Summer Fancy Food Show on the Main Stage on Sunday, June 12, from 11:15 a.m. to 12:15 p.m. Open to professionals only, the Summer Fancy Food Show is the largest B2B specialty trade show and beverage show in the United States Registration for the Summer Fancy Food Show is at fancyfoodshows.com.About the Specialty Foods Association
The Association of Food Specialties (SFA) has been the leading trade association and information source for the $175 billion specialty food industry for 70 years. Founded in 1952 in New York, the SFA represents manufacturers, importers, retailers, distributors, brokers and other trade participants. The SFA is known for its Food shows; the sofi™ award, which has honored excellence in specialty food and beverages for 50 years; the Trendspotter Panel View annual reports and forecasts; the State of the Specialty Foods Industry Report and Today’s Specialty Food Consumer to research; e-commerce enabled SFA Product Marketwhere members showcase products and sell directly to qualified buyers; SFA feedthe daily source for industry news, trends and new product information, and Spill & Dish: A Specialty Food Association Podcast.
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