Specialty Food

The State of the Specialty Food Industry

CADE staff attended the Specialty Food Association’s Fancy Food Show in June 2019 to make market connections for farmers and learn more about the latest food trends. “Specialty food” is the catchall phrase the association and its conference use to describe any innovative, non-commodity foods and what farmers often call “added value.”

The event showcased the latest products available on the market. Most of these products were new, healthy snacks and beverages since more and more American consumers are eating on-the-go. Many of these healthy snacks were made with fresh ingredients and while baked cheese crackers, hops-infused tea and all sorts of meat and mushroom jerkys were showcased, the focus of most of the hot new items at the show had ingredients sourced from warmer climates than central New York: coconut, moringa, almonds and more.

The Special Food Association prepared a State of the Special Food Industry report which they presented at the show as well. Here are the 7 key insights from their report:

1.     Plant-based milks and meats are strongly favored. The report estimates that the retail market for plant-based specialty items grew 24% from 2016 to 2018 and this means consumers are making a choice for the impossible burger and oat milk over grass-fed beef and organic milk.

2.     Specialty beverages are increasingly a force in the market. The $11.8 billion beverage industry grew faster than food from 2016 to 2018. Water and sparkling water lead the pack of what specialty food consumers report they purchase most often and are among beverages that the report forecasts growing over the next five years.

3.     Younger consumers don’t look to supermarkets for quick meals. The overall rise in food service spending is putting pressure on supermarket spending. While consumers across the board increasingly favor quick and single-serve items, millennials and Generation Z are not purchasing these products at their local grocery store as much as they could.

4.     Reducing packaging and food waste are hot points. Retailers that outwardly emphasize recycling or reduced packaging resonate with 33% of all consumers surveyed, slightly higher than the concept of food waste reduction.

5.     The convenience store channel is an under-tapped market for specialty items. Bodegas and gas station haven’t yet gotten savvy when it comes to sourcing specialty products. These stores tend to focus on impulse purchases and have yet to offer many clean label or healthy snack alternatives, but there is a lot of room for opportunity.

6.     Foodservice needs to move to greater customization. Customization at restaurants is popular and expected among all consumers today. While some dietary restrictions are common, a cultural move is taking place toward greater customer control. The more foodservice can promote customization, the more likely their sales will grow.

7.     Opportunity lies in breakfast. Breakfast has emerged as a growing opportunity, especially with Generation X and men. Prepared and packaged foods that address this desire could open sales.

 

What should we make of all of this? As you are preparing products for your farm store, farmers market, CSA or wholesale outlets over the next year, think about if any of these trends apply to you. Are you a meat producer who could be offering ready-to-eat sandwiches alongside your premium cuts at the farmers market? Are you a cheesemaker that may want to dabble in making dehydrated cheese-based crackers or a whey-based soda? Is there a convenience store in your town that is in desperate need of some fresh, healthy products? Use these market trends as inspiration as you explore product development or taking on new customers.

It is also important for us to remember that these food trends are not purely born of consumer demand. Media shapes what people desire and you should in no way think of these trends as set in stone. Take the growing “opportunity” for plant-based milk and meat products. Part of the growth in this sector is due to very strong lobby groups that are working hard to get these new products integrated into our FDA food pyramid and institutions so that they sustain their businesses. And while these new products are taking sales directly away from dairy and meat producers, there is an opportunity right now to counter the plant-based food industry’s narrative with your own story. If anything, these food trend should inspire all dairy and meat producers to think about why they stand behind the health and environmental benefits of the food they produce and find better ways to communicate this to consumers and the media. All in all, consumer trends reveal how and when an innovative product on the market has staying power, which is just as much a function of a producer being good at promoting his or her own products as it is a result of some new, innate consumer desire.