supplying energy for the $148.7 billion specialized food market
SAN FRANCISCO: As the market gets closer to maturity, the rate of growth in the specialty food business has decreased. This was mentioned by Mintel experts during the Winter Fancy Food Show, which took place in San Francisco on January 19–21. Specialty food sales increased by 10% to $148.7 billion in 2018, making up 16% of the overall food market, according to David Browne, senior researcher at Mintel.
Mr. Browne stated, “We’re fast approaching the point where specialty is basically 20% of all food and beverage,” at a presentation at the event on January 19. It’s a significant accomplishment.
Beverage sales in the specialty segment have increased by 13% and 10%, respectively, during the past two years, outpacing food sales. According to Mr. Browne, there is a growing trend in functional beverages that support healthy digestion, mental clarity, energy, and relaxation.
“The specialty beverage market is full of surprises and excitement,” he stated. “This is a nice place to be at the moment.”
According to Mr. Browne, snacks, which include chocolate, wellness bars, jerky and meat nibbles, chips, crackers, and cookies, account for 27% of sales of specialized foods.
“Our consumer data indicates that one of the main ways consumers of specialty food interact with these products is through everyday snacking,” the spokesperson stated.
According to Mintel, 90% of committed plant-based consumers purchase specialty foods, and over 33% of specialty food customers had bought plant-based foods in the previous six months.According to Mr. Browne, “we’ve taken steps in the last few years to really try and quantify how large the plant-based market is as well as to better understand the purchase behavior of specialty food consumers with plant-based.” Specialty plant-based products are currently estimated to be worth $5.5 billion. Plant-based products made for almost 5% of total specialty sales in 2018. Although it is expanding and considerable, its proportion is still quite tiny.
“When people ask me where the growth is coming from in specialty foods, next year 20% of the growth in terms of number of dollars will come from plant-based foods,” stated David Lockwood, director of Mintel Consulting.Mr. Browne added that e-commerce, with $3 billion in sales, accounts for 2% of the specialty food retail business and is a major driver of growth.
Regarding the internet specialized grocery sector, Mr. Browne predicted that it will increase in the next years. “We estimate that sales will approach $6 billion. This is supported by our consumer data, which shows that 86% of consumers who purchase gourmet foods also purchase specialty groceries.
Specialty brands are gaining popularity among consumers due to their natural, organic, and non-GMO product claims as well as their high protein and low sugar dietary claims. Compared to prior generations, millennial and Gen Z customers are more prone to experiment with different diets, according to Mr. Lockwood.
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“Younger adults can be on multiple diets at the same time and have started taking this a la carte mentality,” he stated. “As you can see, just as many people are trying keto as they are paleo, dairy-free, or even gluten-free. Five years ago, if I had said anything about the keto diet, people would have laughed if they knew what it was.”
The consumption of specialty foods is influenced by demographics. Consumers from Generation X are more likely to purchase the greatest variety of specialty food categories, whereas consumers from Generation Z are more likely to allocate the largest portion of their weekly food expenditure on speciality foods. Millennials, who make up 84% of the market, are more likely to purchase specialty foods than Gen Z (66%), Gen X (75%), and baby boomers (69%).
According to Mr. Lockwood, “baby boomers, who were leading all of specialty foods several years ago, are starting to tail off a little bit, but not a lot.”
According to Mr. Lockwood, traceability and transparency are also important factors that influence sales of specialized foods and are indicators of long-term market success.
“Whether it’s specialty food or not, a company’s ability to succeed over the long run will be determined by its brand and product transparency,” he stated. “The businesses that people will remember as having helped them are the ones that will endure. That represents a significant shift from the past 10, 20, or 30 years, when legacy companies flourished because your mother always bought them. Now, things are different.