The specialty food industry has never been more entic-ing, and that’s evident in the numbers. Sales topped

an all-time high of $120.5 billion in 2015, according to the Specialty Food Association’s “State of the Industry 2016” report. Even more impressive, though, is its $94 billion in retail sales, a nearly 20 percent jump from 2013-15.

If those impressive numbers aren’t enough to make your mouth water, then consider this: 58 out of the 61 specialty food categories included in this year’s report grew over the past two years, many by double digits. In fact, two cat-egories—Eggs and Refrigerated RTD Tea and Coffee—leapt by triple digits.

“I think the industry is growing at about 22 percent versus all foods, which was growing at about 4 percent,” says Ron Tanner, vice president of philanthropy and government for the SFA, who over-sees the report. “So specialty foods are growing almost five times faster than mass-market foods.”

While the industry’s phenomenal growth is more than encouraging, the best news is the edge that independent retailers have over big-box chains like Kroger, Costco and Target. Sure, the giant counterparts comprise a massive four-fifths of industry sales after their recent expansion into the specialty food area. But smaller stores are keep-ing pace with sales growth, and they even enjoy a slight edge over their big-box competitors: While mainstream stores marked a 19-percent growth in sales from 2013-15, natural food stores recorded 19.5 percent growth, and specialty food stores chalked up 20 percent growth.

According to the SFA report, the upward trend has largely been fueled by the growth of small businesses. And although about 80 percent of specialty foods are sold through supermarkets, that share has been decreasing somewhat. “People are no longer taking weekly trips to the store. Instead, they go every other couple days,” says Tanner. “They’re start-ing to prefer smaller stores so they can just go in and get a few things rather than doing the weekly shopping.”

Millennials are notably credited for influencing nearly every industry in

retail, and food is no exception. They want smaller retail outlets, a more per-sonal shopping experience and unique products that tell a story. Tanner says independent retailers have an advantage here because of their smaller staffs who can learn about products and relay that information to the customer.

“I think that a lot of Millennials are beginning to make specialty foods more important in their everyday eating,” he says, “whereas people in their 50’s and 60’s kind of grew up with the idea that food was fuel, and it’s something that you try to get at a less expensive price.”

But that mentality is changing. As Baby Boomers hit retirement, they are willing to splurge on some of life’s luxu-ries. While embracing the Information Age, many of them are rejecting the cheaper, mass-processed foods of yester-year and opting instead for quality foods from smaller producers.

“From our consumer research, we learned that people want to get infor-mation on products, and they want to be knowledgeable about the products they buy,” says Tanner. “The indepen-dent retailers have staff and personnel who can help educate people, give them ways to prepare the products or explain how to eat them. I think that’s how specialty retailers can increase their share of the business.”

TOP EATS AND TREATSOnce again, Cheese and Cheese Alternatives occupy the No. 1 spot out of 61 segments when it comes to specialty food sales. “It’s more than a $4 billion category, so it’s a very significant part of the industry—much higher than any other category—and it’s still growing,” says Tanner.

In fact, the category grew 14.7 percent from 2013-15. While cheese remains king in terms of sales, it’s fol-lowed by Meat, Poultry and Seafood at $3.6 billion (up 23 percent); Chips, Pretzels and Snacks at $3.4 billion (up 22 percent); Coffee, Coffee Substitutes and Cocoa at $3.2 billion (up 17 per-cent); and Bread and Baked Goods at $2.6 billion (up 15 percent).

While those fantastic numbers are impressive, it’s the Refrigerated RTD Tea and Coffee category that has exploded

RISE&E&E shine

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the specialty food industry is in the limelight with a record-breaking $120.5 billion in sales and a whopping 20 percent growth at retail in 2015.

by dayna fields

Shop the Summer Fancy Food ShowMore than 45,000 specialty food professionals as well as 2,550 brands from 55 countries will gather in New York on June 26-28 for the Summer Fancy Food Show, sponsored by the Specialty Food Association. The industry is buzzing with the news that specialty food sales topped $120 billion in 2015, and the momentum is sure to make for the biggest and best show yet.“The show continues to sell out as exhibitors are eager to take advantage

of record sales as well as record consumer interest in specialty food,” says Louise Kramer, communications director for the SFA. “Tunisia will be front and center as the show’s partner country, and there will be special activities in the Tunisian pavilion as the country strives to expand its exports.”Innovation is an overarching theme of this summer’s show, which is now in

its 62nd edition. Kramer herself is most looking forward to a new show sec-tion called New Brands on the Shelf, which will feature more than 30 emerg-ing manufacturers who are new to market but not yet ready for a full booth. One big change that regulars will notice is the absence of the sofi Awards

ceremony, for which winners have already been announced (see right). In its place, there will be a special invite event for buyers and press to meet the winners and sample products. “This way, the winners can leverage their honor before the show and better connect with buyers,” says Kramer. Also, the show will again offer the new all-access Premium Pass, which was

launched last summer, so SFA members can attend all educational sessions for a flat fee of $75 ($150 for non-members). The pass gives buyers an eco-nomical opportunity to learn everything they need to know to claim their slice of the retail pie. For more information, visit specialtyfood.com.

Summer Fancy Food Show 2015

2016 SoFi award winnerS *Category, Company, Product

Salsa, Dip: American Spoon, Pumpkin Seed Salsa

Soup, Stew, Bean, Chili: Backyard Safari Company, Dinner Tonight Black Bean Tortilla Chili Mix

Confection: Big Picture Farm, Sea Salt & Vanilla Farmstead Goat Milk Caramels

Cold Beverage: Bittermilk, No. 3 Smoked Honey Whiskey Sour

Dessert Sauce or Topping: BLiS, Bourbon Matured Maple Syrup

Vinegar: Boulder Flavours, Balsamic Nectar

Pasta, Rice, Grain: Bravo International, Pastifico Artigianale Leonardo Carassai

Sweet Snack: Creative Snacks Co., Organic Coconut Bites

Hot Beverage: Dick Taylor Craft Chocolate, Drinking Chocolate - Belize, Toledo

Chocolate: Droga Chocolates, Money on Honey

Dairy or Dairy Alternative: Epicurean Butter, Organic Cocoa Coconut Butter

Meat, Pate, Seafood: Fermín USA, Ibérico Pork Dry-Cured Chorizo Sausage Spicy

Cooking, Dipping or Finishing Sauces: FoodMatch, Barnier Pimento Sauce with Preserved Lemon

Pasta Sauce: Gustiamo, Pianogrillo Sicilian Cherry Tomato Sauce

Cracker: Jan’s Farmhouse Crisps, Cranberry Pistachio “The Original”

Condiment: King’s Cupboard, Non-GMO Salted Caramelized Fig Spread

Vegan or Gluten-Free Products: Kitchen Table Bakers, ParmCrisps Mini Aged ParmesanCrisps

New Product: La Pasta, Radicchio, Parsnip and Apricot Ravioli

Savory Snack: Little Red Dot Kitchen, Hickory Smoked Spicy Candied Bacon

Oil: Los Chileros Stöger, Organic Austrian Pumpkin Seed Oil

Jam, Preserve, Honey, Nut Butter: Marcelli Formaggi, Cioccomiel

Bread, Muffin, Granola, Cereal: Michele’s Granola, Ginger Hemp Granola

Cookie, Brownie, Cake, Pie: Moon Dance Baking, Holly Baking Cookie Brittle Cinnamon & Spice

Appetizer: Pacific Pickle Works, Brussizzle Sprouts

Ice Cream, Gelato, Frozen Treat: The Gelato Fiasco, Ripe Mango Sorbetto

Baking Ingredient, Baking Mix, Flavor Enhancer: The Spice Hunter, Coriander Lime Global Fusion Rub

Cheese: Vermont Creamery, Bijou

Salad Dressing: Wozz! Kitchen Creations, North African Chermoula Dressing

shinein the past two years, posting a whopping 301.6 percent sales growth, even though it only garnered $143 million in 2015. “Its growth is really high, but its base is relatively low,” says Tanner. However, new products, such as Kombucha, are drawing plenty of interest. Meanwhile, as sugary drinks and sodas continue to decline in popularity, bottled water grew

51.4 percent over the past two years while Juice and Functional Beverages grew 37 percent. “So people are basically looking for alternatives to mass-market sodas, and they’re finding those in teas, and there’s also a lot of growth in sparkling water and vitamin-enhanced waters,” says Tanner.

While tea and coffee drinks have been thrusted into the limelight, Frozen

Juices and Beverages have plummeted into oblivion. The category posted an astounding 45 percent drop in sales from 2013-15. While no other category even comes close to that kind of loss, the four that followed it are: Shelf-Stable Non-Dairy Beverages (down 5.4 percent); Cold Cereals (down 5.2 percent); Shelf-Stable Pasta (up 3 per-

cent); and Pickles, Peppers, Olives and Other Vegetables (up 5.6 percent).

“Consumers are looking for products that are less processed, so they’re look-ing for refrigerated products that are fresher,” says Tanner. “And it may not be the easiest for retailers to stock, but that’s what the consumers are demand-ing, so they need to.”

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