Specialty food sales soar to $175 billion

The U.S. specialty food market reached $175 billion in sales in 2021, up 7.4% from a year ago, according to the Specialty Food Association.

That growth compared with a 5.8% increase the previous year, when a sharp decline in foodservice offset outsized gains in retail and e-commerce, the association said in its 2022 report on the state of the specialty food industry.

Frozen and chilled meat, poultry and seafood led specialty food categories in retail dollar sales in 2021, followed by cheese and plant-based cheese in second place, and potato chips , pretzels and other snacks in third. Three chilled categories topped the fastest growing group: ready-to-drink (RTD) tea and coffee at No. 1, followed by creams and creams, then entrees.

AFS/SPINS

“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 any food,” Denise Purcell, vice president of content and education to the Specialty Food Association (SFA), said in a statement. “Growth will continue, but at a slower pace than the industry experienced during the whirlwind of grocery shopping and home meal preparation influenced by the 2020 pandemic, and will depend on the bandwidth of supply chain and changing challenges such as inflation, shipping issues, cost increases and material shortages.”

Manufacturers continue to report that they are unable to properly forecast sales because they often do not know what shipments from their suppliers will look like, according to the SFA’s State of the Specialty Foods Industry Report. Shipping times also fluctuate, causing delays in the production schedule. These factors influence 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 increase in raw material costs, according to the report.

After lagging in 2020, specialty drinks overtook food and grew twice as fast in 2021. The SFA said consumers view some products as essential and others as discretionary. For example, food was more of a priority for consumers during the initial phases of COVID-19, 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 are growing rapidly.

The overall herbal specialty retail market grew by 6%, topping $7.7 billion in 2021 after growing 26% in 2020, according to the SFA report. Herbal growth has outpaced the overall specialty retail market, which grew 4% in 2021 and 20% in 2020. However, some herbal categories have increased specialty retail sales more slower than the overall market in 2021, especially yogurt and plant-based yogurt; Tofu; coffee creamers and whiteners (long shelf-life); vegetable milk (chilled); and vegetable milk (long shelf-life). The largest growth gap is in chilled plant-based meat substitutes, which grew 34% in specialties but 66% overall.

AFS/SPINSSpecialty food sales soar to $175 billion

The top specialty food categories in retail dollar sales for 2021 were meat, poultry, seafood (frozen, chilled); cheeses and vegetable cheeses; chips, pretzels, snacks; bread and bakery products; and coffee and hot cocoa (non-RTD). Rounding out the top 10 sales were chilled meals; chocolate and other confectionery; bottled water; frozen desserts; and frozen entrees for lunch and dinner.

Looking at fast-growing segments, SFA said the top 10 categories were RTD (chilled) tea and coffee; coffee creamers and whiteners (chilled); appetizers (chilled); frozen breakfast foods; frozen appetizers and snack foods; seasonings; pasta (chilled), frozen fruits and vegetables; sauce, pasta and pizza (long shelf-life); and sodas and soft drinks.

The SFA noted that this year’s report took a closer look at sales of specialty perishables, which are expected to reach nearly $33.5 billion in 2022. Perishables are critical to the specialty, both in terms of scale and as a good source of growth, the association said. . 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.

According to the SFA report, consumers also want more BIPOC and women-owned brands, and retail buyers and foodservice operators are looking for incubators, brokers, wholesalers and distributors, and business consultants. sales specializing in supporting and growing these brands. The presentation of these brands went far beyond seasonal characteristics to align with observed months like black history or women’s history, the SFA observed. The association added that the pandemic has also given retailers more information about what store formats shoppers want next, and smaller footprints with minimal human contact are in demand.

supermarket news logoThis piece originally appeared on Supermarket News, a sister website to New Hope Network. Visit the site for more grocery trends and insights.