the state of the specialty food

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all-natural bacon

SPECIALTY FOODPRODUCTS • TRENDS • BUSINESS INSIGHTS M A G A Z I N E ®MA A N

SPECIALTY FOOD

THE STATE OF THE

INDUSTRY 2012

BREADORGANIC

THE STATE OF THE SPECIALTY

FOOD INDUSTRY 2012

• Total sales of specialty foods in 2011 were $75.14

billion, with $59.74 billion retail sales.

• Specialty foods represent 13.7 percent of all food

sales at retail.

• New product introductions were down 6.2 percent in

2011 and lag behind 2009 introductions.

• Premium private-label introductions continue to drop,

down 11 percent in 2011 to 410 products.

• The leading claim for new specialty food products is

Kosher, followed by All Natural.

• Natural food stores are the fastest growing retail

channel, boasting a sales increase of 19.8 percent

between 2009 and 2011.

• Cheese and Cheese Alternatives is the largest

specialty food category, at $3.44 billion.

• Refrigerated Salsas and Dips, Teas and Pickles,

Peppers, Olives and Other Vegetables have the

highest specialty food penetration.

• Shelf-Stable Functional Beverages are the fastest

growing specialty food category, followed by

Yogurt and Kefir.

• In 2011, 41 percent of specialty food manufactur-

ers reported more than a 20 percent increase

in sales.

• Manufacturers say that specialty food stores and

natural supermarkets are the fastest growing retail

channels for specialty foods.

• The average transaction size for specialty food

stores was $41.49 in 2011, up 11.4 percent

over 2010.

• Three-quarters of retailers say that Local is the most

influential product claim today and two-thirds report

the claim will grow the most in the next three years.

• Retailers say the fastest emerging cuisine is Latin;

importers report that Eastern European and Indian

are growing.

BY RON TANNER

The specialty food industry continues to enjoy spectacular growth, outpacing most sectors within

the U.S. economy. From 2009 through 2011, sales of specialty foods rocketed by 19.1 percent. Sales at retail

grew 9.2 percent between 2010 and 2011.

Working with Mintel International and SPINS, the National Association for the Specialty Food Trade and

Specialty Food Magazine have tracked sales of specialty foods through supermarkets, natural food stores and

specialty food retailers. The data reveals a stand-out industry. Here are some of the highlights:

The NASFT State of the Specialty Food Industry is a joint research project prepared by Mintel International

and SPINS. The project encompasses three years of sales data (2009–2011) for 51 specialty food categories,

pulled from the SPINS database of mainstream and natural food stores. In addition, Mintel surveyed specialty

food manufacturers, importers, distributors, brokers and retailers to develop the statistics presented in this report.

ABOUT THE RESEARCH

Illustrations by Funnel Inc.

2A ❘ THE STATE OF THE SPECIALTY FOOD INDUSTRY 2012

FOR DEFINITIONS and brand examples of

specialty food segments researched for this

report—plus Supply Chain Insights—visit

specialtyfood.com/onlinehighlights.

http://specialtyfood.com/onlinehighlights

-

THE SIZE OF THE SPECIALTY FOOD INDUSTRY

AT RETAIL AND FOODSERVICE

Total U.S. sales of specialty foods are booming, up 19.1 percent between 2009 and 2011. Sales now top $75 billion; about four-fifths of sales occur at retail.

Retail sales of specialty foods increased 9.2 percent between 2010 and 2011, well above the rate of inflation. This follows a strong jump of 7.6 percent between 2009 and 2010. Consumers like to eat well and are willing to seek out and pay for specialty foods.

The market share within retail channels has held steady over the past three years. Although natural food stores have grown at the highest rate—nearly 20 percent—mainstream stores continue to dominate. Interestingly, specialty food stores have held their own despite growing competition from large chains.

THE STATE OF THE SPECIALTY FOOD INDUSTRY 2012 ❘ 3A

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Source:


TOTAL U.S. SALES OF SPECIALTY FOOD

TOTAL U.S. RETAIL DOLLAR SALES

OF SPECIALTY FOODS

SPECIALTY FOOD SALES BY RETAIL CHANNEL

59,737

15,400

75,137

79.5

20.5

100.0

Retail Channels

Foodservice

Total

$ Million % Share

18.7

20.8

19.1

% Change

2011 2011 2009–2011

$ Million Index% Change $ Million Index% Change

Sales at Current Prices Sales at Inflation-Adjusted Prices*

2009 50,858 — 100 52,519 — 100

2010 54,722 7.6 108 55,598 5.9 106

2011 59,737 9.2 117 59,737 7.4 114

Mainstream

Specialty Food Stores

Natural Food Stores

Total

21,789

5,797

2,416

30,002

72.6

19.3

8.1

100.0

72.4

19.3

8.3

100.0

72.5

19.3

8.2

100.0

17.0%

16.8%

19.8%

17.2%

23,292

6,205

2,660

32,157

25,504

6,772

2,894

35,169

$ Million % Share $ Million % Share

2009 2010

$ Million % Share

2011 CHANGE

2009–2011

BREADORGANIC

pretzelsSEA SALT

granola

spice

PREMIUM FOOD PRODUCT INTRODUCTIONS

New product introductions Gell by ��2 percent in 2011, after a meager gain in 2010. Within food, Bakery and Snacks led, with 130 introductions apiece. Beverage debuts were up, with Juice Drinks showing the most significant jump.


INTRODUCTIONS BY CATEGORY

NeX ipremiumw positioned Good and beWeraHe product launches in all

outlets by cateHory

Source: Mintel/GNPD

Product Category

Bakery

Snacks

Sauces and Seasonings

Processed Fish, Meat and Egg Products

Desserts and Ice Cream

Meals and Meal Centers

Chocolate Confectionery

Dairy

Side Dishes

Sugar and Gum Confectionery

Fruits and Vegetables

Sweet Spreads

Breakfast Cereals

Savory Spreads

Soup

Baby Food

Sweeteners and Sugar

Beverages (subtotal)

Alcoholic Beverages

Hot Beverages

Juice Drinks

Water

Ready-to-Drink Coffee & Tea

Carbonated Soft Drinks

Sports and Energy Drinks

Other Beverages

Total

142

132

101

156

150

81

147

24

49

35

63

29

15

12

7

3

7

320

80

90

55

18

25

13

6

33

1,473

151

114

168

157

79

111

104

54

43

16

33

33

5

22

13

6

3

397

179

124

47

4

25

11

0

7

1,509

130

130

123

120

108

76

75

52

43

29

24

22

22

19

15

9

3

415

169

104

71

11

10

10

5

35

1,415

# of Introductions

2009 2010 2011

1,153 1,112 1,000Food (subtotal)

KOSHER

COOKIES

all-natural bacon

No A

dditives

PREMIUM FOOD PRODUCT INTRODUCTIONS

Kosher continues to be the leading product claim, with 446 new kosher products in 2011. The most significant increases were in Low/No/Reduced Trans Fat and Low/No/Reduced Cholesterol. Whole Grain claims are on the rise while Organic is declining. Convenience-related claims such as Ease of Use, Microwaveable and Time/Speed seem to be losing importance.

Private-label introductions are slowing, accounting for 29 percent of premium product launches in 2011. As consumers feel more economically steady, many are switching back to brands.


Data does not equal totals because products may make more than one claim

Farm FreshSource: Mintel/GNPD

Source: Mintel/GNPD

INTRODUCTIONS BY CLAIM

NAME BRAND VS. PRIVATE-LABEL

PREMIUM PRODUCT LAUNCHES

Kosher

All Natural

No Additives/Preservatives

Ethical—Environmentally Friendly Package

Low/No/Reduced Allergen

Microwaveable

Gluten-Free

Low/No/Reduced Trans Fat

Ease of Use

Convenient Packaging

Low/No/Reduced Fat

Organic

Low/No/Reduced Cholesterol

Ethical—Environmentally Friendly Product

Whole Grain

Low/No/Reduced Sugar

Time/Speed

Seasonal

Antioxidant

Low/No/Reduced Calorie

Total

442

237

172

141

73

151

65

98

129

116

122

119

58

40

41

64

58

50

45

57

1,473

462

265

225

244

139

150

130

89

136

176

103

90

58

53

48

54

77

55

32

35

1,509

446

267

228

208

138

124

122

114

105

93

89

81

73

57

56

55

54

44

43

33

1,415

# of Introductions

CLAIMS 2009 2010 2011

Product Category

Name Brand

Private Label

Total

Private-label Share %

959

514

1,473

%

34.9

1,054

455

1,509

%

30.2

1,005

410

1,415

%

29.0

2009# 2010# 2011#

SALES OF SPECIALTY FOODS AT RETAIL

Specialty foods at retail (excluding PLU and private label) increased by 17.2 percent between 2009 and 2011. Cheese and Cheese Alternatives, at $3.4 billion, are by far the largest specialty food category, followed by Meat, Poultry and Seafood; Chips, Pretzels and Snacks; Coffee, Coffee Substitutes and Cocoa; and Bread and Baked Goods. Only two categories showed decline.

Does not include sales

through Whole Foods,

Trader Joe’s or

Walmart

Does not include

private-label sales or

PLU items

Data may not equal

totals due to rounding

*Editor’s Note: The total

size of the U.S. specialty

food market and the

numbers presented here

are different because the

Product Category data

does not include PLU

items such as prepared

foods, meat, bread,

pastries and so on.

Mintel estimates that

these products account

for about 40 percent of

specialty food sales.

Source:

Mintel/SPINS/Nielsen

Product Category 2009

$ Million

2011

$ Million

% Change

2009–2011% Share % Share

Cheese and Cheese AlternativesMeats, Poultry and SeafoodChips, Pretzels and SnacksCoffee, Coffee Substitutes and CocoaBread and Baked GoodsYogurt and KefirCondiments, Dressings and MarinadesFrozen Lunch and Dinner EntreesCandy and Individual SnacksFrozen DessertsMilkCookies and Snack BarsNuts, Seeds, Dried Fruit and Trail MixesPickles, Peppers, Olives and Other VegetablesRefrigerated Salsas and DipsTeasBaking Mixes, Supplies and FlourShelf-Stable Fruits and VegetablesOils and VinegarsCold CerealsRefrigerated Juices and Functional BeveragesShelf-Stable JuicesCrackers and CrispbreadsEnergy Bars and GelsSoupSeasoningsWaterShelf-Stable Pasta and Pizza SaucesReady-to-Drink Tea and CoffeeShelf-Stable PastasCarbonated BeveragesBeans, Grains and RiceEntrees and MixesSweetenersShelf-Stable Meat, Poultry and SeafoodRefrigerated CondimentsFrozen Fruits and VegetablesOther Dairy and AlternativesShelf-Stable Salsas and DipsFrozen Appetizers and SnacksEggsNut and Seed ButtersShelf-Stable Functional BeveragesPudding and Shelf-Stable DessertsConserves, Jams and SpreadsFrozen Breakfast FoodsHot CerealsRefrigerated PastaRice CakesRefrigerated Pasta and Pizza SaucesFrozen Juice and BeveragesOtherTOTAL

3,1131,6501,5581,1481,381

8321,3271,082

940921805772506643522591613576593573560521501352459466431443368407403370367299311259229239238234137118

47132124

95723818167

1,59530,002

3,4401,9211,8381,7031,6341,6281,4391,1211,0871,048

947838701682660658649628618616609560527526510509500488451444427398386315314298286273254246168153143135130109864521157

1,98035,169

10.516.418.048.318.395.78.43.6

15.513.717.78.5

38.46.1

26.411.55.99.04.17.68.87.55.0

49.711.29.1

15.910.122.59.26.07.45.35.61.0

15.424.614.57.05.2

22.129.5

203.52.15.2

15.319.818.212.6-2.4-4.224.1

17.2

10.45.55.23.84.62.84.43.63.13.12.72.61.72.11.72.02.01.92.01.91.91.71.71.21.51.61.41.51.21.41.31.21.21.01.00.90.80.80.80.80.50.40.20.40.40.30.20.10.10.10.05.3

100.0

9.85.55.24.84.64.64.13.23.13.02.72.42.01.91.91.91.81.81.81.81.71.61.51.51.51.41.41.41.31.31.21.11.10.90.90.80.80.80.70.70.50.40.40.40.40.30.20.10.10.00.05.7

100.0

RETAIL SALES OF ALL FOODS

Sales of all food, including mass market and specialty, increased just 5.1 percent between 2009 and 2011. Big gainers include Coffee, Coffee Substitutes and Cocoa along with Shelf-Stable Functional Beverages, both increasing more than 20 percent.

The penetration of specialty foods varies significantly by category. Specialty Refrigerated Salsas and Dips and Teas represent more than 50 percent of sales in those categories and specialty Pickles, Peppers, Olives and Other Vegetables, Refrigerated Pasta and Pizza Sauces and Yogurt and Kefir account for more than one-third of their category sales.

Sourc

e: M

inte

l/SPIN

S/N

iels

en

Sourc

e: M

inte

l/SPIN

S/N

iels

en

Does not include sales through Whole Foods, Trader Joe’s or Walmart. Does not include private-label sales or PLU items. Data may not equal totals due to rounding.

Product Category 2009$ Million

2011$ Million

% Change2009Ð2011

Share%

Share%

Specialty Product Category

SPECIALTY FOOD PERCENTAGE OF

ALL FOOD SALES BY CATEGORY

Share of All Sales

%

Meats, Poultry and Seafood

Bread and Baked Goods

Milk

Carbonated Beverages

Cheese and Cheese Alternatives

Chips, Pretzels and Snacks

Frozen Desserts

Frozen Lunch and Dinner Entrees

Candy and Individual Snacks

Condiments, Dressings and Marinades

Cold Cereals

Shelf-Stable Juices

Shelf-Stable Fruits and Vegetables

Coffee, Coffee Substitutes and Cocoa

Water

Entrees and Mixes

Yogurt and Kefir

Other Dairy and Alternatives

Refrigerated Juices and Functional Beverages

Cookies and Snack Bars

Crackers and Crispbreads

Soup

Nuts, Seeds, Dried Fruit and Trail Mixes

Frozen Fruits and Vegetables

Eggs

Baking Mixes, Supplies and Flour

Shelf-Stable Functional Beverages

Shelf-Stable Meat, Poultry and Seafood

Energy Bars and Gels

Oils and Vinegars

Beans, Grains and Rice

Sweeteners

Seasonings

Ready-to-Drink Coffee and Tea

Pickles, Peppers, Olives and Other Vegetables

Pudding and Shelf-Stable Desserts

Shelf-Stable Pastas

Frozen Breakfast Foods

Shelf-Stable Pasta and Pizza Sauces

Refrigerated Condiments

Nut and Seed Butters

Teas

Shelf-Stable Salsas and Dips

Frozen Appetizers and Snacks

Refrigerated Salsas and Dips

Conserves, Jams and Spreads

Hot Cereals

Frozen Juice and Beverages

Refrigerated Pasta

Rice Cakes

Refrigerated Pasta and Pizza Sauces

Other

TOTAL

18,092

16,061

13,861

14,175

11,616

10,731

10,232

10,604

9,405

6,562

6,799

6,079

5,666

4,223

4,936

5,081

4,141

4,395

4,570

4,314

4,156

4,345

3,699

3,719

3,232

3,579

2,627

2,915

2,477

2,703

2,446

2,251

2,054

1,883

1,932

1,944

1,803

1,584

1,670

1,294

1,116

1,230

1,161

1,132

959

998

897

414

223

229

51

12,039

244,305

19,690

16,487

15,319

14,008

12,514

11,298

10,544

10,494

10,211

6,666

6,630

6,026

5,609

5,235

5,163

5,066

4,916

4,758

4,721

4,481

4,420

4,214

4,086

3,875

3,619

3,606

3,199

3,046

2,860

2,719

2,445

2,432

2,165

2,150

1,984

1,926

1,827

1,774

1,717

1,374

1,304

1,255

1,204

1,160

1,148

1,018

879

356

250

182

44

12,737

256,811

7.4

6.6

5.7

5.8

4.8

4.4

4.2

4.3

3.8

2.7

2.8

2.5

2.3

1.7

2.0

2.1

1.7

1.8

1.9

1.8

1.7

1.8

1.5

1.5

1.3

1.5

1.1

1.2

1.0

1.1

1.0

0.9

0.8

0.8

0.8

0.8

0.7

0.6

0.7

0.5

0.5

0.5

0.5

0.5

0.4

0.4

0.4

0.2

0.1

0.1

0.0

4.8

100.0

7.7

6.4

6.0

5.5

4.9

4.4

4.1

4.1

4.0

2.6

2.6

2.3

2.2

2.0

2.0

2.0

1.9

1.9

1.8

1.7

1.7

1.6

1.6

1.5

1.4

1.4

1.2

1.2

1.1

1.1

1.0

0.9

0.8

0.8

0.8

0.7

0.7

0.7

0.7

0.5

0.5

0.5

0.5

0.5

0.4

0.4

0.3

0.1

0.1

0.1

0.0

5.1

100.0

8.8

2.7

10.5

-1.2

7.7

5.3

3.0

-1.0

8.6

1.6

-2.5

-0.9

-1.0

24.0

4.6

-0.3

18.7

8.2

3.3

3.9

6.3

-3.0

10.5

4.2

12.0

0.8

21.8

4.5

15.4

0.6

0.0

8.0

5.4

14.2

2.7

-1.0

1.4

12.0

2.8

6.2

16.9

2.1

3.7

2.5

19.6

2.1

-2.0

-14.0

12.2

-20.5

-12.2

5.8

5.1


Teas



Yogurt and Kefir




Shelf-Stable Pastas

Seasonings

Oils and Vinegars









Refrigerated Pasta




Sweeteners



Soup



Rice Cakes






Frozen Desserts

Frozen and Refrigerated Meats, Poultry and Seafood

Hot Cereals

Water

Cold Cereals

Shelf-Stable Juices

Entrees and Mixes



Milk



Eggs




Other

TOTAL % OF SPECIALTY FOOD SALES

57.5

52.4

34.4

34.2

33.1

32.5

28.4

27.5

24.3

23.5

22.7

21.7

21.6

21.2

21.1

21.0

18.7

18.4

18.0

17.9

17.1

16.3

16.3

13.0

12.9

12.8

12.1

11.9

11.7

11.4

11.2

10.7

10.6

10.3

9.9

9.9

9.8

9.8

9.7

9.3

9.3

7.6

7.4

7.0

6.2

6.1

5.7

4.6

4.5

3.1

1.9

15.5

13.7

SALES GROWTH OR DECLINE BY PRODUCT CATEGORY

This table shows which categories are growing faster in specialty than in all foods. For instance, Shelf-Stable Functional Beverages are doing well in all foods, with a 21.8 percent growth rate, but are exploding in specialty, with a 203.5 percent jump.


Does not include sales through Whole Foods, Trader Joe’s or WalmartDoes not include private-label sales or PLU itemsData may not equal totals due to rounding

Source:

Mintel/SPINS/Nielsen

Product CategorySpecialty Foods

% Change 2009–2011All Foods

% Change 2009–2011Variance (% point)


Yogurt and Kefir


Rice Cakes



Hot Cereals



Soup



Water

Frozen Desserts

Eggs

Cold Cereals




Teas


Shelf-Stable Juices


Shelf-Stable Pastas

Frozen and Refrigerated Meats, Poultry and Seafood


Milk







Refrigerated Pasta

Entrees and Mixes





Seasonings

Oils and Vinegars









Sweeteners


Other

TOTAL

203.5

95.7

49.7

12.6

38.4

48.3

19.8

24.6

18.3

11.2

18.0

29.5

15.9

13.7

22.1

7.6

9.0

-4.2

-2.4

11.5

15.4

7.5

22.5

9.2

16.4

7.4

17.7

10.1

6.0

15.5

8.4

26.4

14.5

18.2

5.3

8.8

5.9

3.6

8.5

9.1

4.1

6.1

15.3

7.0

5.2

2.1

10.5

5.2

5.0

5.6

1.0

24.1

17.2

21.8

18.7

15.4

-20.5

10.5

24.0

-2.0

4.2

2.7

-3.0

5.3

16.9

4.6

3.0

12.0

-2.5

-1.0

-14.0

-12.2

2.1

6.2

-0.9

14.2

1.4

8.8

0.0

10.5

2.8

-1.2

8.6

1.6

19.6

8.2

12.2

-0.3

3.3

0.8

-1.0

3.9

5.4

0.6

2.7

12.0

3.7

2.1

-1.0

7.7

2.5

6.3

8.0

4.5

5.8

5.1

181.7

76.9

34.3

33.0

27.9

24.3

21.8

20.4

15.6

14.2

12.7

12.7

11.3

10.7

10.2

10.1

10.0

9.8

9.8

9.4

9.2

8.4

8.3

7.8

7.6

7.5

7.2

7.2

7.1

7.0

6.8

6.8

6.3

6.0

5.5

5.5

5.1

4.7

4.6

3.7

3.5

3.4

3.3

3.3

3.2

3.1

2.8

2.7

-1.3

-2.4

-3.6

18.3

12.1

THE SPECIALTY FOOD SUPPLY CHAIN

The average specialty food manufacturer does about $2.2 million in annual sales and the average importer reaches $2.5 million. These volume numbers have stayed about the same over the past few years, demonstrating the stability of the industry.

The average specialty food manufacturer markets 52 SKUs, while the average importer offers 178. The average number of manufacturer SKUs remained about the same in 2011, as companies continued to eliminate low-volume items when introducing new products.

Direct sales are a significant factor for specialty food manufacturers; 36 percent of retail sales are direct versus 32 percent through distributors. Foodservice accounts for about 12 percent of manufacturer sales.

SPECIALTY FOOD MANUFACTURERS

10A ❘ 5)& S5"5& 0' 5)& S1&$*"L5: '00D */D6S53: 2012

2011 MEAN ANNUAL SALES BY SUPPLIER TYPE

2009 2010 2011 % % %

DOLLAR SALES CHANGE

There has been a major turnaround since 2009, when 36 percent of manufacturers reported a sales drop. In 2011, 78 percent of manufacturers boasted an increase, with 41 percent up at least 20 percent.

Up 1–9% 21 21 17Up 10–19% 19 19 20Up 20% or more 16 36 41Unchanged 8 11 15Down 1–9% 13 7 4Down 10–19% 13 3 2Down 20% or more 10 2 2

Mean Annual Sales: $2,207,586Mean Number of SKUs: 52

Source: Mintel

52

178

1,785

2,650

Manufacturers

Importers

Distributors

Brokers

MEAN NUMBER OF SKUs BY TYPE OF SUPPLIER

Source: Mintel

Manufacturers

Importers

Distributors

Brokers

$2,207,586

$2,515,625

$7,760,000

$2,724,000

Source: Mintel

Direct to Retail

Distributors—Retail

Direct to Consumers

Direct to Foodservice

Other

Distributors—Foodservice

36%

32%

15%

7%

5%

4%

MANUFACTURER SALES BY CHANNEL

Source: MintelData may not sum to 100 due to rounding

Share of Total Sales Mean %

SPECIALTY FOOD MANUFACTURERS

For the first time, NASFT asked about innovation plans for the coming year. The answers demonstrate the diverse opportunities within the industry.

Raw materials are the biggest expense for specialty food manufacturers as they create quality food. Advertising and marketing expenses, at 10 percent, are low as these entrepreneurs rely on their personalities and passion to sell.

The three major product claims that interest consum-ers today are All Natural, Local and Organic. Manufacturers predict that Local, All Natural and Sustainable will grow the most in the next three years.

Manufacturers believe that the most sales potential is with specialty food stores, followed closely by natural supermarkets.

Data may not sum to

100 due to rounding

SPECIALTY FOOD INNOVATION

PLANS FOR 2012

FASTEST GROWING RETAIL CHANNELS

FOR SPECIALTY FOODS

THE MANUFACTURER VIEWPOINT:

WHAT ARE THE INFLUENTIAL PRODUCT CLAIMS?

Interests Consumers Most Today

Will Grow the Most in the Next Three Years

72%

43%

38%

67%

19%

30%

18%

41%

10%

17%

56%

28%

All Natural

Organic

Local*

Eco-Friendly

Sustainable

Fair Trade Multiple answers accepted

Source: Mintel

*“Local” is defined as within

200 miles distance from operator

Gluten-free

Convenient/Easy to Prepare

Indulgent

Functional

Less Indulgent and More Healthful

Portable

Other

35

32

30

26

23

20

22

Multiple answers accepted Source: Mintel

I plan to develop specialty food that is also…

Natural Supermarkets (e.g.,Whole Foods Market)

Conventional Supermarkets (e.g., Kroger, Safeway)

Foodservice (e.g., restaurants, cafés, school/office cafeterias)

Mass Merchandisers (e.g., Target, Walmart)

Other


Data may not sum to 100 due to rounding Source: Mintel

25

24

18

12

8

14

Raw Materials

Packaging

Administrative

Advertising & Marketing

Other

Source: Mintel

31%

25%18%

11%

10%

6%

MANUFACTURER EXPENSES BY TYPE

Share of Total Expenses Mean %

%

%

Production, Warehousing, Shipping and Labor

THE IMPORTER VIEWPOINT:




75%

50%

50%

63%

13%

13%

13%

13%

6%

19%

56%

50%

All Natural

Organic

Local

Eco-Friendly

Sustainable

Fair Trade

SPECIALTY FOOD IMPORTERS

Specialty food importers had a good year, with 50 percent reporting increased sales; however, their performance lagged that of manufactur-ers. The weak dollar and consumers’ desire to support local producers had an adverse effect.

All Natural and Local are the most influential product claims today, believe importers. They also believe Local will grow the most in the next three years.

The hot emerging cuisines will be Eastern European and Indian, according to specialty food importers. Goulash and curry, anyone?

Importers also see specialty food stores as the fastest-growing channel, followed by natural supermar-kets. They are not enthusiastic about foodservice as restaurants embrace the local food movement.

Importers rely on distributors much more than manufacturers do, with two-thirds of sales going through retail and foodservice distributors. Very little imported product is sold directly to the consumer.


IMPORTER SALES BY CHANNEL

Distributors—RetailDirect to Retail Distributors—Foodservice Direct to FoodserviceDirect to Consumer

553112

2<1

Share of Total Sales 2011Mean %

FASTEST GROWING RETAIL CHANNEL

FOR SPECIALTY FOODS

Mean Annual Sales: $2,515,625Mean Number of SKUs: 178

EMERGING CUISINES

Source: Mintel

Multiple answers accepted

Source: Mintel

*“Local” is defined as within


Source: Mintel






Other


Data may not sum to 100 due to rounding

Data may not sum to 100 due to rounding

Source: Mintel

31

25

19

–

13

13

20

24

28

4

12

12

0

6

19

25

38

6

6

6

2010 % 2011 %

Up 1–9%

Up 10–19%

Up 20% or more

Unchanged

Down 1–9%

Down 10–19%

Down 20 or more

Eastern European

Indian

Italian

Mediterranean

Latin, other than Mexican

African

Japanese

Korean

Thai

Vietnamese

Caribbean

Mexican

Russian

Spanish

Chinese

Other

31

31

25

25

19

13

13

13

13

13

6

6

6

6

–

13

Region% of

Importers

DOLLAR SALES CHANGE

%

SPECIALTY FOOD DISTRIBUTORS


Mean Annual Sales: $7,760,000Mean Number of SKUs: 1,785

Distributors feel that Local is by far the most significant product claim: 70 percent say it is the most important claim now and 60 percent report it will be the most important in the next three years. Eco-Friendly will also be significant in the near future.

As the major distributors grow and provide less in-store services, the mean number of stores serviced has significantly increased, to 650.

Distributors see specialty food stores as having the most potential for growth. They perceive more opportunities in conventional supermarkets than other industry segments do.

All Natural

Organic

Local*

Eco-Friendly

Sustainable

Fair Trade

FASTEST-GROWING RETAIL CHANNEL

FOR SPECIALTY FOODS

THE DISTRIBUTOR VIEWPOINT:



*“Local” is defined as within 200 miles distance from operator

It was a good year for most specialty food distributors, with 75 percent reporting sales increases. Yet one in five did see a dip in sales.

Up 1–9%

Up 10–19%

Up 20% or more

Unchanged

Down 1–9%

Down 10–19%

Down 20% or more

25

30

20

5

20

-

-

2011 %

Source: Mintel

DOLLAR SALES CHANGE

IN THE PAST YEAR

60%

50%

30%

70%

20%

60%

20%

30%

10%

20%

60%

20%



Specialty food stores and supermarkets are the bread and butter of distributors, followed by foodservice/restaurants and mass merchandisers.

DISTRIBUTOR SALES BY CHANNEL

Source: MintelData may not sum to 100 due to rounding


Supermarkets

Foodservice/Restaurants

Mass Merchandisers (e.g., Walmart, Target)

Natural Food Stores (e.g., Whole Foods Market, Trader Joeʼs)

Gift Stores

Delis

Club Stores (e.g., Costco, Samʼs Club)

Other

35

19

9

8

8

3

2

1

16

Share of Total SalesMean %

Source: Mintel

517 650

2010 2011

Mean # of Stores Services per Distributor

NUMBER OF STORES SERVICED





Other


Data may not sum to 100 due to rounding Source: Mintel

40

20

20

-

10

10

%

SPECIALTY FOOD BROKERS

The broker community had a good year, with 84 percent reporting sales increases. Despite the challenges posed by consolidation, only 8 percent of brokers had a down year.

The broker network is quite diverse, comprising both small street brokers as well as those who operate nationally and represent thousands of specialty food products.

Brokers often service multiple channels, as evidenced by the overlap in sales. The largest channel is specialty food stores, which are called on by 84 percent of brokers. They see natural supermarkets as the fastest-growing channel.


Brokers believe that Local interests consumers the most today and will also grow the most in the next three years. Interest in All Natural and Organic may fade, they believe.

Mean Annual Sales: $2,724,000Mean Number of SKUs: 2,650

Local*

All Natural

Organic

Sustainable

Eco-Friendly

Fair Trade

CHANNELS SERVICED AND

FASTEST-GROWING

CHANNELS

Fastest-growingStore/

Channel %

500 or less

501–1,000

1,001–2,000

2,001–5,000

More than 5,000

20%20%

8%

24%28%

Up 1–9%

Up 10–19%

Up 20% or more

Unchanged

Down 1–9%

Down 10–19%

Down 20% or more





Other


28

32

24

8

8

-

-

2011 %

Source: Mintel

THE BROKER VIEWPOINT:



52%

68%

56%

20%

36%

36%

32%

12%

16%

40%

40%

60%



NUMBER OF SKUs CURRENTLY

REPRESENTED

DOLLAR SALES CHANGE

IN THE PAST YEAR

Stores/Channels

Serviced in 2011 %

84 16

68 28

48 8

36 4

24 20

40 24

Multiple answers accepted

Source: Mintel �wLocalw is demned as witIin 200 Niles distance GroN operator

Source: Mintel

Data NaZ not suN to 100 due to roundinH

SPECIALTY FOOD STORE RETAIL

OPERATING STATISTICS


The average specialty food store comes in at slightly more than 5,000 square feet and carries 2,112 SKUs. It is busy, sporting more than 3,000 transactions per week, at an average size of $41.49, an 11.4 percent increase over 2010.

NASFT asked retailers how rising food prices have affected their business. Seventy-one percent report raising prices yet 57 percent say they are taking a lower margin. It all depends on the product and the price elasticity that consumers will pay.

About three-fourths of retailers report a sales increase for 2011. Many more experienced increases in the 10 percent and higher range than in 2010.

About one-fourth of sales in specialty food stores are natural foods and nearly one-fifth are local. Eco-Friendly and Fair Trade resonate less with shoppers, accounting for 6 percent and 5 percent of sales, respectively.

Average Annual Sales: $6,783,117Average Sales per Square Foot: $1,353.91

KEY STORE STATS

EFFECTS OF RISING FOOD PRICES

*“Local” is defined as within 200 miles distance from operator. Data may not sum to 100 due to rounding

Source: Mintel 2011

Up 1–9%Up 10–19%

Up 20% or more

Down 20% or more

Down 1–9%

Down 10–19%10%

27% 22%

14%

19%8%

DOLLAR SALES CHANGES

Unchanged

Store Size (sq. ft.)

SKUs per Store

Transactions per Week

Transaction Size

Suppliers Utilized

Value of Inventory

5,010

2,112

3,144

$41.49

88

$315,357

2011 Mean

Source: Mintel

Raised Prices

Taking a Lower Margin

Increased Assortment of Private Labels

Reduced Selection of Premium (and Higher-priced) Products

Added a Bigger Selection of Value-based Brands

Other

71

57

35

25

18

10

Source: Mintel Multiple answers accepted

Up 1–9%

Up 10–19%

Up 20% or more

Down 1–9%

Down 10–19%

8%

27%

27%20%

12%

6%

Source: Mintel

Unchanged

2010

All-Natural

Local*

Sustainable

Organic

Eco-Friendly

Fair Trade

13%

24%

6%

5%

18%

14%

SHARE OF NATURAL/ETHICAL PRODUCT SALES

% ofRetailers

Other

20%

SPECIALTY FOOD RETAILERS

As a service to NASFT members, Mintel/NASFT will be offering complimentary access to the entire 2012 State of the Specialty

Food Industry research. Access will be available beginning April 20.

NASFT’s webinars@work series will present The State of the

Specialty Food IndustryWednesday, April 11, 2012

2–3 p.m. Eastern Time.

Please contact [email protected] for more information.

SPINS offers a POS reporting service for the Specialty Gourmet supermarket channel. SPINSScan Specialty Gourmet features chains and independent operators with more than 25 percent of sales derived from specialty-gourmet and natural products. If you are interested in more information on becoming a SPINS retailer participant, please visit spins.com.

Local resonates with specialty food retailers, with 74 percent saying it interests consumers most today and 67 percent believing it will grow the most in the next three years. Although Sustainable is not influential today, retailers say it will be in the near future.

Retailers see Latin as the No. 1 emerging cuisine, followed by Mediterranean. Indian, Vietnamese

and Eastern European are also on the upswing, as noted by about three in

10 retailers.


Ron Tanner is NASFT’s vice president, communications, education, government & industry relations.

EMERGING CUISINES

SPECIALTY FOOD RETAILERS

Local*

Organic

All Natural

Sustainable

Eco-Friendly

Fair Trade*“Local” is defined as within



Multiple answers accepted Source: MintelInterests Consumers Most Today


74%

67%

63%

55%

27%

45%

20%

25%

16%

25%

41%

33%

THE RETAILER VIEWPOINT:


Latin, other than Mexican 45

Mediterranean 37

Indian 31

Vietnamese 31

Eastern European 29

Spanish 25

African 20

Japanese 18

Korean 18

Thai 18

Mexican 16

Italian 14

Caribbean 12

Russian 6

Chinese 4

Other 18

% of

RetailersRegion

mailto:[email protected]

http://www.spins.com

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