New York — The Specialty Food Association’s (SFA) annual State of the Specialty Food Industry Report reveals that the specialty food market reached $175 billion in 2021, up 7.4 percent versus the previous year.
“The specialty food market has prospered amid two difficult years, with our latest research showing specialty continues to grow at a faster rate than all food,” says Denise Purcell, SFA vice-president, content & education. “Growth will continue, but at a slower pace than the industry experienced during the 2020 pandemic-influenced whirlwind of grocery shopping and at-home meal preparation — and will depend on supply chain bandwidth and shifts in challenges like inflation, shipping issues, cost increases and materials shortages.”
The research examines market size and sales; dollar and unit sales growth; specialty food category penetration; and 10-year tracking and forecasting in key categories.
Key facts and figures from the report include:
Top 10 Categories in Retail Dollar Sales
- Meat, poultry, seafood (frozen, refrigerated)
- Cheese and plant-based cheese
- Chips, pretzels, snacks
- Bread and baked goods
- Coffee and hot cocoa, non-RTD
- Entrees (refrigerated)
- Chocolate and other confectionery
- Desserts (frozen)
- Entrees, lunch, dinner (frozen)
Top 10 Fastest-Growing Categories
- Tea and coffee RTD (refrigerated)
- Creams and creamers (refrigerated)
- Entrees (refrigerated)
- Breakfast foods (frozen)
- Appetizers and snacks (frozen)
- Pasta (refrigerated)
- Fruits and vegetables (frozen)
- Sauces, pasta, and pizza (shelf stable)
- Soda and carbonated beverages
Additionally, the report noted several insights and takeaways:
The Supply Chain’s Impact on Growth The parts of the industry that will grow in the next few years in part hinge on supply chain bandwidth, according to the report. Makers continue to report that they are unable to properly forecast their sales because they often don’t know what their supplier shipments will look like. Lead times for shipments also fluctuate, causing production schedule delays. All of this influences how makers formulate their products.
BIPOC- and Women-Owned Brands in Demand Consumers want more BIPOC- and women-owned brands and retail buyers and foodservice operators are seeking out incubators, brokers, b2b wholesalers and distributors, and sales consultancies that specialize in supporting and growing these brands. Showcasing these brands has moved far beyond seasonal features to align with observed months like Black History or Women’s History, and will continue to expand.
The Next Retail Formats The pandemic gave retailers insight into the store formats shoppers want next and smaller footprints with minimal human contact are in demand.
Plant-Based Challenges The overall plant-based specialty retail market grew 6 percent, exceeding $7.7 billion in 2021, after 26 percent growth in 2020. Plant-based growth has outpaced the entire specialty retail market, which grew 4 percent in 2021 and 20 percent in 2020. However, some plant-based categories were among 12 that grew specialty sales slower than the entire market in 2021. The largest growth gap is with plant-based meat alternatives. It grew 34 percent in specialty but 66 percent in the total market. Historically, this category has been composed of 97 percent specialty items, but it changed in the past three years and now non-specialty items are contributing to much of the growth.
Specialty Beverages Grow Faster Than Food Trends shifted in 2021 and specialty beverages grew twice as fast as food. During the initial phases of COVID, food was more a consumer priority but over time, consumers expanded their shopping lists to include more specialty beverage purchases. RTD alcoholic beverages including hard seltzer, hard kombucha and fermented functional cocktails are growing rapidly.
Opportunities in Perishables The SFA took a closer look at specialty perishable sales, which are expected to reach nearly $33.5 billion in 2022. Perishables (random weight, non-UPC’d specialty items sold in a bakery, cheese, deli, meat and seafood sections) are critical to specialty, both in scale and as a good source of growth. For specialty retailers, perishables departments represent enticing, creative merchandising and execution. They are also important centers for emerging food and beverage innovation that may eventually migrate to packaged goods categories.