Anyone who owns or shops in retail stores knows about the economic challenges store-owners face every day. A seminar sponsored by the National Association for the Specialty Food Trade, Inc. (NAFST) was recently held to share their research on the state of the industry. The seminar provided industry research, not only from NASFT and Mintel, but also from SPINS, a provider of natural product industry sales across retail channels.
According to the experts, the retail industry's news is not all doom and gloom. In fact, specialty foods are the fastest-growing segment in the retail food industry. Data shows that retail sales totaled $47.9 billion in 2007, up almost 20% from 2005. Reasons for growth are attributed to improving consumers education about more sophisticated and adventuresome foods and the growing immigrant population. Another driver is an increase in foreign travel, which is responsible for travelers experimenting with authentic foods and bringing these food traditions home with them. There's also experimentation and experience in the kitchen, imaginative new product launches, and wider availability of specialty foods.
Sales of specialty food at retail stores jumped by 19.2% between 2005 and 2007, whereas sales of all food grew by just 5.4%. In addition, specialty food accounts for 12.5% of all retail food sales. Candy and individual snacks recorded the biggest sales growth between 2005 and 2007, followed by refrigerated juices and functional beverages.
Retailers say their biggest challenges are keeping up with trends and determining which products will find a sustained sales audience. NAFST pollsters found that some factors that could inhibit retail growth were that wider availability could cause certain products to lose their "cachet" as being unique. Also, increases in food prices could cause home chefs to curb experimentation with new and unusual products. One idea to counteract this potential problem is by offering consumers serving suggestions of your specialty product that pair well with low-cost everyday items such as chicken, pasta, rice and vegetables.
While the current state of the economy gives all Americans a reason to watch their dollar more closely, the specialty food industry has not yet become an official casualty of tighter family budgets. With effective marketing and a continued push to educate shoppers on the health benefits of many specialty foods, the industry has reason to hope that the 2008 holiday season and beyond will provide continued growth.
Source: The Gourmet Retailer, September 2008
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