The Specialty Food Association (SFA) has released a second edition of its groundbreaking research report, Understanding the Real Value of Specialty Foods. Built on interviews with 1,000 shoppers, 100 retailers, and other data points, the new report outlines the positive impact of specialty products on retailer profitability and shopper loyalty, impact that has only increased in importance since the first edition came out in 2014.
Sales of specialty foods have grown from $88 billion in 2013 to an estimated $207 billion in 2023, an increase of 149%.
Describing the current moment as "an era of specialty food prominence," the report notes that sales of specialty products have grown from $88 billion in 2013 to an estimated $207 billion in 2023, an increase of 149%. With specialty food and beverages now representing 21.6% of all center store grocery sales in the 63 categories measured by SFA, they are no longer regarded as niche products, but a major driver of growth in the grocery sector.
Top Takeaways:
Specialty foods drive shopper loyalty. The report outlines a clear relationship between how customers rate their primary store and that store's selection of specialty food items. Almost half (44%) of primary store shoppers surveyed for the report make trips to secondary stores specifically "to find specialty food items that their regular store does not carry." These trips, along with others made to dedicated specialty stores, represent $1,200 in sales per household per year, sales which retailers could be retaining themselves.
Specialty foods drive retailer profits. In addition to the sales generated from retaining more trips, specialty foods are disproportionately more profitable on the shelf, according to this report. In fact, specialty food items generate a gross margin dollar return that is 3-4 times higher per unit than mainstream items, which, the report posits, helps to balance out "somewhat slower turns from specialty products." Given specialty products' higher average prices and gross margin rates, these items deliver more than twice the return on inventory investment (ROI) for retailers: 50.1% compared with 19.8% for non-specialty items, according to this report's data.
SFA's new report contains sections on the economic impact of specialty foods, consumer insights and market dynamics, retailer case studies, growth opportunities, the role of distributors, private-label trends, e-commerce strategies, and the future outlook for the specialty foods market.
