The specialty food industry hit record sales of $120.5 billion in 2015, with retail sales growing nearly 20% from 2013-2015. 58 out of 61 specialty food categories saw growth over those years, with Eggs and Refrigerated RTD Tea and Coffee more than doubling. Independent retailers are keeping pace with and even slightly outgrowing major chains. Millennials are influencing the industry by preferring unique, storytelling products and smaller store formats that allow for more personal shopping experiences.

1. T
he specialty food industry
has never been more entic-
ing, and that’s evident in
the numbers. Sales topped
an all-time high of $120.5 billion in
2015, according to the Specialty Food
Association’s “State of the Industry
2016” report. Even more impressive,
though, is its $94 billion in retail sales,
a nearly 20 percent jump from 2013-15.
If those impressive numbers aren’t
enough to make your mouth water, then
consider this: 58 out of the 61 specialty
food categories included in this year’s
report grew over the past two years,
many by double digits. In fact, two cat-
egories—Eggs and Refrigerated RTD Tea
and Coffee—leapt by triple digits.
“I think the industry is growing at
about 22 percent versus all foods, which
was growing at about 4 percent,” says Ron
Tanner, vice president of philanthropy
and government for the SFA, who over-
sees the report. “So specialty foods are
growing almost five times faster than
mass-market foods.”
While the industry’s phenomenal
growth is more than encouraging, the
best news is the edge that independent
retailers have over big-box chains like
Kroger, Costco and Target. Sure, the
giant counterparts comprise a massive
four-fifths of industry sales after their
recent expansion into the specialty
food area. But smaller stores are keep-
ing pace with sales growth, and they
even enjoy a slight edge over their big-
box competitors: While mainstream
stores marked a 19-percent growth in
sales from 2013-15, natural food stores
recorded 19.5 percent growth, and
specialty food stores chalked up 20
percent growth.
According to the SFA report, the
upward trend has largely been fueled
by the growth of small businesses. And
although about 80 percent of specialty
foods are sold through supermarkets, that
share has been decreasing somewhat.
“People are no longer taking weekly trips
to the store. Instead, they go every other
couple days,” says Tanner. “They’re start-
ing to prefer smaller stores so they can
just go in and get a few things rather than
doing the weekly shopping.”
Millennials are notably credited for
influencing nearly every industry in
retail, and food is no exception. They
want smaller retail outlets, a more per-
sonal shopping experience and unique
products that tell a story. Tanner says
independent retailers have an advantage
here because of their smaller staffs who
can learn about products and relay that
information to the customer.
“I think that a lot of Millennials are
beginning to make specialty foods more
important in their everyday eating,” he
says, “whereas people in their 50’s and
60’s kind of grew up with the idea that
food was fuel, and it’s something that you
try to get at a less expensive price.”
But that mentality is changing. As
Baby Boomers hit retirement, they are
willing to splurge on some of life’s luxu-
ries. While embracing the Information
Age, many of them are rejecting the
cheaper, mass-processed foods of yester-
year and opting instead for quality foods
from smaller producers.
“From our consumer research, we
learned that people want to get infor-
mation on products, and they want to
be knowledgeable about the products
they buy,” says Tanner. “The indepen-
dent retailers have staff and personnel
who can help educate people, give
them ways to prepare the products or
explain how to eat them. I think that’s
how specialty retailers can increase
their share of the business.”
TOP EATS AND TREATS
Once again, Cheese and Cheese
Alternatives occupy the No. 1 spot out of
61 segments when it comes to specialty
food sales. “It’s more than a $4 billion
category, so it’s a very significant part of
the industry—much higher than any
other category—and it’s still growing,”
says Tanner.
In fact, the category grew 14.7
percent from 2013-15. While cheese
remains king in terms of sales, it’s fol-
lowed by Meat, Poultry and Seafood
at $3.6 billion (up 23 percent); Chips,
Pretzels and Snacks at $3.4 billion (up
22 percent); Coffee, Coffee Substitutes
and Cocoa at $3.2 billion (up 17 per-
cent); and Bread and Baked Goods at
$2.6 billion (up 15 percent).
While those fantastic numbers are
impressive, it’s the Refrigerated RTD Tea
and Coffee category that has exploded
RISE&E&E shin
06_7 Show Report_EditFinal_DF.indd 6 6/10/16 5:42 AM

2. the specialty food industry is in the limelight with
a record-breaking $120.5 billion in sales and a
whopping 20 percent growth at retail in 2015.
By Dayna Fields
Shop the Summer Fancy Food Show
More than 45,000 specialty food professionals as well as 2,550 brands from
55 countries will gather in NewYork on June 26-28 for the Summer Fancy
Food Show, sponsored by the Specialty Food Association.The industry is
buzzing with the news that specialty food sales topped $120 billion in 2015,
and the momentum is sure to make for the biggest and best show yet.
“The show continues to sell out as exhibitors are eager to take advantage
of record sales as well as record consumer interest in specialty food,” says
Louise Kramer, communications director for the SFA.“Tunisia will be front
and center as the show’s partner country, and there will be special activities
in the Tunisian pavilion as the country strives to expand its exports.”
Innovation is an overarching theme of this summer’s show, which is now in
its 62nd edition. Kramer herself is most looking forward to a new show sec-
tion called New Brands on the Shelf, which will feature more than 30 emerg-
ing manufacturers who are new to market but not yet ready for a full booth.
One big change that regulars will notice is the absence of the sofi Awards
ceremony, for which winners have already been announced (see right). In
its place, there will be a special invite event for buyers and press to meet
the winners and sample products.“This way, the winners can leverage their
honor before the show and better connect with buyers,” says Kramer.
Also, the show will again offer the new all-access Premium Pass, which was
launched last summer, so SFA members can attend all educational sessions
for a flat fee of $75 ($150 for non-members).The pass gives buyers an eco-
nomical opportunity to learn everything they need to know to claim their
slice of the retail pie. For more information, visit specialtyfood.com.
Summer Fancy Food Show 2015
2016 sofi award winners
*Category,Company,Product
Salsa, Dip: American Spoon,Pumpkin Seed Salsa
Soup, Stew, Bean, Chili: Backyard Safari Company,DinnerTonight Black Bean
Tortilla Chili Mix
Confection: Big Picture Farm,Sea Salt &Vanilla Farmstead Goat Milk Caramels
Cold Beverage: Bittermilk,No.3 Smoked HoneyWhiskey Sour
Dessert Sauce or Topping: BLiS,Bourbon Matured Maple Syrup
Vinegar: Boulder Flavours,Balsamic Nectar
Pasta, Rice, Grain: Bravo International,PastificoArtigianale Leonardo Carassai
Sweet Snack: Creative Snacks Co.,Organic Coconut Bites
Hot Beverage: DickTaylor Craft Chocolate,Drinking Chocolate - Belize,Toledo
Chocolate: Droga Chocolates,Money on Honey
Dairy or Dairy Alternative: Epicurean Butter,Organic Cocoa Coconut Butter
Meat, Pate, Seafood: Fermín USA,Ibérico Pork Dry-Cured Chorizo Sausage Spicy
Cooking, Dipping or Finishing Sauces: FoodMatch,Barnier Pimento Sauce with
Preserved Lemon
Pasta Sauce: Gustiamo,Pianogrillo Sicilian CherryTomato Sauce
Cracker: Jan’s Farmhouse Crisps,Cranberry Pistachio“The Original”
Condiment: King’s Cupboard,Non-GMO Salted Caramelized Fig Spread
Vegan or Gluten-Free Products: KitchenTable Bakers,ParmCrisps MiniAged
ParmesanCrisps
New Product: La Pasta,Radicchio,Parsnip andApricot Ravioli
Savory Snack: Little Red Dot Kitchen,Hickory Smoked Spicy Candied Bacon
Oil: Los Chileros Stöger,OrganicAustrian Pumpkin Seed Oil
Jam, Preserve, Honey, Nut Butter: Marcelli Formaggi,Cioccomiel
Bread, Muffin, Granola, Cereal: Michele’s Granola,Ginger Hemp Granola
Cookie, Brownie, Cake, Pie: Moon Dance Baking,Holly Baking Cookie Brittle
Cinnamon & Spice
Appetizer: Pacific PickleWorks,Brussizzle Sprouts
Ice Cream, Gelato, Frozen Treat: The Gelato Fiasco,Ripe Mango Sorbetto
Baking Ingredient, Baking Mix, Flavor Enhancer: The Spice Hunter,Coriander
Lime Global Fusion Rub
Cheese: Vermont Creamery,Bijou
Salad Dressing: Wozz! Kitchen Creations,NorthAfrican Chermoula Dressing
inein the past two years, posting a whopping
301.6 percent sales growth, even though
it only garnered $143 million in 2015.
“Its growth is really high, but its base is
relatively low,” says Tanner. However,
new products, such as Kombucha, are
drawing plenty of interest. Meanwhile,
as sugary drinks and sodas continue to
decline in popularity, bottled water grew
51.4 percent over the past two years while
Juice and Functional Beverages grew 37
percent. “So people are basically looking
for alternatives to mass-market sodas, and
they’re finding those in teas, and there’s
also a lot of growth in sparkling water and
vitamin-enhanced waters,” says Tanner.
While tea and coffee drinks have
been thrusted into the limelight, Frozen
Juices and Beverages have plummeted
into oblivion. The category posted an
astounding 45 percent drop in sales
from 2013-15. While no other category
even comes close to that kind of loss,
the four that followed it are: Shelf-
Stable Non-Dairy Beverages (down
5.4 percent); Cold Cereals (down 5.2
percent); Shelf-Stable Pasta (up 3 per-
cent); and Pickles, Peppers, Olives and
Other Vegetables (up 5.6 percent).
“Consumers are looking for products
that are less processed, so they’re look-
ing for refrigerated products that are
fresher,” says Tanner. “And it may not
be the easiest for retailers to stock, but
that’s what the consumers are demand-
ing, so they need to.”
06_7 Show Report_EditFinal_DF.indd 7 6/10/16 5:42 AM