7 Opportunities in Specialty Foods and Drinks

Convenience retailers take notice: Specialty food merchandising opportunities are there for the taking. The Specialty Food Association's (SFA's) annual State of the Specialty Food Industry report offered seven takeaways, including a specific callout to convenience-store retailers.

The SFA identified key trends, including the emergence of plant-based foods, specialty beverages, younger consumers gravitating toward specialty items and breakfast-oriented daypart having a golden opportunity to step up, and it singled out the c-store channel to elevate its game.

The New York-based association, which conducted the study with Chicago-based Mintel, refers to convenience as an “under-tapped market for specialty items,” along with the foodservice channel, which the group advised to “move to greater customization” of these items.

The SFA didn’t elaborate on specific details for c-stores, but the intent is that chains could look to partner with primary and secondary suppliers with an affinity for specialty foods and then incrementally integrate select new offerings into their stores, ones compatible with demographic buying preferences.

The SFA said that specialty foods remain one of the fastest-growing segments of the consolidated food business as total sales jumped 9.8% between 2016 and 2018, reaching $148.7 billion in 2018.

Specialty food sales outpaced the growth of all food at retail during the period, up 10.3% vs. 3.1%, and product innovation and the wider availability of brands through mass-market outlets is playing a part in the success rate.

The share of consumers buying specialty foods by generation in 2018 were millennials at 84%, Gen X at 75%, boomers at 69% and Gen Z at 66%.

“Diverse consumer lifestyles are taking specialty foods mainstream,” said Phil Kafarakis, president of the SFA. “To reach these consumers and increase their own sales, food merchants have embraced the vast assortment of specialty products. Our research outlines the momentum in the industry and provides a comprehensive picture of where we are today and how businesses can prepare for the future.”

Click through to see product examples of the seven specialty food categories with the highest dollar growth.

Photograph: Shutterstock

Ready-to-drink tea

A new line of premium, caffeine-free iced tea, Pure Leaf Herbal Iced Teas from PepsiCo are brewed with real hibiscus flowers and no artificial sweeteners. The drinks contain 100 to 110 calories per serving. Three flavors are available: Mango Hibiscus, Peach Hibiscus and Cherry Hibiscus. They have SRPs of $1.99 for a 18.5-ounce single-serve bottle and $6.29 for a multipack of six 16.9-ounce bottles. Pure Leaf is also introducing a new flavor to the Tea House Collection: Organic Hibiscus Tea Passionfruit & Pineapple.

Photograph courtesy of PepsiCo

Bottled water

Ice Age Glacial Water is collected from the edges of ancient glaciers in British Columbia. Sodium-, fluoride-, chlorine- and nitrate-free, the water is bottled and packaged using technology that improves efficiency and reduces its environmental footprint, the company says. The water also comes in an Ice Age 9.5 variety, which infuses the pure glacial water with electrolytes for a higher pH of 9.5. Both varieties are available in 500-mL and 1-liter BPA-free plastic bottles for an SRP of $1.69 and $2.89, respectively. 

Photograph courtesy of Ice Age Glacial Water

Plant-based meat alternative

NoBull Burgers from Oh My Gosh Yum LLC, are made from an organic lentil base. The newest addition to the NoBull family has authentic curry and roasted sweet potato flavor, with added organic brown rice, organic chia and coconut milk.

Photograph courtesy of NoBull Burgers

Baked goods (noncookies)

The SFA’s annual Sofi Awards recognize “the best of the best in specialty foods,” and taking the top spot in the baked goods category, which ranked among the top five categories based on retail sales, was Date Lady Fruitcake, which secured the gold medal in the category. Manicaretti Italian Food Importers took the best new product honor for its Filippi Panettone Classico indulgent baked variety.

Photograph courtesy of Manicaretti

Cookies

Notching the gold Sofi award in the cookie category was Douglas Sweets’ Italian Lemon Rosemary Shortbread, while Desserts On Us Inc. won the best new product for its Laceys Almond and Dark Chocolate With Meyer Lemon.

Photograph courtesy of Douglas Sweets

Cheese from cow’s milk

The gold Sofi award in the cheese and cow-milk category went to Bellwether Farms for its Whole Milk Ricotta, while Cabot Creamery Cooperative took the best new product honor for its Cabot Centennial Cheddar. The farm families that own Cabot Creamery have roots tracing to 1919, and the Centennial Cheddar celebrates that milestone. 

Photograph courtesy of Cabot Creamery

Rice treats

Selma’s Cookies’ Strawberries and Creme Rice Crispy Treats are a new twist on an old favorite. The treat is hand-mixed with generous portions of melted marshmallow and natural strawberry bits and flavor. It’s topped with creamy white chocolate for an indulgent snack.

Photograph courtesy of Selma’s Cookies