What Are Your Daily Specialties?

Specialty foods sold in c-stores have more upside than many people think, and here’s why
specialty foods

An energy drink, bag of chips, pack of smokes and beef jerky meet hemp heart bites, hibiscus green tea mixer, acai berry chocolate truffles and blackberry sheep milk yogurt.

It might not sound like these items belong together; but specialty/gourmet foods have a bona fide reason for being in c-stores.

This niche food segment was once considered out of a convenience-store retailer’s league. But today, several factors, including the role of millennials, are propelling the specialty-food opportunity, one that offers $110 billion in sales and 22% growth over the last two years. That’s a market expansion trajectory 10 times the pace of mainstream foods, according to the Specialty Food Association (SFA).

An October webinar sponsored by New York-based SFA in conjunction with researcher Mintel bore out the possibilities. The one-hour session detailed the role that convenience plays in specialty-food buying.

“People are reaching for gourmet snacks regularly, and it’s not just for special occasions anymore,” said David Browne, an executive with Chicago-based research firm Mintel, citing products from artisanal jerky to freeze-dried fruit as widely popular.  

Currently, the leading categories driving the niche specialty-food segment are cheese, chocolate, frozen novelties, coffee, cookies, tea, nuts, seeds and dried fruit.

Joining Browne in the discussion was Denise Purcell, editor of Specialty Food Magazine, which is sponsored by the SFA. Purcell communicated granular insights about demographic trends and more, serving up recent developments considered essential for retailers and marketers to watch closely, including:
 

  • Convenience and e-commerce “is king” and will play a larger role looking forward;
  • Males, who are doing more of the shopping, have become a force to be reckoned with in this segment, which could not have been said a couple years ago;
  • While Gen Xers and baby boomers both have specific needs, it’s millennials who are the linchpin group, possessing the power to make or break the proposition for marketers and retailers. In fact, the 18- to 34-camp makes six visits a month to specialty-food stores, according to Mintel/SFA research.

Millennials have multiple buying triggers, Purcell said. “They buy specialty foods to bring to the office, give as a gift [or] have on hand for guests,” she said, adding that gluten-free has become a vital classification for these types of products.

Focusing the lens on millennials, Purcell broke them out into two groups: 18- to 24-year-olds, who are prone to buying sweet snacks, and 25- to 44-year-olds, who have a preference for meat, poultry, rice and grains. These oldest millennials are pushing 40, and their eating habits are shifting.

Millennials also like to share information about food. “They buy them to entertain and enjoy the social aspect of it,” Purcell said.

Specialty Goes Mainstream?

One key development underscored by Mintel’s Browne is that the specialty-food universe is shrinking and evolving—all because of a selective vetting process to bring in new products and declassify existing ones. “The narrowing of the definition of specialty foods comes when products like Greek yogurt go mainstream,” Browne said.

So what can marketers and retailers do to foster the conversation around these products?

Articulate not only the value but also the point of difference inherent in specialty goods. There’s tremendous opportunity to recruit new users, Browne said, as Mintel research shows 70% of respondents are aware of the specialty-foods market and 80% have heard of the term.

Also compelling: 57% of consumers are aware of and understand the term, while 47% actually buy the products. This 10% gap is crucial to convert those who are merely aware to becoming actual users, Browne said.

The real challenge, especially in the c-store sphere, is to properly market these items, and through that process assure customers that these items are within their means. Certainly, the perception is that specialty foods and beverages carry price points that are too cost-prohibitive.

Stay tuned for Part II of the examination of the specialty-foods niche market, coming to CStoreProductsOnline.com next week. We will put the spotlight on snacking, the GMO equation, corporate responsibility and more granular insights on key demographic groups—including up-and-coming iGen and GenZ (8 years old to 20 years old) consumers.