Specialty foods category offers deep insights into market trends

by Keith Nunes
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SAN FRANCISCO — A key component of any successful product development program is the answer to a simple question, “What’s next?” For the food and beverage category, the answer may lie among the 1,400 exhibitors at this year’s Winter Fancy Food Show, held this past week in San Francisco.  The show itself is an overwhelming cornucopia of food and beverage product development unofficially dedicated to the concepts of clean label, transparency and premiumization.

Spend a day walking the exhibition hall and you will come away with three primary impressions — anything perceived as artificial is bad, the more obscure a raw material or primary ingredient the better it is, and there are no boundaries when it comes to the use of flavors or the addition of nutrients. Waters featuring artichoke and hemp-seed oil, protein-enriched condiments and pancake mixes, and snack mixes featuring such varieties as habanero-spiced pistachios and honey-roasted chickpeas were all on display.

It’s easy to understand why there is such a focus on these trends. Retail buyers attend the show looking for “gourmet” products they may sell in their stores, and the exhibitors are using clean label, raw material “exclusivity,” and flavor and nutrient innovation as points of differentiation.

Several trends have taken hold in the consumer packaged goods sector during the past few years, most notably that some traditional center-of-the-store products are not as popular as they once were. Consumers are shifting their focus to the perimeter of supermarkets or taking their business to such alternative retail formats as mass merchandisers or specialty stores, which often feature many of the products that are the center of much attention at the Winter Fancy Food Show and its companion event the Summer Fancy Food Show. One need only look at the strength of Whole Foods and the emergence of the Sprouts Farmers Market chain as evidence.

It is in this manner that the specialty foods category is influencing the food and beverage industry. One may easily distinguish the bright line that extends from such small companies marketing the simplicity of their product formulations to the efforts of larger companies to make their products more clean label friendly.

The fragmentation that is developing at retail combined with the power of social media, which dramatically lowers the cost of marketing and gaining exposure, will continue to bolster the strength and influence of the specialty food category. The Specialty Food Association estimated category sales to be approximately $88 billion in 2013 with 80% being sold at retail.

In the association’s annual state of the industry report, it identified nuts and seed butters, eggs and frozen desserts as the fastest growing categories in specialty foods. Distributors queried by the group identified that the market for food and beverages manufactured from non-bioengineered ingredients has the highest potential for growth of all product claims over the next three years. It is such insights that may lend assistance in determining what product categories may be trending in the near future.

Spend a day at an event like the Winter Fancy Food show and you will see many unusual product formats and applications. Many may make you shake your head in disbelief, but others may be worth a second look, because they may hold the answer to what’s next?

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