Donna Berry 2019CHICAGO — Beverages, snacks and plant-based foods are fueling the growth of specialty foods, a sector of the marketplace that continues to outpace the growth of conventional foods. Specialty foods are defined as foods or beverages of the highest grade, style and/or quality in their respective categories. Their specialty nature is derived from a combination of attributes, including uniqueness, origin, processing method, design, limited supply, unusual application or use, packaging, or channel of distribution/sales.

Beverage sales are growing faster than food sales, up 13% and 10%, respectively, over the past two years, said David Browne, senior analyst, Mintel, Chicago, who provided a state-of-the-industry update at the 2020 Winter Fancy Food Show held Jan. 19 to 21 in San Francisco. He emphasized there is a rising trend in functional beverages that promote energy, mental focus, relaxation and digestive health.

“There’s a lot of excitement and surprise in the specialty beverage market,” Mr. Browne said. “It’s a good place to be right now.”

The fastest growing categories are ready-to-drink (R.-T.-D.) tea and coffee (19%), water (15%), and refrigerated juices and functional beverages (7%).

And while “specialty” and “fancy” are not correlated to healthfulness or better for you, many marketers are choosing to differentiate through value-added propositions. Product claims such as natural, organic and non-G.M.O., along with dietary claims such as high-protein and low-sugar are attracting shoppers to specialty brands, said David Lockwood, Mintel Consulting.

In the beverage space, there’s increased emphasis on sugar content. Studies show a growing number of shoppers rely on the sugar — and now the “added sugar” – content of beverages as basis for a decision to purchase and consume. The International Food Information Council Foundation, Washington, for example, reported in its 2019 Food and Health Survey that four out of five shoppers are limiting or avoiding sugars in foods.

Since Jan. 1, 2020, manufacturers with annual sales of at least $10 million are required to include an added sugars line on the Nutrition Facts Label. It is a mandatory subset of the total sugars line. Smaller companies have an extra year to comply.

Reducing sugar in beverages is as much art as it is science, as each beverage system and flavor is different. Read more about adding sweetness to beverages without adding sugar here.

View the slideshow to see a range of new beverage products that feature a reduced sugar positioning in the market.