Live from Fancy Food Show: Taking Food Retail to the Next Level
Introduced to celebrate the Specialty Food Association’s (SFA) 65th anniversary, LevelUP, billed by the New York-based organization as an “immersive experience” made its debut at this year’s Summer Fancy Food Show in the Big Apple (June 25-27). The attraction spotlights global food innovations, premier industry research, and the future of food and commerce.
Among LevelUp’s features are Shaping the Future of Food for 65 Years, which enables visitors to discover the history of the specialty food industry and the SFA; The Future Market, which discusses factors that will inspire food commerce tomorrow and shop the store of the future, Taste Tomorrow, where attendees can sample up-and-coming products, World Food Trends in partnership with SIAL Paris, allowing visitors to share in global innovations and trends new to the U.S. market; Product Picks, where a curated selection of on-trend items from on-site Fancy Food Show exhibitors can be previewed; an exhibit of the 2017 sofi Award winners; and Tomorrow’s Products Today: Exhibitor Locator, which lets attends create a map to find exciting products on the show floor.
Additionally, a full lineup of speakers and programming is scheduled for the three days of the show. On June 25, Progressive Grocer attended The Food Market of Tomorrow, in which Shelly Balanko, SVP of The Hartman Group and David Lockwood, director of Mintel Consulting, outlined specialty food trends over the next five years.
During her presentation, Balanko spoke of the “playfulness” that now imbues the specialty segment, which is less about exclusivity and more about the embrace of a chef-driven culture, with consumers gravitating to casualness, accessibility and transparency. She also noted the rise of early- and mid-stage brands, which were stealing share from legacy incumbents because of their ability to capture shoppers’ imagination by offering them something “new and different.”
In fact, according to Balanko, specialty foods overall are growing faster than the conventional sector, with particular growth in packaged products. Noting the recent success stories of craft beer and cold-press juices, she pointed to consumer interest in local and artisanal products as a desire for “upgraded experiences,” adding that they were willing to pay more for quality, but it wasn’t just about price. Today’s shoppers want distinctive product experiences and transparent narratives, along with such macrotrends as health and wellness and global flavors/sourcing, as part of their ultimate journey to pleasure and discovery.
Balanko emphasized that specialty was still very much about niche, with low household penetration numbers normal. Those usual suspects, Millennials, crop up as the largest regular buying population, although Gen Xers show a disproportionate interest in the sector. She explained that the key benefit areas driving specialty speak to such niche benefits as high-nutrient density and customized health and wellness.
Perhaps most intriguingly, Balanko discussed how specialty may recast the retailer-supplier relationship; she suggested that retailers, which outpace restaurants for share of specialty food sales, may redesign their center-store sections to accommodate more specialty brands. As consumers continue to demand both quality and convenience, Balanko predicted that “healthy convenience” would drive the fastest packaged specialty food growth. She further noted that with steady specialty market share gains in the United States, retailers would need to commit to a position: specialty or value. With the U.S. entry of German deep-discounter Lidl, which seems to want to have it both ways, it will be interesting to see if the grocer can disrupt that particular prediction along with U.S. food retailing in general.
Innovation Key to Growth
In his presentation, Lockwood focused on 13 out of 51 specialty food segments, discussing their individual growth forecasts. As a whole, the sector had experienced less growth in 2015-16, which Lockwood attributed mainly to food deflation and retail channel consolidation, along with the fact that the industry is maturing. Over the next five years, he forecast a lower but still good growth rate.
One reason for specialty’s continuing growth may be because a full 60 percent of all consumers purchase such foods, as Mintel defines them, with the 23 percent of that group identified as heavy buyers (purchasing from more than three of the 51 segments in the past six months) leading food trends.
Interestingly, when asked by Mintel what consumers were most interested in when it came to specialty food, retailers focused most on local, followed by GMOs, and saw sustainability as a rising interest, while consumers themselves still expressed the greatest interest in all-natural items. For their 2017 innovation plans, manufacturers told the market research company that they were working on gluten-free, non-GMO and convenient/easy-prep products.
Among the specialty segments broken out for the presentation, Lockwood noted that grocery was by far the largest department, with beverages growing much faster than the rest of the store, and bars in particular among the fastest growers in grocer. He also pointed out the great innovation occurring in such segments as salty snacks, with products offering whole grains, ancient grains and now pulses and other non-wheat ingredients – what Lockwood referred to as “gluten-free 2.0,” and frozen desserts, with their development of dairy-free and health-and-wellness-focused items.
In fact, as some items take off and enter the mainstream, they may “outgrow” their specialty status altogether, observed Lockwood, citing the case of Greek yogurt, now a ubiquitous presence on shelves of all types of grocery stores.