Specialty foods are defined as products that have limited distribution and a reputation for high quality. These items are becoming more popular—and easier to find—as the American consumer has developed a more sophisticated and discerning palate and as a growing number of channels offer foods to attract these consumers. NASFT (National Association for the Specialty Food Trade) estimates that there are more than 180,000 specialty foods products in the marketplace in channels that vary from boutiques and department stores to specialty food stores, natural food stores, supermarkets, and drug stores. The number and range of specialty food products has been growing steadily since NASFT and Mintel began to report on the industry in 2004; consumers have shown many times over that their interest in specialty foods—both imported and U.S.-made—shows no sign of slowing.

A number of factors have contributed to the continued growth in the industry: globalization, a greater interest in high-quality ingredients, and more disposable income. Consumers continue to educate themselves about the food traditions of other regions through travel and armchair travel, by reading books and magazines, and by watching cooking shows. They have also expanded their away-from-home eating horizons by visiting more sophisticated restaurants that feature foods of unusual areas or regions. And consumers have begun to include more specialty foods and beverages in their at-home menus as well, both from foreign countries and from a number of distinct regions in the U.S.

This report encompasses three years of sales data (2004–06) for each of 40 segments, and discusses the positive and negative factors that may have a bearing on each segment’s future growth or decline. New products in each segment, drawn from Mintel Global New Products Database, are included in order to illustrate representative examples in each product class or to point out new avenues that a product class is taking. Also included in this report is a comprehensive look at distribution channels within the specialty food trade, from importer and broker to retailer.

The following segments have been selected for inclusion in this report. The segments chosen represent a large portion of the overall market, and while not exhaustive, are deemed to present a representative view of the whole market.

Baking mixes supplies and flours

Beans, grains and rice

Bread and baked goods

Candy and individual snacks

Carbonated, functional and ready-to-drink tea/coffee beverages

Cheese and cheese alternatives

Chips, pretzels and individual snacks

Coffee, coffee substitutes and cocoa

Cold cereals

Condiments

Conserves, jams and nut butters

Cookies and snack bars (i.e. granola bars)

Crackers and crispbreads

Eggs

Energy bars

Entrées and mixes

Frozen desserts

Frozen entrées, pizzas and convenience foods

Frozen fruits and vegetables

Frozen juice and beverages

Hot cereals

Milk, half and half, cream

Nuts seeds, dried fruits and trail mixes

Oils (cooking)

Other dairy

Puddings and shelf-stable desserts

Refrigerated juice and functional beverages

Refrigerated sauces, salsas and dips

Rice cakes

Seasonings

Shelf-stable fruits and vegetables

Shelf-stable juice and functional drinks

Shelf-stable meat, poultry and seafood

Shelf-stable pastas

Shelf-stable sauces, salsas, and dips

Soup

Sweeteners

Teas

Water

Yogurt and kefir

Data from this report is derived from sales through the following channels:

Mainstream Channels:

Food stores with $2 million or more in sales Drug stores with $1 million or more in sales

Mass merchandisers, excluding Wal-Mart

Natural Channel:

Natural supermarkets with $2 million or more in annual sales with a 65% natural product mix. However, GNC, Vitamin Shoppe, and other supplement stores are not included.

Specialty Channel:

Specialty food retailers generally do not sell mass products such as cereals or packaged foods typically sold through mainstream channels (e.g. mainstream products produced by major CPG manufacturers). There is a considerable amount of specialization in this industry—some retailers may sell only cheese, while others primarily deal in prepared foods, with coffee and baked goods offered as companion products. They are generally smaller units, with limited product offering and square footage.

Excluded items

Specialty health and beauty care items such as shampoos or soaps, as well as pet food, household improvement and cleaning products (e.g. candles), and other products that are often sold alongside specialty food products (e.g. cookware, magazines, books).

Meat, poultry, cheese, fish, dairy, deli, and bakery sold PLU (price look-up) or in bulk, as current store practices do not include the reporting of these data.

Fresh fruit and vegetables and some products within other segments (e.g. some confectionery products), again, because they are likely to be sold PLU or in bulk.

Alcoholic beverages, as the laws regarding the place of sale of these beverages vary from state to state, making it impossible to collect consistent sales data.

Sales of private-label specialty products (e.g. Wegmans Italian Classics, Kroger Select). Note, however, that an estimate of sales through Trader Joe’s is provided in the Market Size section. Since privately owned Trader Joe’s does not share sales information, this number is an estimate and is not included in any segmentation tables.

In addition to specific exclusions noted in the above definition, also excluded from sales figures in this report are sales through:

Convenience stores

Mail order

Internet

Minor channels, such as department stores, florists, airport outlets, and clothing boutiques